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Impact Investing Donors Nearly Doubled in 3 Years

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The number of affluent households where donors participated in impact investing nearly doubled compared with 2017, with minorities and younger individuals more likely to participate.

The 2021 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households is the eighth in the series of biennial studies researched and written by the Indiana University Lilly Family School of Philanthropy in partnership with Bank of America. The survey, conducted in January 2021, reflects charitable giving in 2020 and is based on a nationally representative random sample of 1,626 households.

Participation in sustainable/impact investing among affluent donors nearly doubled since the last survey, up from 7% in 2017 to 13% in 2020. The study cites socially responsible investing, mission-related investing and social impact bonds as examples of impact investing.

Nearly six in 10 (59%) donors said that their impact investing was in addition to their existing charitable giving, while the percentage of affluent donors who indicated that their impact investing was in lieu of all other charitable giving decreased from 9% in 2017 to 5% in 2020.

There were notable differences within demographic subgroups, with LGBTQ+ individuals, Blacks, Latinos and younger individuals all more likely to participate in sustainable/impact investing:

  • LGBTQ+ individuals (29%) compared with non-LGBTQ+ individuals (12%);
  • Black individuals (31%) and Latino individuals (22%) were at least twice as likely to participate than White individuals (11%); and,
  • Younger individuals (17%) were more likely to participate in impact investing and become more knowledgeable (27%) than older individuals (12% and 14%, respectively).

A larger percentage of affluent donors used giving vehicles to make charitable contributions, with interest in giving vehicles being led by younger donors and a racially/ethnically diverse group of donors actively using giving vehicles. Giving vehicles could be such things as a will with charitable provisions, qualified charitable distributions from an IRA, or a planned giving instrument. Affluent households have many choices about how to make charitable gifts now and for the future. 

In 2020, 17% of affluent households had a will with a specific charitable provision compared with 13% in 2017. The difference was less significant with other vehicles, such as a planned giving instrument, 7% compared with 5% in 2017, and a donor-advised fund (DAF), 7% compared with 5% in 2017.

The study’s investigators sought information regarding qualified charitable distributions from an individual retirement account (IRA). This method of giving surfaced as the second most popular giving vehicle, with 8% of affluent donors giving via the qualified charitable distribution. Nearly six in 10 households (59%) with a total net worth between $5 million and $20 million currently use or expect to use a giving vehicle in the future.

For the first time since the study’s inception, the 2021 study investigated how affluent households use digital tools and platforms for their giving. More than half of affluent donors (57%) gave through the nonprofit’s website.

Digital tools, such as crowdfunding and payment processing apps attracted nearly one in five affluent donors, 18% and 17%, respectively. Some donors (13%) used social media fundraising tools. Affluent donors (7%) also used online donor-advised fund recommendations for their giving in 2020.

The study includes in-depth analysis based on age, gender, race and sexual identity. Households in the study have a net worth of $1 million or more (excluding the value of their primary home) and/or an annual household income of $200,000 or more. Average income and wealth levels of the participants in the study exceeded these threshold levels; the average income and wealth levels of study respondents were approximately $523,472 and $31.1 million, respectively, with median income and wealth levels of $350,000 and $2 million, respectively. Respondents’ average age was 52.5 years.

To access the 2021 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households, visit https://philanthropy.iupui.edu/news-events/news.html