Emergent Philanthropists: America's Evolving Ethnic Donor Groups
Historic philanthropy patterns of America’s affluent donors are giving way to a more complex and disparate population that represents our country’s patchwork communities. The systematic and predictable giving methods by the rich no longer dominate our donor bases. Diverse communities are emerging with new giving patterns and objectives.
Affluent African-Americans, Asian-Americans and those of Hispanic heritage are joining the donor ranks of many organizations. Their concepts of philanthropy encompass giving from all available resources including time, expertise, money and combined efforts. Nonprofit organizations will need to embrace fresh communication styles and adopt flexible stewardship, solicitation and recognition efforts to garner more involvement and support from these emergent philanthropists.
Giving in the U.S.
People living in the United States are more philanthropic than residents of any other country. The stats say it all:
- 80 percent of American households donate annually; with 129 million households in the U.S., that’s more than 100 million making gifts to charitable organizations!
- More than $300 billion was donated in each of the past few years.
- More than eight of every 10 donations are given by individuals versus donations from corporate entities or large private foundations.
- Charitable giving has increased nearly 3 percent on average every year over the past 40 years.
- Average household giving is nearly $3,000 each year.
- For households with annual incomes between $100,000 and $1 million, the average is just less than $5,000, and for households with $1 million or more in annual income, the average household gift jumps to nearly $60,000 each year.
It’s estimated that one in every five households in the U.S. is affluent — defined as having household income around $100,000 or higher.
Traditionally, the affluent have been middle-aged, white, married men whose wealth was inherited or self-made through business ventures. Today, an affluent household is just as likely to be headed by someone younger, more entrepreneurial, a minority, a woman or a combination of these.
Emerging into prominence on the philanthropic scene are three ethnic groups: African-Americans, Asian-heritage and Hispanic-heritage donors. They share the sense of obligation to help others, and much of their giving is linked to family and kinship, therefore more personal and informal. Religion plays a large role in these communities’ traditions of giving as well.
Since this article only begins to touch on the topic of emerging philanthropy from ethnic communities, generalization is necessary. But, by understanding even a cursory introduction to the commonalities and differences of each group, nonprofits can learn about and come to embrace new traditions of giving. Ultimately, we must create flexible, welcoming environments through which these generous donors can connect to accomplish their personal philanthropic goals.
Around 2.5 million African-Americans live in households at the affluent level. Traditionally, wealth has been achieved through family business but recently has expanded to include certified professions, real estate holdings, entrepreneurial ventures, entertainment, media and professional sports. Even though affluent African-Americans donate up to 25 percent more of their discretionary income than Caucasians, few of them consider their giving as “philanthropic.” Helping those in need is simply a general obligation, and gifts of time and talent are sometimes more highly valued than cash donations.
Traditionally, religion, education, social and political organizations reaped the largest benefits of African-American giving. Lately, donations toward AIDS causes and genocide in Africa have been increasing. Patterns of charitable giving are similar to those of the general population, except these generous people often prefer to make donations privately and confidentially.
Communications should be informational and must provide a sense of accomplishment within the community. Because women tend to be the charitable-giving decision makers in many African-American homes, be certain to highlight gifts and involvement by their peers. The assurance of anonymity, if desired, always should be offered. Solicitations and payment choices that allow cumulative giving options mimic savings patterns employed by many African-Americans. Gifts of impact can be accomplished if structured over multiple years.
The affluent Hispanic-heritage community
The number of affluent Hispanic households has more than doubled in the past few decades, and Hispanics' wealth is growing faster than the general public. Today, more than 3.7 million Hispanic households have incomes exceeding $100,000. Family-owned and small businesses account for much of this wealth, as well as inheritance. Nearly seven of every 10 Hispanic households donate to charitable causes. Their gifts go to help the poor. The Catholic Church, education, job training, youth and disaster-related organizations receive a large portion of their giving. Person-to-person assistance is more predominate in this community than any other. Millions of dollars are sent to relatives abroad or given to other family members before charitable contributions are considered. Because gifts are given when needed, extremely informal and unpredictable giving patterns tend to be the norm.
The Hispanic population in the U.S. is young; almost half are under the age of 40. This group tends to be fiscally conservative and has a strong propensity toward savings. As these donors are aging, their giving priorities are diversifying, and community needs, capital projects and some cultural organizations are finding interest among Hispanic donors. These emerging philanthropists rally behind their leaders and tend to support their causes as well.
Consider communications that are bilingual when appropriate. Examples of donors who have made a difference through their modest gifts may prompt others to consider engagement. Because many Hispanics have adopted mainstream investment strategies for their own savings, use language that provides the same sense of resource accumulation at your organization. Allow donors flexibility in the timing and level of their gifts. The concept of regular “annual gifts” has not yet taken root among many donors of Hispanic heritage. Large gift solicitation efforts may need to take on a sense of group giving versus individual giving.
More than 12 million Asian-Americans live in the United States today. They are the largest source of immigrants in the past 20 years. With more than 60 percent of this group foreign-born, giving patterns are heavily tied to traditional ways. The wealthiest of the emerging ethnic communities, Asian-Americans’ average household income is higher than that of all other major racial groups. They are highly educated and have a higher rate of savings than the average household in the U.S. Wealth has been built through small business ventures including personal services, food and lodging. High-tech company startups and professional positions are also dominant in building wealth.
Philanthropy is part of the Asian culture, and these individuals give a higher percentage of their annual incomes to charitable causes than Caucasians. Many send money abroad to help family members or make gifts person to person. At home, informal loan associations are common, often to help others get started in business. Because of the private nature of these gifts, celebrations and recognition for charitable donations are neither common nor expected. This generous group gives money, skill and time to help organizations and efforts that enhance their communities; often they seek involvement in the projects or even leadership positions. In return, they expect a high degree of accountability and demand effective use of their funds. Be certain to show the results of mission funding in your communications before you seek larger or additional gifts.
Direct services, educational organizations and cultural centers receive a large portion of Asian-Americans’ funding. Nursing homes, health organizations, and services for the elderly and youth also fare well. Successive generations of Asian-heritage donors tend to diversify their giving interests even more.
Before soliciting large gifts, be certain to involve your prospect in the formative stages of the project. Consider providing more information about the funding details and results expected. Include information that shows your fiscal effectiveness and long-term plans. Major-gift giving is common among Asian-Americans and may represent a large life event as well. When celebrating these more public gifts, recognition is welcomed and provides community awareness as well as a desire to prompt others to make similar gifts.
The face of America’s philanthropist is changing. Nonprofit leaders who want to engage a fuller representation of their communities must begin to recognize and invite involvement from these emerging philanthropic ethnic groups. It’s well-known that people respond to people who are similar in look, economic status and values to themselves. Take time to assess the makeup of your leadership and staff; determine if your donor base would benefit from greater involvement with these generous donors; review the visual components of your organizational communications to find out if they represent your community’s changing demographics; and above all, be flexible and welcoming in your fundraising efforts. Be the changing force behind your organization’s open invitation to a new group of affluent emerging philanthropists.