Women control more U.S. wealth than ever before – 51.3% currently, according to the Federal Reserve, which forecast this figure would surge to two-thirds by 2030. Nearly all industries are looking closely at how women choose to use their wealth and why. The power of women’s wealth is having an impact on everything from how companies sell sneakers to how they design product packaging to where they place digital advertisements.
From our work with families within Private Banking at Brown Brothers Harriman, we know that women are keenly interested in conversations about wealth planning and philanthropy. They are generous-minded in how they plan and in how they think about the potential impact of their wealth – both on their families and in their charitable activities. Research released over the past several years by the Women’s Philanthropy Institute (WPI) at the Indiana University Lilly Family School of Philanthropy has confirmed our experience related to women and philanthropy.
Women Are More Likely to Give
Over the years, research by the Women’s Philanthropy Institute has found that single women, regardless of income level and age, are more likely to give to charity than single men.
For example, a September 2015 WPI whitepaper, “Do Women Give More? Findings from Three Unique Data Sets on Charitable Giving,” included the figures behind single male’s and female’s likelihood of giving, revealing that 50.8% of women respondents would donate to charity and only 40.9% of men. The whitepaper also noted that as women’s incomes rise, their likelihood of making charitable donations is even higher than that of their male counterparts.1
Previous research by WPI has also supported the notion that women spread their giving across more organizations compared with men and that they are more likely to give across almost every charitable subsector.2
Further, the 2014 edition of WPI’s “Women Give” series investigated how religion, gender and age shaped charitable giving habits. Here too, women were more likely than men to give: among religiously unaffiliated Americans, younger single women (under 45 years old) donated about twice the amount to charitable organizations as did young men.3
In its “Women Give 2012” study, WPI examined the charitable giving habits of baby boomer and older consumers in single-headed households specifically. Due to the sheer size of this generational cohort – approximately 76 million strong – it has a significant collective impact on many areas of society, including philanthropy. The research found that, across income levels, “boomer and older women are more likely to give to charity and give more than their male counterparts when other factors affecting giving are taken into consideration.”4
Women Are More Strategic When They Give
Gender appears to affect not only how much an individual gives, but how one approaches charitable giving as well. A May 2015 Women’s Philanthropy Institute whitepaper, “How and Why Women Give: Current and Future Directions for Research on Women’s Philanthropy,” reported that high-net-worth women tend to be more strategic in their charitable giving, with 78.4% creating an annual giving budget, compared with 71.9% of men.5
Many women today are not interested in simply writing an annual check to a pet charity and hoping their gift will do good work; they want their charitable dollars to effect change and have the greatest possible impact. In order to ensure that those charitable dollars will be utilized most effectively, it is critical for donors to understand how an organization will put their contribution to work and how the impact of that work will be quantified.
Navigating the Philanthropic Landscape Across Generations
With so many worthwhile organizations to choose from and so many important causes to support, it is critical that charitable donors be well informed before making gifts. There are more than 1.5 million nonprofit organizations in the U.S., meaning that even if a donor’s charitable focus is narrow, the due diligence involved in effective giving can be significant. First, donors must identify their own charitable goals and mission. Second, they must understand the scale and scope of their chosen cause and the organizations that meet those goals. Only then may donors endeavor to make charitable gifts in an impactful and tax-efficient manner.
Oftentimes during this process, having multiple generations come to the table to share values and make decisions about charitable giving can be transformative for a family and its philanthropy. In a Q3 2015 InvestorView article, “Educating the Next Generation: Because Money Doesn’t Come with Instructions,” BBH’s Chief Investment Strategist Scott Clemons wrote:
Early participation in philanthropic activity teaches the next generation how to give away money wisely, and giving money away requires as much skill as getting it and growing it. How to select worthy recipients, how to make sure that funds are used for the intended purpose, how to obtain accountability from recipients and how to deploy financial wealth as an expression of family values are all aspects of “being good with money.”6
Women’s Philanthropy Institute’s “Women Give 2013” study investigated the effect of early education around philanthropic activity and found that parents discussing charitable donations with their offspring increased the likelihood of children giving to charity by 20%.7
On behalf of our charitable clients, BBH often works closely with strategic philanthropic advisors, donor-advised funds and community foundations. This year, the Boston Foundation, a beloved New England institution, celebrates its centennial year.
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1 Source: Women’s Philanthropy Institute, “Do Women Give More? Findings from Three Unique Data Sets on Charitable Giving,” September 2015.
2 Source: Women’s Philanthropy Institute, “Where Do Men and Women Give? Gender Differences in the Motivations and Purposes for Charitable Giving,” September 2015.
3 Source: Women’s Philanthropy Institute, “Women Give 2014.”
4 Source: Women’s Philanthropy Institute, “Women Give 2012.”
5 Source: Women’s Philanthropy Institute, “How and Why Women Give: Current and Future Directions for Research on Women’s Philanthropy,” May 2015.
6 Refer to the Q3 2015 edition of BBH’s InvestorView for additional details on educating the next generation about the role of philanthropy.
7 Source: Women’s Philanthropy Institute, “Women Give 2013.”