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Wealthy young Americans’ approach to Philanthropy mirrors the ultra-wealthy, says SEI Survey


New data released today by SEI (NASDAQ: SEIC) indicates that when it comes to philanthropy, the youngest high-net-worth Americans share habits and attitudes with the wealthiest individuals and families in the country. 

The report, Algorithms of Wealth: Community, showcases that wealthy Americans who are under the age of 40, as well as those who have assets of USD10 million or more, are outliers in their commitment to philanthropy, including the amount they give, the desired impact of their donations, their methods of giving, and their giving values.

"Philanthropy at any level is generous. It also happens to be a priority for the majority of wealthy Americans," says Michael Farrell, Managing Director of SEI Private Wealth Management. "However, those under the age of 40 and those with the highest assets tend to give the most. Despite this being central to many wealthy families' values, donating money also creates questions and anxiety. Is the donation making a difference? What impact does my check make on the charity's beneficiaries? Without specific goals for giving, donations may not meet an individual's expectations."

Philanthropic giving is generally universal among wealthy Americans. The average survey respondent allocated roughly 13 per cent of their wealth to causes each year. The youngest respondents, those under 40, however, gave away more than twice the average (27 per cent). In this instance, young high-net-worth respondents are even more aggressive in their giving than ultra-high-net-worth respondents. Those with more than USD10 million in assets donated roughly 21 per cent of their wealth each year. When it comes to bigger picture considerations about the impact of wealth, the youngest and wealthiest respondents ranked philanthropy higher than their peers. While running out of money, or "going back," was the item most respondents (59 per cent) referenced as the biggest anxiety-inducer, roughly a quarter of young respondents and nearly one-third of ultra-wealthy respondents identified "making the right impact with giving" as the leading source of anxiety related to their wealth. By comparison, only 21 per cent of total respondents felt the same way.

Specifically within giving, however, results varied regarding what elements of philanthropy caused the greatest stress for wealthy Americans. While nearly half of all respondents (48 per cent) said nothing about their donations keeping them awake at night, young respondents and those with more than USD10 million in assets again contrasted with the majority. Specifically, only 28 per cent of ultra-high-net-worth respondents and 26 per cent of those under 40 claimed that philanthropic giving did keep them awake at night. The top concern for both groups was that their donations had been wasted. The ​Algorithms of Wealth: Community survey also revealed that more than any other age group, those under 40 cared the most about the social impact of their philanthropic giving. Thirty-nine per cent of these respondents considered social impact to be the preferred measure of results followed by family impact and financial impact. Similarly, 37 per cent of the wealthiest respondents considered social impact to be the preferred measure of results followed by family impact and then financial impact. Interestingly, the largest per centage (11 per cent) of those who preferred to measure results through political impact were the youngest respondents, while only four per cent of those over the age of 40 viewed political impact to be most important.

While many respondents had preferred methods for measuring the impact of their donations, 41 per cent of respondents over the age of 60 and 37 per cent of those with fewer than USD10 million in assets did not measure the results of their giving at all.

"The level of engagement in giving among the youngest and wealthiest respondents can also be tied back to giving strategy," says Jeff Ladouceur, Director of SEI Private Wealth Management. "Results were consistent with what we experience with SEI Private Wealth Management clients in that the more an individual plans their giving, the more likely they are to measure its impact and be satisfied with their approach to philanthropy."

Among various methods of giving, respondents under the age of 40 and those with more than USD10 million in assets were much less likely than their peers to give checkbook donations, which are one-time or impulse donations. The youngest and wealthiest only allocated 29 and 33 per cent of their giving to checkbook donations, respectively. By contrast, the average respondent allocated 44 per cent of donations to this method of giving. The two groups were also more likely than their peers in age and assets to allocate giving through gifts to family, lump-sum donations and donor-advised funds.

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