As the rich get richer across the globe, high net worth clients in North America have tightened their grip on their wallets, according to Merrill Lynch’s World Wealth Report.
Before the economy took a plunge, the U.S. was donating more than $200 billion annually to charities around the globe. “This is a continent where charitable giving is part of the culture,” said Ileana van der Linde, a principal in the wealth management practice for Capgemini Financial Services, the company that partnered with Merrill Lynch for the study. “But there has been a 3% reduction since the crisis,” she said in a phone interview.
However, the report said that high-net-worth investors in Europe, Asia Pacific, Latin America and the Middle East took the opposite track. They increased donations in 2009, up from 2008.
“Countries in Asia [have] suffered less than in the U.S. and wealthy investors there don’t feel as poor,” said Sophie Schmitt, a senior analyst for Aite group in a phone interview. “Wealthy individuals would like their money going as far as possible.”
Still, philanthropy requires a business-minded strategy in order to maximize the benefit. “Donors want to be sure they approach philanthropy as making an investment and not giving a gift,” said Gillian Howell, national head of private philanthropy for Bank of America Merrill Lynch.
Linde added: “Taxes were one of the reasons why people gave charitably around the world, but it’s not the predominant reason but its part of the equation.”
The study, based on surveys accumulated from over 1,100 high-net-worth investors, found that more than 80% of wealthy individuals primarily gave to charity because they feel socially responsible. Tax benefits and social networking were of lesser interests, the report states.