The ultra-wealthy – those with a net worth of $30 million (£24 million) or more, also referred to as ultra-high-net-worth individuals (UHNWs) – already play a substantial role in charitable giving worldwide. But society’s expectations of this cohort are increasing as need and inequality grow. As UHNW philanthropy becomes a greater point of focus among charitable organisations, luxury and other marketeers may need to reconsider how they engage this small group of high-demand individuals.
The UHNW community gave $175 billion (£139 billion) to philanthropic causes in 2020, according to Wealth-X, an Altrata company, in its 2022 Ultra High Net Worth Philanthropy Report. This accounted for 36% of all giving by individuals worldwide. Notably, total giving by UHNWs rose by 4.1% year on year – a higher growth rate than among other individuals, institutions and public foundations.
Philanthropy can have a significant bearing on UHNWs’ share of personal spending. Marketers need a deep understanding of UHNW philanthropy beyond the group’s demographics and interests and the factors that will impact their ability to successfully engage and grow sales among UHNWs.
The appeal of major giving among the ultra-wealthy
Over the past 10 years, UHNWs have become increasingly involved in philanthropic causes. This has coincided with their own growth in cumulative net worth. In their Philanthropy Report, Wealth-X estimates that UHNW wealth totaled $42.9 billion (£34.2 billion) in 2021, up by 54% from 2016 and roughly double the total of a decade before.
Instances of ‘major giving’ – the largest donations charities and similar organizations receive from individuals – are concentrated among the UHNW community. Indeed, ‘an interest in or passion for philanthropy increases in line with wealth,’ according to Wealth-X’s 2021 Interests, Passions, and Hobbies of the Wealthy Report, since wealth provides greater opportunity and scope for individuals to donate parts of their personal wealth.
UHNW interests and demographics impact giving
The interests, passions and hobbies of the wealthy matter. For organizations that depend on prospecting for and engaging with the wealthy, such pursuits are key to a holistic understanding of an individual.
Philanthropy ranks high among the ultra-wealthy’s top interests; 23.8% rate it as such, second only to sports (25.7%), according to Wealth-X’s Interests report. But charitable interests differ by region, age group and gender among other factors as well, even within this small community.
For example, UHNWs in North America, Europe and Asia show characteristic differences in how they give. ‘North America’s ultra-wealthy are far and away the most actively engaged in philanthropy,’ according to Wealth-X’s Interests Report. ‘The region’s elevated wealth, tax framework and limited welfare coverage have contributed to a longstanding tradition of public giving in the US.’ This contrasts with the Pacific and Europe, where UHNW giving may be constrained by state-provided welfare.
Marketers who understand UHNWs’ personal interests can visualize how those elements impact their willingness to spend. But UHNWs’ personal interests differ across demographics and geographies. For example, millennials’ top 10 interests include travel, music, food and animals and ‘philanthropy comes lower down the list,’ the Interests Report describes. Meanwhile, philanthropic UHNWs ‘support causes that are often more aligned with their passions’; a marketeer for yachts who knows a specific UHNW enjoys both boating and donating to the arts can use this insight to inform their outreach strategy.
A challenge and opportunity for luxury marketers
The coming years represent a historic opportunity for luxury and other marketeers. Over the next decade, the world will witness the largest transfer of intergenerational wealth in its history. ‘This will boost the number of ultra-wealthy heirs and those whose fortunes derive from a combination of inherited and self-made wealth,’ according to Wealth-X’s Philanthropy Report.
At the same time, an appeal of civic engagement is growing among this more diversified, multigenerational UHNW cohort. They are ‘keener to embark on major philanthropic initiatives at an earlier stage of their lives,’ the report describes, driven by awareness of global environmental and social issues, as well as public concerns about economic inequality.
The opportunity can be lost to businesses who don’t take UHNWs’ interests to heart alongside their demographics and spending trends. Only with this holistic understanding can marketers lean into all these factors to create a more tailored approach.
Wealth databases can help
Wealth databases can provide insights into how to create a more targeted strategy and a more compelling message. Wealth-X, which is now an Altrata company, offers extensive resources in this area, enabling marketers to gain insight into the passions, interests, net worth analysis and investment trends of this exclusive group.