How the super-rich are skimping on charitable gifts

The world of philanthropy is facing a good news/bad news situation. 

On the one hand, the country's biggest donors are giving more money to charities as the economy stabilizes. Last year, the biggest 50 donors gave a massive $7.7 billion in charitable gifts

The bad news? That represents an increase of just 4 percent from 2012, at a time when the mega-rich are witnessing huge gains in their net worths. Total wealth for Forbes' 2013 billionaires' list jumped 17 percent from the previous year, reaching $5.4 trillion. 

While it's commendable that the wealthy are donating more, their proportional lag in giving illustrates the challenges facing nonprofits. While the wealthier are more likely to give to charity than the average American, most middle-income Americans actually donate a bigger percentage of their discretionary income to charities than do the wealthy. 

"Historically the rich have always given a bigger dollar amount, but the percentage of their income isn't usually as high as the middle class or even the moderate income," said Eileen Heisman, the chief executive of the National Philanthropic Trust. "It's wonderful to see Mark Zuckerberg give these monster gifts, but are the high-net-worth where they should be? No."

About 95 percent of high-net-worth households give to charity, when compared with 88 percent of all U.S. households, according to the National Philanthropic Trust, which is one of the country's top grant-making institutions. 

Zuckerberg, the co-founder of Facebook (FB), and his wife, Priscilla Chan, were the leaders of last year's philanthropic gifts from the rich, donating almost $1 billion, according to the Chronicle of Philanthropy. Zuckerberg's net worth has gained $4.2 billion year to date, reaching $28.9 billion as of Feb. 12, according to the Bloomberg Billionaire Index. That means his 2013 donation represents 3.4 percent of his current wealth. 

Americans in the middle class -- with incomes of $50,000 to $75,000 -- give about 7.6 percent of their discretionary income to charity. For those with income above $100,000, the percentage falls to 4.2 percent, according to the Chronicle of Philanthropy. 

At the same time, income inequality in the U.S. is growing. Since 2009, 95 percent of the country's income gains have gone to the top 1 percent of earners. 

Some of the wealthy are concerned about losing their fortunes, which makes some cautious about giving charitable gifts, Heisman said. Another reason the ultra-rich may be lagging is that there's no standard for giving, aside from Warren Buffett's Giving Pledge, which asks the wealthiest to donate at least half their wealth to charity. (Zuckerberg has signed on for the pledge.)

Overall, charitable giving is growing again, after dipping during the recession, Heisman noted. But charities realize the need to appeal to middle-income donors, which often make up the bread-and-butter of their campaigns. 

"Every charity wants the ultra-high-net-worth donor, but they won't give to every charity," Heisman noted. "You have to stay in touch with those more moderate gifts because they are more consistent."

  • Aimee Picchi

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