Two new surveys of American highfliers show worrying signs

Millionaire US householders increased their giving by 20% last year according to research by the Northern Trust.

However, the researchers found that giving is expected to be lower this year because of uncertainty regarding estate tax laws and family care obligations. 27% said they plan to increase their charitable donations in 2007, compared with 44% the year before.

There was also a noticeable decline in enthusiasm for giving between 2005 and 2006. Fewer millionaires now make charitable donations part of their household budget (59% in 2006 compared with 70% in 2005). Fewer HNW households view donations as an important tax reduction strategy (28% in 2006 as opposed to 44% in 2005), and there has been a decline in the importance they place on donating during their lifetime versus giving from their estate (60% agreed it was important in 2005, but only 43% agreed in 2006).

The largest increase this year was among the 'deca-millionaires', those with over $10 million liquid assets to invest, where donations increased by an average of more than 50%.

Deca-millionaires make much more frequent use of all types of giving vehicles than other wealth segments. Deca-millionaires are roughly three-to-four times more likely to use private foundations (25% vs. 9%), charitable gift annuities (18% vs. 5%), donor-advised funds (16% vs. 5%) and charitable lead trusts (12% vs. 3%).

The survey, Wealth in America 2007, asked 1002 HNW households about their attitudes to philanthropy, investment and beliefs about wealth and personal success. It found that the so-called GenX millionaires (aged 27 to 41) tend to be more generous than their older counterparts. 26% of GenX gave in excess of $20,000 last year compared to 15% of Baby Boomers (aged 42 to 60) and 12% of older millionaires.

The survey also found that less than half of those surveyed (41%) consider themselves knowledgeable about various vehicles for giving, such as charitable remainder trusts, private foundations, or donor advised funds.

http://northerntrust.com

Strong emphasis on wills and academia

Meanwhile, another recent survey of some of America's wealthiest individuals found that the most common philanthropic activity is a charitable bequest through a will. 42% have made this commitment, whilst 27% have set up a charitable trust or family foundation. Charitable gift annuities and donor-advised funds are used by one in five HNW individuals.

The U.S. Trust Survey of Affluent Americans prepared for the US Trust Company interviewed people with an 'investable' net worth greater than $5 million, not including primary residence. It also included a sub-sample of ultra-HNW individuals with total assets of $25 million or more.

Only 33% cited tax considerations as a motivation for giving. 68% said they would give to an academic institution and 66% to a health-related organisation in their will. Meanwhile, only 36% said they would consider leaving money to a charity related to public issues, such as the environment or politics.

A high level of trust in the leadership of a charity was a key motivator. Others said they were more likely to give if they have access to increased information on the performance of the charity.

The study also looked at their views on the economy, investment behaviour, wealth management, philanthropy and intergenerational wealth issues. www.ustrust.com/pdf/SurveyXXVI_Report.pdf