uhnws and the anatomy of giving: survey of giving amongst hnw individuals

7/28/2019 UHNWs and the Anatomy of Giving: survey of giving amongst HNW individuals

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Understanding theAnatomy of GivingResearch shows giving is not a tax strategy,but a lie strategy.

seic.com/privatewealth


2/12

The protracted wrangling overdecit reduction and tax codes inWashington in recent years has

raised concerns about the negativeimpact on charitable giving. Wouldthe elimination o tax deductionsact as a disincentive or the wealthy

to give, possibly crippling the non-prot sector?


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Such ears appear unounded, according to recent research rom SEI. Taxes are

not the main driver behind philanthropic giving, at least among the wealthy. Multi-

millionaires share their wealth because its part o who they are. It denes them

as individuals and gives purpose to their wealth. In act, most wealthy individuals

would give even more i they could develop a strategic approach to their

philanthropy and see clear evidence their gits are having the appropriate impact.

t sei c c b wly

l. m 200 l-ll w w ly $11 ll cpl

l y nb 2012. t c p k w wy

wly l wl.

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ty wll p wc cl x , l

w l wl, w y b.

t bl b p l pp p . mly

by pl, ccl ppc pl wll-- y.

ty cl b pl c blc k w l-

y.

The greater the blessing, the greater the

responsibility to give back.Survey respondent


4/12

2

understandingt

heanatomy

ofgiving

Why arent people giving more?ty, wly l cllcly l bll ll c y. illy y

llc 12% wl c lly. nbly, w lkly

- , wl 50 c y.

hw, w q b w c y wl lk llc c, b

jp clly ( 1). t 19% l wl.

W l bck? t c k c.

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l 85% bl k l cc wl.

g l p ly cy. Wl l ll wl wll lwy

b p q w c , pp

l c b . B ly cl , c p

lp lcy ll ply p.

B q : hw c ? hw c p p w

jpz wl? g c , w l bck?

Figure 1: Enormous potential or increased giving

Desired

future allocation

19.1%

Average

allocation now

12.2%

The

UHNW

giving

habit

r llc11.6%

l llc13.6%

ml llc11.3%

50 yllc

13.0%

ep llc11.7%

r llc17.0%

l llc21.2%

ml llc17.8%

50 yllc

20.4%

ep llc18.8%

The graphic to the let shows the average charitable allocations among various subsets o the ultra-high-net-worth market. As you can see, as a

group, they are generous in sharing their wealth. Whats impressive is what these individuals would like to give pending the removal o certain

barriers. The overall size o the allocations increases 63% on average. (Source: Scorpio Partnership and SEI)


5/12

Determining when enough is enougha pl w c b cl . t cc bw

wl, z ppc . a y 2, bc

c w wl z (Cy, d, Plpy, c.).

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By - pcp y by x c. t

c cl x j c c-k pc. a w 25%

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l y c ly wc b p x b

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Figure 2: The nomenclature o giving

More tactical

100m

25m

10m

1m

The UHNW approach to giving More strategic

Personalnetwealth(USD)

Point at which this phrase starts being the

preferred main description for the processof allocating personal wealth to causes

Gifts

Charity

Donations

Philanthropy

Endowing

Research shows that words matter in the language o giving and provide a signal to how the ultra-high-net-worth approach it. Words like charity,

gits, and to a certain extent, donations, connote a more tactical approach. Words like philanthropy and endowing, however, appear to be

more strategic in nature. Its clear that people who approach it more strategically tend to give more. (Source: Scorpio Partnership and SEI)


6/12

4

understandingt

heanatomy

ofgiving

Eliminating the federal middle man

oll, wl ly y pp wly l c x b y p c ( 3), y c cb c ql w

l x cl p. i, l y p

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w q.

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b cly c y pp.

i l cl cplxy x c . s bcl

, wl p by pc. Cqly, pl ,

pcl, wl , c l plpy pc.

Figure 3: The inuence o tax benets on decisions to give

Overall

Male

Under50

50to59

60andover

Female

0%

0%

0%

0%

0%

0%

very important

important

somewhat important

not important

not at all important

Entrepreneur

Employee/Other

Retired

24%

18%

32%

19%

24%

26%

14%

32%

19%

24%

20%

25%

32%

20%

3%

21%

25%

33%

18%

1%

30%

11%

28%

23%

9%

22%

16%

35%

18%

10%

25%

15%

31%

22%

7%

25%

19%

33%

17%

7%

33%

33%

13%

13%

5%

As you can see, only a small

raction o survey respondents

said that tax benets were

very important to their

giving behavior. Overall about

one-third said that tax benets

are somewhat important,

while another third believe it

is not important (or not at all

important). (Source: ScorpioPartnership and SEI)

I dont give solely or tax purposes,but I want to maximize my tax benets andthe tax law is complicated and changing.

