Differences In Giving Among Ultra High Net Worth (UHNW) Donor Groups by Wealth-X
Key Findings
- The Wealth-X and Arton Capital Major Giving Index rose to an all time high in 2014, up 25% since 2004 and up 6.4% year-over-year.
- Global UHNW philanthropic giving totaled US$112 billion in 2014.
- Global UHNW giving per capita was $530,100 in 2014.
- The typical UHNW philanthropist donates $28.7 million in his or her lifetime.
- 65% of UHNW individuals donate over $1 million throughout their lifetimes.
- Emerging forms of philanthropy, such as venture and impact philanthropy make up 7% of UHNW philanthropy giving, or $7.8 billion.
- Based on lifetime giving, India has the most generous donors, followed by the United Kingdom and Hong Kong.
- Based on lifetime giving as a percentage of net worth, the United Kingdom has the most generous donors, followed by the United States and Hong Kong.
- Education remains the most popular cause that UHNW individuals donate to, followed by health.
- 73.2% of UHNW philanthropists are self-made.
- Approximately 4.3 million registered Syrians are currently displaced as refugees. Including all people displaced by war, the number of estimated refugees worldwide is nearly 60 million.
- Providing food, shelter, education, and a stipend for 4.3 million refugees will cost an estimated $60.2 billion.
- 7,441, or 1 in 28 UHNW individuals gave a total of US$2.7 billion to the refugee crisis.
- The average gift size is US$357,500.
- With 211,275 UHNW individuals worth US$29.7 trillion globally and 5,975 UHNWIs worth US$995 billion in the Middle East North Africa (MENA) region, UHNWIs have the opportunity to help close the financing gap. If each UHNWI contributed US$815,100, or just 2.8% of their lifetime giving, all registered Syrian refugees could be accommodated.
Differences In Giving Among Ultra High Net Worth (UHNW) Donor Groups – Introduction
Philanthropic giving remains a leading concern for the world’s UHNW population. In last year’s report, we tracked two trends that have impacted UHNW giving: the rise of giving metrics and the growth in global wealth inequality. Giving metrics have grown in both popularity and power, fuelling a continuing revolution in giving that has led to a greater focus on finding ways to measure success.
While inequality remains an important concern for UHNW donors, the key issue that has captured the public imagination over the past year is the global refugee crisis, particularly the stream of refugees seeking entrance into Europe to escape fighting in Syria and other parts of the Middle East and North Africa.
Global Overview
In the 2015 Wealth-X and Arton Capital Philanthropy Report, we examine the state of global UHNW philanthropy and survey the population of UHNW donors. We then focus on the European refugee crisis that has shaped so many lives over the past year and how UHNW donors are contributing to this cause.
The overall outlook for UHNW giving remains strong. In 2014, the Wealth-X and Arton Capital Major Giving Index continued its upward climb, and has now risen 25% since 2005 and up 6.4% year-on-year. The index tracks trends in UHNW charitable giving, taking into account the size of gifts from UHNW individuals and the number of gifts these individuals made on a yearly basis.
Especially in Western nations, the significance of such giving from the very wealthy has never been stronger – as illustrated at the high end of the income tiers by the continued success of the Giving Pledge.
First publicised in 2010 by Bill Gates and Warren Buffett, the pledge encourages billionaires to give away over half their fortunes to philanthropic causes during their lifetime. Over the past year several new UHNW individuals have signed the Giving Pledge. As of November 2015 the total number of signatories was 138, or 5.9% of the billionaire population.
The Refugee Crisis Overview
Over the past year, the European refugee crisis has garnered worldwide attention. During the past four years, more than four million people have left Syria, driven away by intense fighting. Most of these refugees have fled to Europe, looking for political and economic stability. These Syrian refugees join a growing stream of migrant workers coming from across the Middle East and North Africa and entering Europe through Greece and Turkey, fleeing war and economic destitution and seeking peace and a new life.
The size of the crisis has never been greater. According to the United Nations High Commission on Refugees (UNHCR), there were 59.5 million refugees worldwide in 2014, the largest number since World War II.
