International Giving Study Focused on High Net Worth Folk Projects 5% Increase in 2015

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February 26, 2015; Forbes

Forbes reports that a study by BNP Paribas, the huge international bank, suggests that individual philanthropy is expected to grow by five percent in 2015, with current and projected giving in Europe roughly matching America’s. These projections slightly outstrip those made in the IUPUI report covered in NPQ’s feature from Wednesday, “Increases in Charitable Giving Projected, But Where Will That Money Land?” However, the BNP study is a bit limited in its scope; it is based on a survey of approximately 400 individuals of high net worth in Europe, Asia, the Middle East, and the U.S., with investable assets no less than $5 million. This focus on high net worth individuals may confirm some of the concerns stated in the previous article about the landscape of philanthropic givers and receivers.

The small sample is a bit of a concern, given the sweeping conclusions attributed to the study, and the focus on individual grantmakers may or may not apply to other kinds of philanthropy, such as foundation or corporate grantmaking. And the study’s actual finding of the equivalence of giving in Europe and the U.S. is not necessarily based on financial distributions, but on a four-component scale:

  • Current Giving (weighted 30 percent): for the highest score, a donor would have to give 25 percent of income to charity
  • Projected Giving (weighted 20 percent): planning to leave 50 percent of the donor’s fortune to charity
  • Promotion (25 percent): “For a top Promotion score, a philanthropist would also have to promote a charity or cause by using a variety of traditional and social media—such as granting interviews, writing opinion pieces, press releases, advertising, Facebook or Twitter—to advance their cause, as well as building their public reputation around their philanthropy.”
  • Innovation (25 percent): “For a top Innovation score, an individual would have to spend money effectively and employ tools to measure cost effectiveness. Philanthropists would have to assess the impact of their initiatives via both quantitative and qualitative measures and have an exit strategy—from a public/private partnership to self-reliant community organizations, to eradicating the problem, for example—among other criteria.”

In the various categories, the U.S. wins in current and projected giving (a score of 32.5 out of a maximum 50) over Europe (29.6) and Asia (25.5). Both Europe and Asia best the U.S. in promotion (with scores of 8.0 and 6.9 respectively compared to America’s 6.0), and all three are high in innovation, though again, Europe tops with 17.9 compared to America’s 17.2 and Asia’s 17.1.

Explaining the progress that European and Asian donors have made in innovation, the study authors write, “Europe and Asia are much more enthusiastic about exploring new models and developing partnerships, due to sharper economic recoveries and needs.” The Middle East ranked behind the U.S., Europe, and Asia in all categories—due, according to the report, to the religious and cultural structure of charitable giving in those countries.

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Exactly two-thirds of all of the survey respondents said that they thought that advisors were necessary for their giving, but in Europe, it was almost four out of five. Donors in different regions varied as to what kind of advisors: Europeans preferred non-family experts, while Americans said they favored seeking advice and guidance from other family members.

Unsurprisingly, the report suggested donors were attracted to “impact/mission investing,” a broad category in the survey that could mean almost anything. For the bank sponsors of the study, the report described impact investing as prioritizing “social and environmental returns before financial returns…offer[ing] the potential of unleashing a huge base of capital to fund sustainable market solutions.” (Actually, the definition—investing in companies—is not quite a mode of philanthropy.) For promoting their philanthropic giving, four out of ten use social media, with Facebook the most dominant at 83 percent.

While limited in the breadth and reliability of the survey, there are pieces of it, particularly in terms of the donors’ feelings about navigating a wealth of potential recipients and picking among and analyzing potential causes, that are probably of interest to nonprofits here and around the world.—Rick Cohen