ANN LIMBERG: Hello and welcome and thank you for joining our session today. I am Ann Limberg the Head of Philanthropic and Family Office Solutions in Bank of America's Private Bank. And I'm delighted to welcome you to today's very important discussion on decoding the motivations of America's most influential donors. The 2021 Bank of America's study of philanthropy, which will form the basis for our conversation today, is we believe, the leading source of information about charitable giving for affluent Americans. This year marks the eighth edition of this study which we have conducted since 2006. In partnership with the Indiana University, Lilly Family School of Philanthropy. As in past years, the study investigates philanthropic activity by affluent households. The amounts they give and the causes they support. Their volunteering activity, their motivations for giving, their use of giving vehicles and digital tools, and their confidence in societal institutions. Again this year, we have enquired deeply into philanthropic activities and attitudes amongst specific groups within the survey population and that has yielded some valuable insights when viewed through the lens of gender, ethnic and sexual identity and age. I should mention particularly the rise of a younger generation of donor and influencer, those under 38 years old, who would be characterized as members of the next gen cohort. And whose philanthropic practices are, as we will see, changing traditional norms. If you are affiliated with a nonprofit, we hope that the findings from this study, will provide guidance for your organizations' conversations with donors. And if you are a grant making organization or an individual philanthropist, we hope the findings will reveal patterns of continuity and change that will be relevant for you and your own activities.
With me today are three leaders who have been instrumental in bringing in this highly relevant research to you and I will introduce them in a moment. But first I'd like to place today's conversation in some context. All of you make an essential and positive difference in our global society through your service to the nonprofit sector into the missions of the organizations that you care so deeply about. Like you, we at Bank of America, are also engaged in a social mission. We share your values to improve the world by supporting education, healthcare, racial justice, social well-being, the arts and culture and many other causes. And we continue to increase and accelerate our ongoing support through programs delivered through the Bank of America Charitable Foundation and our local market president network. As a values-driven enterprise, we believe we're uniquely positioned to understand and advise you in the work that you do for your non-profit organization or in your personal philanthropic activity. Our philanthropic group is deeply aligned with the missions of many nonprofit organizations, and our team members oversee grant making from private foundations and charitable trusts that we manage, Our Endowment and Foundation and Investment Management Group working closely with our philanthropic advisory team, also helps nonprofits to support and sustain their missions, and we work very closely with wealthy individuals, families and family offices to help them to improve the world and achieve higher impact through their personal philanthropy.
And so now, as we turn to the 2021 study, I'm delighted to be joined by three experts in philanthropy to provide you with an overview of its findings. First from the Indiana University, Lilly Family School of Philanthropy have Doctor Una Osili, Efroymson Chair in Philanthropy, Professor of Economics and Philanthropic Studies, and Associate Dean for research and international programs. And from our own philanthropic team, we are joined by Dianne Bailey, executive overseeing our philanthropic consulting and advisory practice, and Bill Jarvis, our strategy executive overseeing thought leadership, and Bill also serves as the managing editor of this study. So Una, welcome, I would like to turn to you first. Why is the study so important for nonprofits and donors alike?
UNA OSILI: Thank you Ann, and before I begin, I would like to express my gratitude to you and your Bank of America team for your partnership in working with our team at the Lilly Family School of Philanthropy to create this eighth study in our long-running series, which as you noted, was first fielded, can you believe it, in 2006. The study is more important now than ever given the nonprofit sectors increased reliance on a small and more affluent group of donors as we have seen from giving U.S.A. and other national studies in recent years.
ANN LIMBERG: So would you give our audience a brief overview of the methodology that you and your team at the Lilly's School used in conducting the study this year, it's important.
UNA OSILI: Well, 2020 was, as all of us know, an unprecedented year, and although in the past we've conducted and published the study every two years when our team sat down together, it was clear that all of us, to all of us that waiting a year and focusing on 2020 rather than 2019, was the right thing to do. Additionally it allowed us to ask whether and how people change their philanthropic engagement during the first year of the pandemic. And I do believe that the very rich results that we obtained from this year's study, confirmed the sound nature of that decision. Regarding methodology, the Indiana University and Bank of America Teams collaborated in developing the questionnaire during the latter half of 2020 and fielded the survey to 1626 affluent households January of 2021 The timing of the study was intentional and important as it reflects new data related to giving during the pandemic, presidential election season and also carried a focus on racial equity and justice. In addition to a sustained focus on the motivations and strategies of these high-capacity donors.
