Many ultra-wealthy individuals and families—who each hold $500 million or more in assets—say they want to achieve more with their philanthropy. In the United States alone, more than 140 billionaires have signed the Buffett-Gates Giving Pledge, committing to give half of their wealth to philanthropy during their lifetimes or upon their death.
Despite such aspirations, ultra-wealthy American families donated just 1.2 percent of their assets to charity in 2017, which falls considerably short of average, long-term investment returns on assets. Compare 1.2 percent to the S&P 500’s 20-year average annual return of 9 percent. The clear-eyed math shows that if an ultra-high net worth family wanted to spend down half its wealth in a 20-year timeframe, the family would need to donate more than 11 percent of its assets per year—a nearly ten-fold increase over its current level of giving.
The gap between the very wealthy’s current giving and their full potential to give has implications for us all. At its best, private philanthropy, in partnership with innovative nonprofits and resident-led movements, has helped secure major social advances, such as eliminating age-old infectious diseases and securing important civil rights for repressed populations. At the same time, the social problems we haven’t solved will continue to grow. We have arrived at a decisive moment. The ultra-wealthy, having amassed resources of unprecedented magnitude, have the capacity to support innovative initiatives that could benefit millions.
Against that backdrop, The Bridgespan Group’s research team, with support from the Bill & Melinda Gates Foundation, set out to spotlight barriers that impede giving to social-change efforts. The team then identified pathways that could conceivably double ultra-wealthy giving to benefit society from $45 billion to $90 billion per year. The team interviewed more than 60 ultra-wealthy families, their advisors and staff, and experts in the field, and paired insights gleaned from those interviews with lessons from behavioral science and the experiences of community leaders and fundraisers.
Having identified the barriers, we set about conceiving a compelling “future state” for ultra-wealthy giving. We sought to meld an analysis of what exists today and what has (and has not) worked in the past, while surfacing ideas that would help donors with their quest to put more money toward potent social change.
Our assessment identified four significant pathways (there are certainly others) to greater giving to social-change causes, by which we mean causes like human/social services, the environment, and international development. These pathways—individually and collectively—could represent meaningful progress to the audacious goal of doubling giving from this population and unlock billions of dollars to drive social change. However, we also realize that philanthropy is personal, and deeply enmeshed with family, legacy, and values. A core challenge—creating solutions at scale for donors who are accustomed to bespoke approaches—should not be underestimated. Scaling strategies that assume all donors behave alike will likely fail.
- Aggregated funds become a common asset class for ultra-wealthy philanthropists
- A high-impact way for philanthropists to bet big on improving economic mobility
- Philanthropists have access to high-quality services that support their giving
- Philanthropists have consistent access to those qualified grantees that are able to put their big bets to effective use
Read the full article about pathways to greater giving at The Bridgespan Group.