Affluent Software

[Luisa Rodocker]

Visualizewith us: coffers overflowing, a cash flow more than adequate, assets that are fluid, an elderly duck in a top hat diving into a pool of gold coins. The images conjured reflect the essence of the word affluent. Based on the Latin verb fluere, meaning "to flow," affluent is all about flow. (The same image is echoed in other fluere descendants, such as confluence, fluctuate, fluid, influence, mellifluous, and superfluous.) The flowing of goods or riches wasn't the word's first concern, however; 16th century print examples of affluent tend to be about the abundance of such intangibles as "goodness" and "spirit." In the 17th century, the flow suggested by affluent varied greatly: streams, poisons, estates, and blood were all described with the word. In modern use, affluent most often describes wealthy people (or ducks), or places where wealthy people live.

Methodology

The 2023 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households is the latest in a series of studies that have set the benchmark for research on the giving practices of affluent households in the United States.

All results presented in this report rely on data obtained from an original survey developed by the Indiana University Lilly Family School of Philanthropy (School) in partnership with Bank of America and fielded by Ipsos Public Affairs on behalf of the School. The survey was conducted on KnowledgePanel, the largest online panel in the United States that relies on probability-based sampling methods for recruitment to provide a representative sampling frame for adults in the U.S. All data were collected between January 19, 2023, and February 13, 2023, and reflect giving activity during the 2022 calendar year.

Affluent households make up a large proportion of all charitable giving in the United States; understanding the priorities and motivations that underlie and shape affluent philanthropic engagement is key to understanding philanthropy overall.

Guided by their values and beliefs, affluent households continue to lead in charitable giving, with 85% giving to charity in 2022. More than half of affluent households in America (54%) say their giving is very linked to the issues they care most about.

But with seemingly countless nonprofits and causes to choose from, how do affluent donors decide what to support? Nearly seven in 10 affluent donors said their personal values or beliefs led them to support specific nonprofits, and six in 10 indicated their interest in an issue area led them to give.

A graph showing the breakdown of what lead affluent donors to give to certain causes or organizations over others. 69.5% said personal values or beliefs; 60.5% said an interest in the issue area; 51.8% said a recognizable or reputable nonprofit; 48.5% said a perceived need of the organization or issue area; 48.4% said themselves or someone they know benefiting from the organization; 21% said association with another institute; 19.8% said nonprofit report rankings; 11.8% said a compelling pitch; 9.2% said endorsement or pressure from their social circle; and 2% said affinity group discussions.

In addition to giving, affluent volunteers spent an average of 135 hours volunteering with an average of two different organizations in 2022. The top three activities performed by affluent volunteers were: volunteering for a religious organization or ushering; collecting and/or distributing food, clothing or other basic need items; and serving on a board for a charitable organization.

There are many reasons for and benefits of volunteer work, including personal fulfillment. When asked how personally fulfilling affluent individuals found their volunteering to be, 62% said this form of charitable activity was very or completely fulfilling.

A graphic showing the levels of personal fulfillment that affluent individuals felt performing philanthropic activities in the past. 2.9% did not feel fulfilled, 4.5% felt not very fulfilled, 30.7% felt somewhat fulfilled, 47.6% felt very fulfilled, and 14.3% felt completely fulfilled.

Beyond making financial gifts and volunteering, many affluent households create positive change, take action and express their values using various tools as both consumers and investors. Most affluent Americans (79%) say they sometimes or always align their purchasing decisions with their values. Twenty-two percent of affluent individuals indicated they had a charitable giving vehicle they use to make charitable gifts, and 54% of affluent households with a net worth between $5 million and $20 million have or plan to establish a giving vehicle within the next three years.

Our study found that affluent women are driving positive change through their economic influence and strategic philanthropy. Eightly-five percent of affluent household charitable giving decisions were made or influenced by a woman, and significantly more women (42%) than men (33%) spent time volunteering in 2022.

In looking to the future, we found that next generation individuals (Millennials and Gen Z, born in or after 1981) were significantly more likely to indicate they sometimes or always align their purchasing decisions with their values compared to older individuals (those born before 1981). When asked about what causes/issues mattered most to them, younger individuals were significantly more likely to say climate change and education are more important to them, compared to older Americans.

A graph showing the most important causes or issues by age. 4.7% of older individuals found aging important, compared to 0.8% of younger individuals. 12.6% of older individuals found climate change important, compared to 25.7% of younger individuals. 8.5% of older individuals chose disaster relief, compared to 4.9% of younger individuals. 20.7% of older individuals chose education, compared to 28.0% of younger individuals. 19.4% of older individuals chose health care, compared to 13.7% of younger individuals. 24.4% of older individuals chose religious life, compared to 15.9% of younger individuals. And 12.8% of older individuals chose veterans' affairs, compared to 3.4% of younger individuals.

Not only do younger and older Americans rank causes/issues differently, their giving to charitable subsectors also differs. The top three causes/issue were areas where younger and older affluent American give at significantly different rates were:

A graph comparing the causes/issues that older versus younger individuals give to. 54.0% of older individuals and 41.3% of younger individuals give to basic needs. 27.5% of older individuals and 14.7% of younger individuals give to arts/culture. 42.8% of older individuals and 29.2% of younger individuals give to religious/spiritual service.

Despite the economic uncertainty of 2022, the generosity of affluent Americans remains, and it is clear that philanthropy among affluent households is a reflection of their personal hopes, beliefs and values. They choose to support their communities and its members through giving and volunteering, with the goal of driving positive change now and for future generations.

This publication is designed to provide general information about ideas and strategies. It is for discussion purposes only since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Always consult with your independent attorney, tax advisor, investment manager and insurance agent for the final recommendations and before changing or implementing any financial, tax, or estate planning strategy.

Donor-advised fund and private foundation management are provided by Bank of America Private Bank, a division of Bank of America N.A., Member FDIC and a wholly owned subsidiary of Bank of America Corporation.

Investing involves risk. There is always the potential of losing money when you invest in securities. Past performance does not guarantee future results. Asset allocation, rebalancing and diversification do not guarantee against risk in broadly declining markets.

Neither Bank of America Private Bank nor any of its affiliates or advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

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For over half a century, worldwide growth in affluence has continuously increased resource use and pollutant emissions far more rapidly than these have been reduced through better technology. The affluent citizens of the world are responsible for most environmental impacts and are central to any future prospect of retreating to safer environmental conditions. We summarise the evidence and present possible solution approaches. Any transition towards sustainability can only be effective if far-reaching lifestyle changes complement technological advancements. However, existing societies, economies and cultures incite consumption expansion and the structural imperative for growth in competitive market economies inhibits necessary societal change.

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