ANN LIMBERG: And Una, how do define affluent for the purposes of the study?
UNA OSILI: Ann, to qualify for this study, a household must have either a net worth of at least one million dollars, excluding the value of their primary residence, or an annual household income of at least 200,000 dollars This is just the threshold for entry. The median net worth of the participants in the study was actually higher at two million dollars and the median annual income was 350,000 dollars. While the average net worth and annual income were higher still, with net worth in excess of 30 million dollars and incomes over 500,000 dollars. So taken as a whole we can think about this population as being in the top five percent of households nationwide in terms of net worth and annual income.
ANN LIMBERG: Terrific, thanks very much Una and I think that's very helpful. One more point on the study, I mentioned that this year we dug more deeply into different constituencies and Dianne, could you expand more on that?
DIANNE BAILEY: Thanks so much Ann and let me first say how excited I am personally with results we are about to share. As you mentioned, in this year's study we continued to dig more deeply into the philanthropic practices not just of the survey group as a whole but also the different constituencies within it by gender, and ethnic identification, sexual, orientation and also age. This information is nuanced and so powerful. And also as Una has already mentioned, and our viewers may know, we devoted an entire section of the questionnaire to philanthropy specifically in response to the pandemic and earlier this year we shared those COVID-related findings. Now there is a digital article on the Bank of America website that describes the generosity of affluent households during the worst of this period. The focus was on local communities. In particular it was extraordinary that 90 percent gave to their neighbors during this period. We will include a link to that article as a follow-up to today’s conversation.
ANN LIMBERG: Terrific, thanks very much Dianne and Una. Now that we have set the stage let’s turn to the study's findings and talk about the causes that affluent households support and how much they give. Bill I know that we saw some very encouraging areas of strong continuity and consistency in individuals philanthropic practice, I'd like you to give an overview of these trends and then Dianne, I’ll ask you to talk about some of the areas where we saw departures from past practices again, in an encouraging direction. So Bill, if you would, lead us off, tell us about philanthropy in 2020. How much did affluent households give to charity on average?
BILL JARVIS: Ann you used the word encouraging and I can only agree. Despite the economic collapse and the social upheaval caused by the COVID-19 pandemic, affluent households remained very generous in their support of charitable organizations. With 88 percent giving to charity consistent with the 90 percent rate we saw in 2017 and perhaps more significantly Ann, the average annual amount given, increased substantially by 48 percent from just over 29,000 dollars in 2017, to just over 43,000 dollars in 2020.
ANN LIMBERG: Bill, I think that is both remarkable and wonderful Can you give us some insight into the types of charities that affluent donors supported?
BILL JARVIS: Sure Ann, the top three causes supported by donors and both in terms of the incidence of giving and the dollar amounts donated were actually the same in both 2017and in 2020. First of all basic needs that was given to individual supported basic needs charities at a rate of 57 percent and was it was 20 percent of the dollars given, second was religious organizations and incidence of 47 percent, and 32 percent of the dollars and then finally education which includes both K to 12 and higher education and incidence of 36 percent for those combined and 16 percent of the dollars. So to me Ann, this stability testified to two things First the strategic nature of affluent households philanthropy in that it doesn't jump around from year to year, and second it confirms the philanthropists are focused on causes that remain of importance to society.
ANN LIMBERG: Thank you Bill, so Dianne I'll turn to you. 2020 was such an extraordinary year. Not just because of the COVID-19 pandemic but also because it saw such increased awareness of racial injustice. How has that awareness reflected in affluent households philanthropy?
DIANNE BAILEY: Ann, nearly a quarter of our respondents gave to organizations supporting social justice and racial justice causes in 2020 And that data also shows us that this topic is moving more to the forefront of people's consciousness. 19 percent, one in five households, said they want to become more knowledgeable about how their charitable giving can advance racial equity and social justice goals and 11% selected social justice as one of their top three most important causes or issue areas. So this is definitely an area where philanthropy is evolving to meet the urgency of our times.
ANN LIMBERG: You know Dianne, that makes so much sense as we think about and reflect on the range of organizations that donors support to achieve these goals. Everything from long-established and respected institutions like historically black colleges and universities to some very small community-based nonprofits and I think we also see it the way donors are giving, you know, focusing on unrestricted and often transformational gifts. And that really leads to another area where we saw some changes and I wonder if you would describe for us the increase in the use of impact investing by affluent households?
