High net worth individuals in the US donate more and more efficiently than philanthropists in Europe, Asia and the Middle East, according to new research by Forbes Insight and BNP Paribas Wealth Management which analysed the charitable giving of more than 400 philanthropists.
Philanthropists gave a smaller percentage of their income to charity in 2013 compared to the year before, the report says. However, they gave away more money in absolute terms as their wealth has grown.
Americans ranked highest with a total score of 53.2 out of 100. They were followed by Europeans at 46.3, Asians at 42.4 and those from the Middle East at 29.4. Presenting the report in London, Kasia Moreno, editorial director of Forbes Insight, said that it was ‘remarkable’ that Europe and Asia scored so close to the US, considering that the two regions offer fewer tax incentives to donors and think that it’s the government that should address issues such as health and education.
The efforts of the philanthropists, each with a net worth of at least $5 million, were measured according to three criteria in the report, the Individual Philanthropy Index: the percentage of annual income they donate, the impact of their initiatives and the effort put into publicising their causes.
American philanthropists scored better than the others in every category, showing that philanthropy is more established in the US than elsewhere in the world. Europe tended to rank second, followed by Asia and the Middle East. The only exception to this was the innovation category, where Asia was second, followed by the Middle East and Europe. This was probably due to the fact that many wealth creators in Asia and the Middle East have been starting to set up their own philanthropic foundations in recent years.
In the US, initiatives such as the Giving Pledge – a campaign launched by billionaires Bill Gates and Warren Buffett to encourage the wealthy to leave half of their fortunes to charitable causes – have contributed to make philanthropy something HNWs like to promote.
The report suggested that philanthropists in the Middle East were penalised by a lower promotion score: because giving is such a big part of the region’s culture and religions, HNW donors are more modest about it and don’t feel the need to promote their causes. (Pious modesty may play a role too.)
According to 79 per cent of the philanthropists, the need for giving was urgent or extremely urgent. Interestingly, Americans and those from the Middle East reckoned that their own countries were more in need of philanthropic programmes than the rest of the world. The survey suggested this was because the US had one of the highest levels of income inequality in the developed world but also because some Americans were less focused on world affairs compared to the citizens of other countries. Recent upheavals in the Arab world, on the other hand, pushed Middle Eastern philanthropists to focus on their own region, the study said.
Environmental causes worldwide were described as the most urgent by philanthropists in Europe, Asia and the Middle East, while US donors thought health was the most pressing issue. When it came to local causes, however, health was chosen as the cause that needed the most urgent attention by philanthropists in Europe, Asia and the US, while Middle Easterners donors mentioned education. Perhaps unsurprisingly, European philanthropists were the only ones to mention preserving the cultural national heritage as one of their top three causes.
Italian entrepreneur Diego Della Valle (pictured above) – whose family owns the Tod’s shoe company – is an example of a philanthropist who focused on such causes. He has invested $33 million to renovate the Coliseum and said in the report: ‘In Italy, the culture issue is very important… Besides being an important economic resource, we have the duty to protect this heritage for everyone.’