Survey respondent


7/12

What drives the urge to give?s x, w pl ? t cll wl l kw

y y k c. J p, y

bl y w ly pc pl ccc ( 4).

t cc ccl. Wly l wll cly cpl

ply wll p w l- wl cy. t c l-pc

l. ty b bl wl c l .

Figure 4: The drivers o giving

% of respondents

0% 10% 20% 30% 40% 50%

I had more confidence. I had enough for myown lifestyle and to impact my family.

If the market improves my financial situation

If I found something I could be more passionate about

If I could more clearly see a direct impact

If it helped bring my family closer

If there was a bigger tax benefit

None of the above / I dont know

Other

17%

22%

32%

39%

41%

15%

12%

10%

SEIs research suggests that

even wealthy individuals must

consider their own nancial

circumstances when deciding

how much to give to a cause.

The perormance o the markets

is also a actor. Beyond personalcircumstances and markets,

giving is about being passionate

about a cause and having

condence in the impact o the

git. Bottom line: Instilling

passion in the giver, and allowing

him or her to see the results, will

prompt more giving. (Source:

Scorpio Partnership and SEI)

oc p py , c b wl. rc

ll c c b pp p l c b .

W l l cbl w pl c, y wll lkly c

by c 60% .

Instilling passion in the giver,and allowing him or her to see theresults, will prompt more giving.

Source: Scorpio Partnership and SEI


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6

understandingt

heanatomy

ofgiving

Figure 5: Wealth distribution preerences based on capital adequacy

32.2%

27.0%

10.9%

8.9%

8.3%

5.1%

3.5%

4.1%

UHNW allocationof surplus if

current financialneeds arecertainlysatisfied

33.7%

4.8%

4.2%

4.7%

20.6%

12.6%

11.3%

8.1%

UHNW allocationof surplus if

current financialneeds are

not certainlysatisfied

Family history of giving to an organization

Investing directly into businesses

Buying luxuries

Other

Investing in a portfolio for the future

Donating funds to selected causes

Buying physical assets (houses, cars, etc.)

Investing into your business

Source: Scorpio Partnership, SEI.

Note: responses are based on two

questions: (Let Pie Chart) I youreceived one million dollars today

and could do anything with it,

thinking about your current needs,

how much would you allocate in the

ollowing areas? (Right Pie Chart)

I you received another one million

dollars today and had no immediate

nancial needs, how much would

you allocate in the ollowing areas?

oc pl k q , wly l by w y bl

c k c. sc c wll bly y b l pl

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l- ly lcy , w c, cl-p c l cy.

t c clly w w c w w , jy

wly ppl wll cly k b cy. tpc c wl,

c l pp k.

Top fve areas where UHNWs plan to providefnancial support over the next 12 months:

1. Homelessness

2. Education

3. Society

4. Health

5. Human Rights


9/12

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10/12

8

understandingt

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Taking the broader viewt cl p w w wl ccl

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pp. Wy ppl ll? hw c y p c ppc? hw c

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Its harder than I thought to determinewhat to contribute to. Im learning.

Survey respondent


11/12

Additional notes

* About the sample:

A total o 202 ultra-high-net-worth individuals residing in the USA took part in

the survey. The respondents were drawn rom a range o independent sources.

53% were sel-classied entrepreneurs. The average total nancial assets o the

individual respondents was $10.9 million with, or the vast majority, less than 20%

constituting their residential assets. The average annual income was $421,000 withindividuals worth more than $10 million having an average income $1.1 million per

annum. The sample had an average age o 53 with the largest portion (37%) living

in the Northeast. In terms o gender split, this was consistent with the previous

samples o 63% male.

This sample size is considered relevant in size and response levels or the

community o UHNW investors. The quantity in this latest survey was, in act, the

largest o all our surveys in this series to date. Indeed, overall, this survey program

continues to be among the largest o its kind ever undertaken. This, thereoreprovides a very special window into the belie systems and requirements o an

extremely difcult-to-reach client segment.

SEI Private Wealth Management provides individuals and amilies with an

innovative approach to wealth management. Our approach starts with knowing

our clients. To that end, we have sponsored a series o surveys, peer round-table

discussions and other work, all designed to uncover and share the insight o

wealthy individuals. The Anatomy o Giving Survey was conducted in partnership

with Scorpio Partnership Limited, an independent research rm.

SEI Private Wealth Management is an umbrella name or various lie and wealth services provided through SEI Investments Management

Corporation, a registered investment advisor.


12/12

For more inormation, call 1-888-551-7872 or via email

[email protected] to reach a team member.

To learn more about SEI Private Wealth Management,please visit seic.com/privatewealth

1 vlly d

P.o. Bx 1100

ok, Pa 19456

seic.com/privatewealth

2013 SEI 121598 (03

uhnws and the anatomy of giving: survey of giving amongst hnw individuals

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