The extension of the Giving Pledge by signatories beyond the United States in January prompted a renewed interest in the giving habits of wealthy donors. Previously, one of our trustees at the Institute for Philanthropy, Buzz Schmidt, considered whether donors give more effectively by deploying their philanthropic assets within a fixed timeframe, as opposed to maintaining them in perpetuity. The Giving Pledge, with its emphasis on giving away wealth during a philanthropist’s lifetime, seemed to us an opportune moment to revisit this topic.

In compiling our new paper, “Giving Behavior of 22 Wealthy Donors,” we put a series of questions to 22 donors in our own global network (none are signatories of the Giving Pledge). They average an annual philanthropic spend of $2.1 million, from personal wealth or endowments averaging $79 million. Half of them decided to give away up to 25 percent of their wealth to charity. Leading causes supported—both in their own geographies (including the UK, the US, Brazil, Lebanon, Mexico, and Canada) and cross-border—were unsurprising: education, children and youth, community re-generation, and the environment, plus information and communication technology for development.

Four strategic trends among these donors emerged from the report:

  1. None gave money to the arts. Instead, these donors give to social issues they view as more pressing, often ones abroad. One donor said, “I generally believe in addressing the needs of the underserved poor in the neediest parts of the world … not the arts or environmental needs so popular among donors here at home, as much as I love [symphony, opera, and ballet] personally.”
  2. Proactivity and personal engagement beat bureaucracy. Donors expressed the fear that, without the impetus of spending an endowment within an agreed timeframe, foundations are in danger of becoming excessively bureaucratic. One donor remarked, “I strongly believe that philanthropy can be more effective when driven by the wishes and strategy of a living donor. Long-lasting philanthropic institutions can become sclerotic and bureaucratic—not always, but often.”
  3. Empowerment of others through risk-taking. Donors are open to providing seed capital for initiatives, as opposed to waiting for a later, and safer, entry point. Conscious of the multiplier effect, they are keen to support individuals working in non-traditional areas, as well as funding established projects through NGOs.
  4. Partnership and collaboration between stakeholders is essential. One donor made this especially clear: “Partnership: The more that we (civil society, philanthropists, NGOs, and activists) can work together toward a cause, the faster we can move the needle. [There’s a need for] engagement—not only personal engagement, but also moral and legal and financial engagement. [We should] empower the organization so that they do the best they can to move the needle, help the executive team to excel in their strategy and operations so that they can achieve their mission and reach goals they have set with their trustees (and other constituencies).”

Arguably the greatest intergenerational wealth transfer is about to take place. In light of this, nonprofits should feel heartened that philanthropists recognize the need for effective investment now. While the focus remains on efficacy and urgency, our research shows that these donors prioritize engagement at a personal level; they aren’t adopting a purely technical value-for-money approach to impact. The social sector can gain even more if nonprofits take on a greater role in encouraging and helping donors work together.

For more information about our research, click here.