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What do Oprah Winfrey, former New York Mayor Michael Bloomberg and Facebook CEO Mark Zuckerberg have in common? They’ve each given upwards of $10 million to a charity of their choice in recent years.

Whether it’s large or small donations, Americans continue to share their wealth with charitable causes, according to a new Ipsos poll commissioned by RBC Wealth Management-U.S. and City National Bank.

Americans gave a record $373.25 billion in 2015, up about 4 percent year-on-year, according Giving USA Foundation’s annual report. Why the increase in charitable giving? Consultants with RBC Wealth Management-U.S. point to heightened interest in charitable giving and larger gifts due, in part, to a healthier economy.

“It’s largely a function of the economy and the perception of where things are headed in regard to the stock market, interest rates and employment,” says Liz Jacovino, a wealth strategist for RBC Wealth Management-U.S.

Charitable giving has been on the rise since dipping during the 2008-09 recession. As the economy has improved, so have several key economic factors, including personal income, which influence giving, according to the Giving USA Foundation.

The survey, conducted in September 2016, found that more than two thirds of Americans have given or plan to give about the same amount of money to charity in 2016 as the previous year. The remaining 32 percent are pretty evenly split between increasing and decreasing their donations.

Giving provides personal fulfillment to many people, who may want to give back to the community, support a cause they’re passionate about, such as literacy, or show gratitude to the hospital that provided palliative care to a loved one. Others seek income and estate tax benefits related to charitable giving.

However, “it’s hard to find someone who will do it just for tax purposes,” said Catherine Walker, senior trust consultant with RBC Wealth Management-US near Wilmington, Del. “Charitable giving is more prevalent with people who have a direct connection to a charity and a need to give back.”

Gifting options

In a typical year, Americans donate an average of $918.80 to charity, the survey found. While most Americans (82 percent) say charitable giving is important to them, only a quarter donate consistently throughout the year. Some 11 percent donate around the holidays and 5 percent donate after they know their tax situation. The remaining three percent don’t donate at all.

The benefits of giving can be maximized when individuals make charitable giving part of a structured program. “If you make a commitment to doing it on a regular basis, you’re more likely to stick to it,” says Jacovino, who adds that charitable giving should be “part of the planning process.”

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Typically, individuals make direct donations – whether in the form of cash, stocks or property. Another popular way to give is through a donor advised fund, which is similar to a family foundation, but simpler. People who transfer assets into a donor advised fund can designate charitable gifts over a period of time based on their philanthropic goals.

Americans also make donations through charitable trusts, gift annuities or pooled-income funds – all of which provide a tax deduction and a partial income stream through retained interest.

Spread the wealth

Most Americans prefer to spread donations across several causes, with more than half (53 percent) giving to three or more charities, according to the survey. Moreover, 19 percent donate to four to five charities, 10 percent give to six to 10 charities, and 4 percent donate to at least 11 charities.

“Many people pick and choose as they go along,” Walker says. For example, “when there’s a natural disaster, you see a lot of people giving to aid groups,” notes Jacovino. 

But the impact can be far greater if an individual focuses on one to two charities. “A larger contribution has a tendency to have a larger impact,” says Jacovino. “And keeping track of many small donations is more cumbersome to the individual donor and the charity.”

The survey found generational differences in the number of causes that donors target. By far, Millennials (born 1980 to 2000) are more likely to donate to one (24 percent) or two (28 percent) charities. Older Americans prefer spreading out their gifts, with 59 percent of Americans age 55+ giving to at least three charities, and 7 percent who give to at least 10 charities.

Millennials tend to be more focused and more thoughtful about their choices, and they have a greater desire to simplify than Baby Boomers (born 1946-64) and Generation X (born 1961-81), observes Jacovino. She sees more Millennials as part of generational financial planning and charitable giving discussions as more families “embrace family wealth as a legacy” and bring their children or grandchildren into the process.

In deciding where their money might do the most good, Americans face a plethora of worthy causes. Nearly 1.6 million U.S. charitable organizations are registered with the Internal Revenue Service.

The single biggest beneficiary of U.S. donations (32 percent), according to the Ipsos survey, are charities that help children. Other leading causes include: religious and social service groups (17 percent each); education (8 percent); the arts and culture, and international aid and development (3 percent each).

For example, about a third of donations made by Jacovino’s clients go to religious organizations and mainly to their church. Sixteen percent goes to education.

“Usually there’s a personal connection” to a cause, says Walker. “People don’t send money to the University of Delaware because they live in Delaware; it’s because they graduated from there.”

Giving differences

The survey found several notable differences in how Americans donate:

  • People with household incomes over $50,000 annually give more ($1,224) than those who earn less ($394).
  • Boomers donate more money ($1,038) than Gen Xers ($1,003) and Millennials ($662).
  • More women (86 percent) than men (77 percent) say charitable giving is important to them than men, but men give more ($1,143) on average than women ($722). While more women donate money, more than twice as many men donate larger amounts (over $4,000).
    There are other interesting differences between how different demographics give to charity. Parents are more likely (40 percent) to donate to children’s charities than Americans without kids (28 percent). And nearly twice as many parents donate to educational charities (11 percent) than people without children (6 percent).

There are other interesting differences between how different demographics give to charity. Parents are more likely (40 percent) to donate to children’s charities than Americans without kids (28 percent). And nearly twice as many parents donate to educational charities (11 percent) than people without children (6 percent).

Millennials (38 percent) are more likely to be drawn to children’s causes when donating money, compared with 25 percent of Boomers. Millennials (13 percent) are also most likely to be drawn to charities supporting education, compared to 6 percent Gen X (people age 35-54) and 5 percent of Boomers. Meanwhile, Boomers (22 percent) are most likely to donate to religious causes, compared with Generation X (17 percent) and Millennials (11 percent).

The bottom line

Although there’s been a trend toward larger charitable gifts, most Americans (79 percent) donate up to $1,000 in a typical year, according to the survey. A small number, only 5 percent, donate over $4,000 a year.

The trend toward increased charitable donations is expected to continue. The Indiana University Lilly Family School of Philanthropy projects total charitable giving to increase 4.3 percent in 2017.

Jacovino is optimistic about the continued upswing in charitable giving, though she cautions that the November 2016 presidential election could have a longer-term effect. “Whenever we have an election, there’s discussion about what kind of impact it will have,” says Jacovino. “The election itself won’t impact giving, it’s more a function of the impact it might have on the economy – and that might not be known for a while.”

RBC Wealth Management does not provide tax or legal advice. All decisions regarding the tax or legal implications of your investments should be made in connection with your independent tax or legal advisor.