We will be flying blind until we invest in better data on high net worth philanthropy
Philanthropy advice services to support high net worth donors have seen growth and increasing sophistication over the last two decades. Surprisingly this has not been matched by growth in the data on the high net worth giving market. Recent research has revealed that existing data on the scale and scope of HNW philanthropy in the UK is patchy and fragmented. New findings suggest that total giving by the HNW/ UHNW population could be worth around £7.76 billion or much more[i], an amount largely missing from current estimates of UK giving. With a data gap of this scale, UK advisors and policy-makers are flying blind, and much-needed growth and development in major philanthropy is being held back.
High expectations of growth
Yet there are plenty of indicators of considerable growth potential in HNW philanthropy in the UK.
Giving has all the characteristics of a ‘luxury’ good - people spend more on it as they get richer. So, with the global luxury goods market estimated at €1.5 trillion in 2023, showing an 8-10% annual growth (and predicted to keep on growing)[ii], we could certainly expect to see a parallel sizeable increase in HNW giving. However, currently we have no standard approach to measuring whether, or how far, HNW giving in the UK might be following these wider HNW consumption trends.
We also know little about how growing wealth impacts on giving. Most UK and other surveys focus on giving in relation to income, or proxies like use of income tax reliefs. The results of the new research revealed a 91% participation rate in giving by people with wealth of >£1 million, and importantly that the more wealth people have, the more they tend to give. In spite of the limits to the wealth data available to the research, its analysis showed a moderately strong positive relationship between investable wealth and giving. This is significant evidence that many HNW and UHNW individuals make their giving decisions on the basis of their wealth, and that an individual’s asset base provides the financial security which prompts the decision and capacity to give larger amounts. It takes us beyond intuition and anecdote, and shows how income is a weak indicator of giving potential in the HNW market.
Costs of poor market information
However without more detailed metrics on the relationship between wealth and giving, and especially on the effect of changes in wealth, fundraising strategy and giving policy-making can only make limited progress. At a global level it has been estimated that the ultra-wealthy gave a total of $175 billion to philanthropic causes in 2020.[iii] Over half of this figure (52%) is attributed singly to the US, which holds just 40% of the wealth. But this apparent giving dominance of the US may well result from its more comprehensive giving data, which are substantially based on tax returns. Another issue is that this global estimate is based on existing country surveys, and in-country definitions of giving, its inclusions and exclusions, are not standardised. So, for example, giving to non-profit hospitals, universities and religious organisations is included in US tax-based giving statistics, but is barely covered in UK giving surveys which principally focus on giving to charities registered with the UK Charity Commission, excluding a swathe of institutions exempt from such registration such as higher education and major arts/ culture organisations in the UK, as well as organisations registered overseas.
Yet there is strong evidence of major UK giving in all these areas which we are not capturing. Philanthropy advisors and wealth managers have daily experience of it. More obvious are the high-profile multi-million pound donations reported in the media or the Sunday Times Giving List, as well as acknowledgements in the beneficiary institutions’ own publications, press releases, websites, or public donor listings. More formal sources include, for example, the DCMS figure of £413 million donated to the 15 DCMS-sponsored museums and galleries and the CASE-Ross Support of Higher Education survey which states that 'large gifts continued to contribute significantly to the sector’s success. Amongst 79 institutions that provided the data, 219 donors made gifts or pledges of £500k or more during 2019-2020.’ Total philanthropy to UK and Irish universities was assessed at just over £1 billion. Giving to faith-based and religious organisations for primarily religious and missionary purposes is also largely excluded from UK giving surveys.
High returns on investment in better market data
While it is not possible to identify the HNW and UHNW contributions from these figures, they are an important pointer to the levels and destinations of major giving in the UK. Individual philanthropy advisers and wealth managers will know their own client bases, but it is clear that overall data on the shape of the HNW and UHNW market and its key trends are largely missing. Such poor market information is rarely tolerated in successful commercial business areas. The UK needs much better giving research, and the immediate need is for a new dedicated survey of HNW donors in the UK designed specifically to fill in key data gaps. Primarily this would aim at a more accurate assessment and acknowledgement of total market size and trends.
It is not hard to imagine the many other insights such a survey could provide. It could enable valuable regional, or even country, comparisons. It could yield crucial insights into HNW giving behaviours. The patterns which characterise high-volume low-value giving in the general population cannot simply be extrapolated to this very different group of donors, who are likely to be influenced directly by factors such as wealth advice, business and professional interests, and global financial trends. It could, for example, explore causes and institutions supported by HNW; numbers of charities supported and gifts made; trans-national and international giving; use of giving vehicles including legacies; impact of the tax system; and vitally the effect of changes in personal circumstances on decision-making. The essential key features for a new HNW giving survey approach would be:
- the inclusion of data on donor wealth, as well as income
- boosting data on hard-to-access UHNWs, to ensure a final estimate which includes all giving
- a sufficiently large sample of wealthy people to cover the wealth spectrum comprehensively
- asking donors themselves directly about their giving amounts and behaviours.
Assessing the actual and potential value of the philanthropic contribution of the UK’s wealthiest people to our public good deserves much greater attention and investment. This is particularly important given the distinctive characteristics of HNW philanthropy, and the specialised professional fundraising and wealth advisory approaches which are growing up around it. We cannot aim and more and better giving without knowing what we currently have. We cannot call for regulatory changes, tax incentives, strategic investment or match funds, if we cannot pinpoint the size of the potential prize. Fundraising organisations need the data to help them win it, and to make a clear business case for investment in their capacity to work with major and HNW donors. Last but not least, the data gap around giving by the most wealthy people in society leaves the door open for media narratives that focus on evidence of a deficit, claiming the rich are not pulling their weight. Without more accurate data, these claims cannot be challenged and put at risk the greater generosity and motivation to give which we would like to inspire.
[i] Scoping the High Net Worth Philanthropy Market (2023), Cathy Pharoah, Cath Dovey, Tom McKenzie and Vivek Thaker. https://www.beaconcollaborative.org.uk/scoping-the-high-net-worth-philan...
[iii] Wealth-X. Ultra High Net Worth Philanthropy 2022