DIANNE BAILEY: This is one of the most interesting pieces of data from the study this year. The percentage of households reporting that they made at least one impact investment it nearly doubled from 7 percent in 2017 to 13 percent in 2020 and this trend is more pronounced among younger donors. Those under 38, so Millennials and Gen Z, 17 percent of this group, said that they have made an impact investment. And even more prevalent still, was among Hispanic and Latino households at 22 percent. African-American affluent households had 31 percent having made an impact investment. So Ann, the direction here is very compelling. And the factor between a fifth and third of some of these groups are actively involved in impact investing. It should cause nonprofits to think more strategically about how to engage these leaders. All nonprofits seeking contributions to their endowments must be prepared to answer a question. What is your organization doing around impact investing Are you aligning in your investments with your mission? Donors increasingly, they’re pulling multiple levers for social change. And they are doing that personally and they also expect nonprofits to keep the pace with their innovation.
ANN LIMBERG: Thanks Dianne and to you as well Bill. You know, as we know, giving is one side of philanthropic behavior but the other very important side is volunteering and I'd like to turn now, Una to you, could you shine a light for us on some of the trends that we see in that area?
UNA OSILI: Ann, the volunteering data are for me, among the most intriguing in this study because this usually involves some kind of human interaction. And it's challenging to do most types of volunteering virtually. We found that during the pandemic year of 2020 affluent households, not only donated – as Dianne and Bill just described. But they also continue to volunteer with non-profits, with 30% reporting that they engaged in volunteering. Now, while this is down from 48% in 2017 it is still remarkable when we consider the restrictions of lockdowns and social distancing. And demonstrates a connection between these households and the charities they support that goes beyond simply writing a check. And importantly households that volunteered in 2020 reported average giving amounts that were more than twice as high as those who did not. It is also important to remember, Ann, that although 70% of affluent individuals volunteer on their own, nearly 30% indicated that they volunteered with their family. And about one in five volunteered with an organized group. So volunteering is frequently a group activity.
ANN LIMBERG: Thanks, Una. And I would emphasize, I think this group volunteering exercise is really important, because volunteering so often is the gateway to giving. And it can be the start of building up a philanthropic mindset that extends across many generations. Bill, let me turn now to you. And perhaps you can give us an overview of donor's motivations this year. Both for giving and volunteering.
BILL JARVIS: Well, Ann, we know that affluent donors give for a variety of reasons. So for 72% of donors, their choice of which charities to support is driven by their personal values. And the primary reason they give which was cited by a clear majority. Fifty-eight percent of respondents, is that they believe in the mission of the organization. Now in addition to that nearly half of donors give when they believe their gift can make a difference. And nearly a third give for personal satisfaction, enjoyment or fulfillment. So the key message for a non-profit is to be sure that it communicates its mission to potential donors. There's sometimes a tendency, Ann, for the non-profit to focus on its own need for funds. But donors look at things from the point of view of their own values and belief in the non-profit's mission when considering, which organizations to support. And in this context issues-based philanthropy is becoming increasingly important. The affluent are nearly as likely to base their giving decisions on issues, that is to say, 44% of respondents, as they are on organizations, 45% of respondents. So it's essentially even. This, Ann, is a departure from previous studies in this series, in which clear majorities of affluent households indicated that organizations drove their giving decisions and strategies. And among donors ages 38 and younger, 55% say that they're more focused on the issues or causes they consider important, than on organizations just 34%.
ANN LIMBERG: And what about the motivations for volunteering, Bill?
BILL JARVIS: Now here, Ann, in contrast to what I just said about giving the non-profit's need is in fact, what motivates volunteers. So in terms of giving their time two thirds of affluent volunteers are highly motivated to respond to the organization's needs and over 60% by the belief that their service makes a difference. Other important considerations include, as with donating, personal values or beliefs. That's about 60%. Concern for a particular cause or group. About 49%. And concern for the less fortunate. About 43%. So from the point of view of a non-profit, effectively communicating the need for people to assist with these various types of volunteering tasks, is very important.
ANN LIMBERG: So where do donors look for this kind of information so they're better informed about philanthropic opportunities out there?
