Americans love to be charitable, especially with receiving the tax-deduction that follows. When faced with enormous tax bills, the ultra-high-net-worth would rather give their money to charity than the government. But there have recently been agency problems galore. The worst thing for the American Cancer Association on the “business” side of things would be if someone actually found the cure for cancer. Much of this agency money has been wasted.
But now, the young ultra-affluent have this all figured out. Unlike their parents, they are not willing to write elephantine checks to big name, lofty, obscure organizations. That’s not to say they aren’t interested in helping; far from it. Forty-six percent are focused on doing good in their communities and nineteen percent plan to become full-time philanthropists.
Nowadays the young and affluent are getting involved in hands-on niche projects where they can make a difference. They want to see results. They are not interested in providing an annuity to some tax-deductible charity organization.
They mostly give to education and green causes. No doubt some of these ultra-high-net-worth individuals will see their parents dying from big disease and want to support the eponymous nonprofit and follow in their parents’ footsteps. As Adam Smith would say, there is a lot of ruin in big charity. The trend, however, is against them.