While many relief agencies have been providing assistance, there are still millions waiting on the provision of basic food and shelter. The crisis has also raised a significant discussion among Western nations about how best to create structures, such as the Global Citizen Tax Initiative, to deal with such massive human displacement, and how to ensure that such tragedies do not occur again.
As profiled in the report, UHNW individuals have become more involved in this crisis – in rescue and relief efforts, as well as fundraising and advocacy. Wealth-X estimates that 1 in 28 UHNW individuals have donated to refugee efforts, totaling US$2.7 billion. Their involvement has been an important catalyst in broader efforts to resolve the crisis, and throughout this report we point the spotlight at key agencies and individuals who are addressing the refugee crisis with both their time and resources.
The Spectrum Of Philanthropy
UHNW individuals are engaged in a wide variety of philanthropic endeavours. Typically the first step into philanthropy, a majority of all giving still takes the form of direct donations to specific charitable causes.
Donors who give frequently often set up their own private foundations, managed privately by family members or a board of trustees. These foundations may be dedicated to a specific cause. They may also be set to give out all funds over a set period of time, or charted to exist in perpetuity.
Many donors today are looking to invest in ways that match their experience in business life, and have begun to seek out sustainable and scalable models for addressing key problems. Thus, two significant developments have shaped philanthropy over the past decade: the development of new tools, such as venture philanthropy, impact investing, and microfinance for achieving philanthropic goals, and the rise of return on mission metrics to measure the success of particular ventures in achieving these goals. Wealth-X estimates that these emerging forms of philanthropy make up 7% of UHNW philanthropy giving, or US$7.8 billion. Venture efforts in philanthropy, impact investing and micro finance are among the ways that philanthropists have begun to bring the beneficiaries of philanthropic donations into the process of improving the local quality of life.
The Breakthrough Energy Coalition (BEC) is an example of UHNW philanthropists putting their money to good use through impact investing and venture philanthropy. Bill Gates, cofounder of the Bill & Melinda Gates Foundation and Microsoft, launched the BEC, and he is partnering with UHNW donors Jeff Bezos, Richard Branson, Jack Ma, Masayoshi Son, George Soros, Tom Steyer, Meg Whitman, Mark Zuckerberg, and over a dozen other influential donors and investors to allocate billions to the fund.
The objective of the fund—in addition to lowering the cost of renewable energy and carbon dioxide emissions, and bringing energy to the one billion people in the world who are living without electricity—is earning a return on its investment. By focusing on measurable results, both in the form of social benefits and financial returns, the BEC incentivises clean energy companies to accomplish what hasn’t been done before —unseating the fossil fuel industry through technological advances. Gates noted, “Progress towards a sustainable energy system is too slow, and the current system doesn’t encourage the kind of innovation that will get us there faster.” Gates and his cohort of UHNW donors are applying the same business acumen and standards towards the BEC as they do in their professional endeavours. This is what return on mission philanthropy is all about.
Wealth-X estimates that over half of all UHNW individuals are major donors, giving over US$1 million over their lifetime. These gifts are captured in the Wealth-X and Arton Capital Major Giving Index, which rose again in 2014 though at a slightly slower pace than in previous years, up 6.4% year-on-year. At a level of 234, the index has risen each year since the global recession and is now at an all time high, surpassing the prior mark of 232 set in 2006.
Although there is some concern about a decline in giving over the year ahead due to a slowdown in global economic growth, philanthropic giving is, barring a severe contraction, unlikely to see a significant decline as it did during the global financial crisis. Using data on both participation (number of gifts) and capacity (value of gifts), the Wealth-X and Arton Capital Major Giving Index provides insights into typical UHNW philanthropic engagement over the last decade. Despite a decrease in major giving during the global financial crisis, participation levels from UHNW individuals hardly decreased. The increase in the Major Giving Index through 2013 was primarily due to the size of gifts reverting back to normalized levels. In 2014, after two years of over 70% compounded annual growth, we saw the index growth moderate to reflect the economic slowdown.
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