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Surge in global philanthropy

Fundraising | Becky Slack | 1 Jul 2007

The world's wealthiest people may be spending millions on cars, boats and aeroplanes but they still give a staggering $285bn to philanthropic causes.

For the first time, the World Wealth Report 2007, a survey of the world's super-rich by consultants Merrill Lynch and Capgemini, included a section on global philanthropy. It found that 17 per cent of the world's ultra-rich - those with assets of at least US$30m (£15m) - contributed over 10 per cent of their wealth to philanthropic causes.

In comparison, the not-quite-so-rich were less charitable with 11 per cent of high-net worth individuals (HNWIs) - those worth at least US$1m (£500,000) - giving over 7 per cent of their wealth to philanthropic giving.

Britain is one of the top locations for the world's wealthy and is home to 16.4 per cent of Europe's super-rich. It has the fourth largest number of high-net worth individuals, behind only the US, Germany and Japan, with 485,000 now living here, a growth of 8.1 per cent in 2005.

The report found that the total wealth of the world's rich increased in 2006 by 11.4 per cent to $37.2 trillion. While north America accounted for $11.3 trillion of this, Europe's rich contributed $10.1 trillion.

Despite this, European philanthropy among HNWIs still fell short of the generosity of north Americans, who gave away 7.6 per cent of their portfolios, up 20 per cent from 2005. In comparison, Europeans allocated 4.6 per cent of their wealth to charitable donations, falling behind both Asia-Pacific (11.8 per cent) and the Middle East (7.7 per cent).

The report suggested the surge in global giving has been prompted by a desire to give back to society, with two-thirds of philanthropists in Europe citing a sense of social responsibility as the primary reason they gave money to charity.

It found that a new generation of high-net worth entrepreneurs were looking at philanthropy in a more businesslike way in order to maximise the impact of their donations. "HNW philanthropists are leveraging tactics that are quite similar to those utilised and proven successful in their business ventures and personal investing," said the report. "This is resulting in a growing trend toward strategic 'investment-like' giving aimed at maximising societal return on investment."

Musa Okwonga, associate director for communications at the Institute for Philanthropy, said the difference in giving rates between Europe and the United States was partially down to "there being a lot of desire to give but a lack of the current mechanisms to do so". He cited the example of a wealthy American donor who recently bemoaned the difficulty he found giving a million-dollar gift to charity in the UK, compared with the relative ease in the US.

Okwonga said the best advice for charities wanting to attract these super-rich donors was to be patient and transparent. "The more honest you are about what you want and the more you withstand mission drift just because you want a big donation, the better placed you will be to build long and lasting relationships with new donors."

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