Survey analyses giving trends by the wealthy

A recent UK survey involving in-depth interviews with 44 wealthy people (defined as earning £200k or more a year) found that they want an element of control over the timing and destination of their donations. This led many to make donations through charitable trusts or Charities Aid Foundation (CAF). Some also gave more easily to local or small charities where they could exercise more control, often sitting on the board.

The overall aim of the survey was to understand the giving behaviour of wealthy people, to assess their views on tax-efficient methods of donating and identify barriers to giving. The study, commissioned by HM Revenue & Customs, confirmed a number of the findings of Philanthropy UK's research published in Why Rich People Give.

The group broke down into five broad categories - large committed donors, large ad hoc donors, small committed givers, infrequent donors and non-donors. Large committed donors tended to be landowners or self-made business people who made planned but not necessarily regular donations of up to £250,000 per year. They usually did this using CAF or personal charitable trusts. They were also often involved in charities by being a trustee.

Large ad hoc donors responded to requests from "familiar" charities - usually giving one-off payments of around £15,000-20,000 a year. Small committed givers made more regular payments of between £100 and £2,000 each year. This group tended to have more financial commitments, such as dependents or a mortgage. They also earned less than £500,000 a year.

Infrequent donors were also less likely to earn more than £500,000 and more likely to give through sponsorship or door-to-door collections. Non-donors either preferred not to give out of principle or had lapsed into not giving.

The research identified a reluctance to donate among the less committed givers because they felt they already gave enough through taxation. One solution was emphasising the role of tax incentives. In general these were viewed very positively. Simplicity and convenience were key factors in their take-up, with Gift Aid and Payroll Giving the most popular methods.

However, there was little awareness of tax incentives for giving shares, securities, land or buildings to charities. Often participants had accountants or tax advisers who handled their affairs so were one step removed from knowledge about tax incentives. None of the participants had used Self-Assessment giving. Some were motivated by tax relief. The research suggests that a shift in focus to encourage company tax relief would be successful.

Overall, the research found that wealthy participants were more focused on giving by cheque or direct debit than has been found in previous research among the general population, who prefer to give by cash.

Generally, donations tended to be a small proportion of income. Participants were reluctant to specify an amount or proportion that people should give to charity.
Motivating factors include personal affiliation to a charity, faith or upbringing, perceived worthiness of the cause, satisfying a social conscience or offering a sense of wellbeing to the donor.

Barriers included concern about administrative costs, issues surrounding financial scandals and personal financial commitments. Other recommendations from the survey included more publicity about the simplicity of payroll giving and promoting tax reliefs as a single recognisable package.

The research, Charitable Giving by Wealthy People, was carried out by Ipsos MORI for HM Revenue & Customs.

www.hmrc.gov.uk/research/report29-giving-by-wealthy.pdf