Part of being a successful real estate professional in the upper-tier real estate market is knowing your clientele. What motivates them? How and where do they spend their time and money? These are all important things to understand so that you can better meet the needs of your client and market to potential clients.
One of the largest areas of spending for high-net-worth individuals is charitable giving. According to the U.S. Trust® Study of High Net Worth Philanthropy, a biannual study which examines the giving patterns of America’s wealthiest households, households earning $2 million and above gave approximately 14% of their income to charity, more than five points higher than households earning $200,000 to $500,000. How is this information useful to upper-tier real estate professionals? It all comes back to increasing your sphere of influence.
Here are five things you need to know about how high-net-worth individuals give to charity so that you can expand your sphere of influence and generate leads:
1. Charitable giving is on the rise
Although the number of households that give to charity has decreased in recent years, the amount given to charity by individuals is increasing. In 2017, Americans hit a milestone when they gave $410 billion to charity, 70 percent of which came from individuals—an increase of over five percent from the previous year. This shows that charitable giving, especially from high-net-worth individuals, is on the rise in the United States.
2. High-net-worth individuals give more to education
With more than half of high-net-worth individuals sending their children to private schools and colleges, it’s no wonder that education is the top of the list for charitable giving categories. High-net-worth individuals also have a strong loyalty to their alma mater. Who wouldn’t want their name on your college’s new library?
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3. Women are the primary givers in high-income households
Women tend to be more charitable across all income levels. This is especially true for affluent households. Coincidentally, women tend to have a greater say in the home-buying process. Given these two trends, as a high-end real estate professional, it’s safe to say that it’s a good idea to market to women and their charitable endeavors.
4. Millennials are taking the lead when it comes to charitable giving
Despite the stereotype of millennials being selfish, they actually give more to charity compared to the baby boomer generation. Add that to the fact that millennials will eventually inherit their parents’ and grandparents’ wealth and you have a highly-influential group of people.
5. The line between business and charity is fading
The rise of microloan organizations and venture capital investing indicates a shift towards more entrepreneurially focused donations due in large part to millennials. Approximately 77% of high-net-worth millennials either own or include impact investments in their portfolio. This indicates that the idea of philanthropic endeavors (whether they be environmental, social, political, or religious) can be both good for society as well as good for one’s own personal finance is growing.
The giving behaviors of the wealthy are changing. It’s no longer just art exhibits and hospital wings. Millennials are driving the giving economy and upper-tier real estate professionals should take note if they want to increase their sphere of influence.