January 8, 2002

Citigroup Private Bank -US Marketing

Prepared by:
Peg Dwan, VP, (212-559-7612)
 

Objective

To better understand HNW charitable giving needs and interests, so that CPB Philanthropic Advisement Service may better serve clients.

Information to be gathered includes --
• Factors that impact charitable giving
• % of income contributed, form of donation, distribution by type of charity, # of causes supported
• Motivation for giving, selection criteria, evaluation of gift
• Involvement of family in giving
• Non-financial support
• Demographics

Methodology

• A one-page questionnaire was included in the November issue of "citigroup PB".  This issue focused on Philanthropy

• Approximately 5,800 magazines were mailed to HNW clients and wealthy partners on November 16, 2001.  Additional surveys were distributed at a HNW event in Charlottesville in October.

• A postage paid return envelope was provided with the questionnaire; the clients were also given the option of returning their questionnaires by fax.

• A preliminary report for Charlottesville responses was provided 11/19/01.  This final report aggregates all responses.  Differences at wealth level above and below $25MM are noted.

• A response rate of 1.9% (112 responses) was achieved on the mail portion of the study; 23 were received from Charlottesville, for a total of 135.  64 clients were <$25MM in net worth; 55 were above and 11 were unknown.
 

Findings

• Among the respondents ($3MM+ net worth), increase in wealth had most significant influence on giving; events of September 11 caused only 44% (31% of $25MM+) to increase or change focus of their giving; the economy has some influence, but is a determining factor for only 7%; and a change in tax law would not impact giving for more than half.

• More than 60% of respondents donate over 5% of their income and support 5+ charities; top two charities are education (27%) and religion (20%).  Cash and stock are the most mentioned type of donation.

• Many respondents are committed, focused donors driven by personal reward; personal values (76%) and personal interest/ passion (67%) are the determining factors in identifying causes.

• Personal involvement is key to choosing funding opportunities (78%); and the charity's relationship to community (62%) and reputation (54%) are the main selection criteria; respondents do not evaluate the charity as a business/investment opportunity, but they do evaluate the impact of their gift.

• Almost two thirds of respondents involve family in giving; one third have a family foundation (74% of $25MM+); and three quarters prefer to disclose their name when donating.

• The majority of respondents volunteer time to charitable causes (77%); most devote 2+ hours a week; the most frequent activities noted were giving time (47%), serving on boards (38%) and consulting (33%).

• Three quarters of the respondents were male; the average age was 63; and 46% had total net worth of $25MM+.

Conclusion

An enormous amount of money is contributed to charity by individuals, a total of $152B in 2000.  According to the IRS, the 2% of tax returns with $200M+ adjusted gross income donated $42B to charity in 1999; and 1998 Federal Reserve information suggests that % of income represented by contributions increased with net worth.

Charity is a very personal matter, even among the very wealthy.  They are committed, focused donors; personal reward is the most important motivation for giving; personal values and personal interest the top two considerations in determining the cause and personal involvement the primary factor in choosing funding opportunities.

Wealth Most Significant Influence on Giving

• Over the last 10 years, 86% of respondents had increased their charitable giving; of those who provided a reason, 79% cited increase in wealth or earnings.
• The events of September 11 impacted giving for only 44% of respondents in total; 50% for those with net worth under $25MM and only 31% for those over $25MM.
• 68% noted that the economy had some influence; only 7% that it was a determining factor.
• Giving would not change due to the new estate tax laws for 59% of respondents; 32% were unsure.


 

Many HNW donate a significant portion of income and support many charities

• More than 60% of respondents (76% for $25MM+ net worth) typically donate over 5% of their income.
• Cash or a combination of cash and stocks are the most often mentioned type of donation.
• More than 60% support 10+ charities; 42% of the $25MM+ support 20+ charities.
• The top two types of charities supported are education (26%) and religion (19%); 33% of the $25MM+ contribution goes to education vs. 20% for the <$25MM.

Many clients are committed, focused donors driven by personal reward

• 54% describe themselves as "committed, focused" donors, 23% of these as "leaders"
• More than half are motivated by personal reward and a third each by life experience or obligation, which they explain to mean to "give back to society".
• Personal values and personal interest are the determining factors in identifying charities
• A mix of local, national and international charities are selected for giving; $25MM+ are more likely to give to international charities (35% vs. 19% for <$25MM)

Personal involvement is key to choosing funding opportunities

• The top 2 factors in choosing funding opportunities were personal involvement and research.
• Specific charities are chosen for relationship to the community and reputation
• Most clients do not evaluate the charity as a business or investment opportunity, but most do evaluate the impact of their gift.

Most involve family in giving; one third have a family foundation

• Almost two thirds involve their family in giving; spouse and children are most often cited family members
• About half have a foundation; 35% have a family foundation.  For those with $25MM+, 80% have a private foundation; 74% family foundation.
• Most prefer to disclose their name when giving; there is no difference by wealth level.

The majority of respondents volunteer time to charitable causes

• More than three quarters of the respondents provide non-financial support to charitable organizations
• Most contribute two or more hours per week, with 18% giving over 10 hours
• Activities include volunteering time, board membership, consulting and mentoring.

The respondents were primarily male, somewhat older and just under half had $25MM.

• Three quarters were male; only 40% of the Charlottesville respondents were male.
• Two thirds of the respondents were over 55; mean age of 63; those with $25MM+ were slightly younger, 61 vs. 65 mean age; Charlottesville respondents were younger, mean age 53.
• Fewer than half of the respondents had total net worth of $25MM+; unlike Charlottesville respondents, 75% of which had $25MM+ and 35% had $100MM+

Appendix A:  Size, Source and Destination of Charitable Contributions

• In 2000, more than $200B was contributed to charity, 75% of it by individuals.  (Source:  Giving USA)
• About half the funds went to religion and education, similar to CPB survey, although reverse proportions.
• According to the IRS, itemized income tax deductions for charity totaled $120B in 1999 ($42B from individuals with $200M adjusted gross income).  Giving USA estimated an additional $24B from individuals not itemizing deductions.

Appendix B:  Charitable Donations by Wealth Level
The higher the level of wealth, the larger the contributions.  27% of HHs with $100MM net worth gave $500M or more in 1998;  almost 15% of their mean income.  The $50-100MM wealth level gave 10% of their mean income.

Source:  Federal Reserve 1998 Survey of Consumer Finances