BILL JARVIS: Ann, donors do try to find information from a variety of sources to help them assess the impact of their giving. Of the 79% of affluent donors who do monitor the impact of their giving, the most common source of information is the organization itself to which the donators contribute at about 82% look to that. Another important source of information regarding the impact of one's giving is the donors own perceptions or observations of impact, 48% look to that. Or through direct engagement, about a quarter with the organizations they support. And again, this highlights the importance of volunteers. And when we asked respondents to rate themselves on their own level of philanthropic knowledge. We asked them to say were they novices or knowledgeable, or experts. Those three categories. Although, only 5% said they were experts, these self-defined experts had higher levels of giving, more strategic approach to their philanthropy and a budget for their giving. They were also much more likely to monitor their gifts to see whether they had the impact that they intended. Seventy percent said they did that. They were more likely to feel that their gifts were indeed having the intended impact. Eighty-eight percent said that. And they were more likely to have or plan to establish a giving vehicle. Seventy-two percent responded to that. So, Ann, an educated donor is likely to give more and to be more engaged. And this again shows the importance of communication between a non-profit and its donors.
ANN LIMBERG: Thanks, Bill. Dianne, I'll turn back to you. Another significant difference in this year’s study related to the use of giving vehicles. Can you tell us more about that?
DIANNE BAILEY: Certainly, Ann. First, let's set the context here. We know that most charitable gifts, 79% come from cash or other current liquid assets. Only 21% come from other sources. And yet, this pattern of giving is the inverse of how wealth is held in the United States. And it represents a tremendous opportunity for philanthropists to think more expansively about assets they might leverage to support charitable causes. And so the other important trend that you referenced is the increased use of giving vehicles. In 2020, more than one in three study respondents either, currently had or planned to have at least one giving vehicle. For example 17% of households said that they currently have a will with a specific charitable provision. That's a substantial increase from the last study. Also, importantly 7% use a donor advised fund. That's nearly a 75% increase from the last study. Qualified charitable distributions from an IRA. It was a new question this year. It was the second most sighted vehicle at 8% of the respondents. The use of these vehicles is also correlated with net worth. Nearly 60% of households with assets over five million dollars use one or more of these vehicles.
ANN LIMBERG: And that makes so much sense, Dianne. I mean when you think about the benefit of these tools, donor advice fund is a great example. I mean it's flexible, it's simple, it's turnkey. And it makes so much sense both for the emerging philanthropist as well as it does for the far more experienced donor. And with that we're also seeing new platforms and different media for making gifts too, aren't we?
DIANNE BAILEY: That's right. There's a wide range of ways to give via digital means. And this year for the first time we measured the use of these tools by affluent households. Of course, as you would expect, the most frequently used digital means of giving was the non-profit's own website. Fifty-seven percent of donors had used the website to make a gift. But if you look in other digital giving tools, 18% made a gift via a crowdfunding tool. Seventeen percent used payment processing apps. And social media fundraising tools were used by 13% of donors. And although it's a small number 4% said they had used Text to give to make a donation. My point in all of this is that these tools represent money in motion for non-profits. And these are trends that require attention of non-profit staff and even boards. Convenience is key. By investing in seamless online donation platforms and processes, savvy non-profits will erase digital barriers to generosity.
ANN LIMBERG: Yeah, I couldn't agree more Dianne. As Una reflected and you've just mentioned. Last year brought changes across the board for donors but it also importantly brought changes for those organizations they support with their time and their dollars. And so, Una, that brings me back to maybe one last major finding in this year's study. We saw a change related to affluent donors’ confidence in organizations, in businesses and individuals to really solve societal issues What did our research have to say about it?
UNA OSILI: Ann, in each study we've asked the respondents to tell us about their level of confidence in various societal institutions. In government, in individuals, in non-profit organizations. In 2020, confidence was very high in the ability of non-profits and individuals to solve these issues, with the greatest proportion, nearly nine in ten placing their confidence in non-profits. Affluent individuals were also significantly more confident in the ability of small to medium-sized businesses state or local governments the president of the United States, the supreme court and congress to solve societal or global problems, compared with their confidence levels in 2017. The message here it seems is one of optimism for this sector. But it also carries with it a responsibility to continue to earn that confidence.
ANN LIMBERG: Una, this is why today's conversation and our joint research is so critical. We're at a time when the trust that society places in non-profit organizations and the responsibility that we have to society remains very high. And I couldn't think of a better note on which to conclude our conversation today. For our viewers this message of resiliency and generosity and optimism tempered with an ongoing responsibility to the philanthropic sector seems just right. And as we wrap up today, I want to thank our panelists and all of their colleagues who helped to create this study. To all of you, a huge thank you and well done. And to our audience we at Bank of America are available to you as donors and as institutions in understanding how these findings apply to you and how they can help you. Please don't hesitate to reach out to any of us or your advisors, to learn more. As always, thank you for all you do and for joining us today.
