Around the world, most wealthy entrepreneurs have lost at least a quarter of their fortunes in the past 12 months. But they haven’t lost their appetite for philanthropy.
A detailed study of the giving habits of the rich, commissioned by Barclays Wealth and completed by British research firm Ledbury Research, suggests charitable donations are holding up surprisingly well despite the global economic downturn.
The survey of 500 high-net worth individuals and 20 philanthropy experts in the UK and US was conducted in May. The survey found 75% of respondents said they would not decrease their level of giving because of the downturn, while 26% actually plan to increase donations in the coming year. In total, high-net worth individuals have cut back their donations by 2.2% in the past 12 months.
One particularly insightful question looked at what the rich would cut back on as the downturn hit their wealth. Luxury goods and staff ranked top of the list, ahead of eating out and holidays and travel. Charitable giving and education fees are the last two things the rich will give up.
The Australian experience seems to be pretty similar to this, anecdotally at least. Yesterday I had a quick chat with Gina Anderson, the chief executive of Philanthropy Australia, who said most charitable organisations are holding up reasonably well.
“The global financial crisis has had a big affect on corporates, but giving by individuals is holding up quite well at this stage,” she says.
“There will be some individuals who will cut back their funding substantially because of this crisis, but there are many others who will increase their giving in the next 12 months.”
However, those wealthy individuals with foundations are having to trim their spending a bit. The dramatic drop in dividend payments and investment returns means their income is down. While they will continue to meet with obligation to long-term projects (those running over three to five years) their ability to make one-off donations will be reduced.
There had been fears Victorian Bushfire Appeal, which received cash donations of more than $330 million, may have sucked up a lot of donations for 2009, but Anderson says these fears have proved unfounded.
“We saw after the Asian tsunami in 2005 that a whole lot of people gave for the first time and continued to give,” Anderson says.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
