A Report on the Giving of the Ultra-Wealthy
What small nonprofits need to learn from how the wealthy give
Earlier this week, Forbes staff writer Phoebe Liu took a look at the publication’s list of the 400 richest people in the world and investigated on their giving habits. You can read her piece here on the Forbes website. While the information might be interesting to know, there are some lessons that leaders of smaller nonprofits can glean from this list.
America's wealthiest individuals have long been known for their philanthropic endeavors, with billions of dollars donated to various causes, including disease research, education, and climate initiatives. In 2023, Forbes conducted research to assess the generosity of the super-rich and found that, collectively, the members of the Forbes 400 list had donated less than 6% of their combined net worth to charity.
The Forbes 400 Philanthropy Scores
Forbes assigned philanthropy scores to each member of the 2023 Forbes 400 list based on their known charitable giving. The scores ranged from 1 to 5, with 1 indicating that an individual had given less than 1% of their wealth to charity and 5 representing those who had given away 20% or more of their wealth. The breakdown of scores reveals some notable trends:
Minimal Giving: The majority of billionaires, two-thirds, scored either a 1 or 2, meaning they had donated less than 5% of their fortune to charity.
Slight Improvement: While the trend of minimal giving remains consistent with previous years, the 2023 data shows that more billionaires gave away at least 1% of their net worth compared to the previous year.
Top Philanthropists: Only eleven billionaires on the list had achieved a perfect score of 5, indicating that they had given away 20% or more of their wealth. This group includes well-known names such as Warren Buffett, Bill and Melinda French Gates, and MacKenzie Scott.
The Giving Pledge: Seventy members of the Forbes 400 list pledged to give away more than half of their wealth upon their death. However, George Soros is the only individual who has achieved this milestone so far.
Notable Individuals: George Soros emerges as the most generous philanthropist among the Forbes 400, having donated more than $19 billion over four-plus decades primarily through the Open Society Foundations. MacKenzie Scott is also making significant strides in philanthropy by distributing nearly $15 billion in grants since her divorce from Jeff Bezos.
Warren Buffett's Leadership: In terms of total giving, Warren Buffett stands out as the most generous individual in the U.S., with an estimated $55 billion in donations, primarily directed to the Bill & Melinda Gates Foundation.
Implications for Small Nonprofits
The philanthropic landscape among America's wealthiest individuals has several implications for small nonprofits:
Limited Share of Billionaires' Wealth: The fact that most billionaires on the Forbes 400 list have given away less than 5% of their wealth implies that small nonprofits should not rely solely on large donations from the super-rich. These organizations should diversify their funding sources, tapping into a broader donor base, including individual donors, grants, and corporate partnerships.
Growing Generosity: The increase in the number of billionaires who have given at least 1% of their net worth suggests a growing awareness of philanthropy among the wealthy. Small nonprofits should seize this opportunity by actively engaging with potential donors, emphasizing the impact of their work, and fostering relationships with those who are increasingly willing to give.
Philanthropic Leadership: Small nonprofits can look to philanthropic leaders like George Soros, Warren Buffett, and MacKenzie Scott for inspiration and potential support. While these billionaires may not be the primary source of funding for small nonprofits, their philanthropic priorities and values can align with certain causes and create opportunities for collaboration.
Diverse Giving Strategies: Small nonprofits should be flexible and adaptable in their approach to fundraising. MacKenzie Scott's approach of distributing small, unrestricted grants to local charities demonstrates the importance of simplicity and trust in grantmaking. Nonprofits should consider designing grant applications and processes that resonate with potential donors.
Awareness and Advocacy: The Forbes report highlights the significant influence of wealthy individuals in philanthropy. Small nonprofits can use this information to advocate for increased awareness of their causes and encourage the super-rich to allocate a larger portion of their wealth to charitable endeavors.
Building Partnerships: Given the limited resources available to small nonprofits, strategic partnerships with larger philanthropic organizations and foundations become essential. These partnerships can provide access to a broader pool of potential donors and increase the impact of the nonprofit's work.
Transparency and Reporting: In an era of increased scrutiny of philanthropic giving, small nonprofits should prioritize transparency in their financial reporting and impact assessment. MacKenzie Scott's approach of launching a website to detail her giving demonstrates the importance of transparency in building trust with donors.
The Forbes 400 list provides valuable insights into the philanthropic behavior of America's wealthiest individuals. While the majority of billionaires have given a relatively small percentage of their wealth to charity, there are signs of growing generosity and awareness among this group. Small nonprofits should not rely solely on large donations from the super-rich but instead focus on diversifying their funding sources, building partnerships, and leveraging the trends in philanthropy to advance their missions. As the philanthropic landscape evolves, nonprofits should adapt their strategies to effectively engage with donors and create lasting impact in their respective fields.
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