When opportunity knocks - the wealthy and their wealth

Two reports were published last month which have a significant bearing on our understanding of philanthropists, their philanthropy and ultimately giving to universities. I will leave the second report from the Milken Institute for my next blog, but for now I am sharing some facts surfaced in Cap Gemini’s World Wealth Report.

Cap Gemini has been releasing this study for some years and it gives a very useful insight on the scale of High Net Worth wealth and where it resides. The headline of this study is that high net worth wealth continues to flourish – at rates well beyond standard economic growth rates.

According to the 2019 study there are now 19.6m high net worth individuals in the world who have collective assets of US$74trillion. The shared wealth of these HNWI has grown by 26% in the past five years alone. In the past year, the study reports that the HNWI population and their financial wealth each grew by nearly 9% in 2019. The study also reports that high net worth wealth is concentrated in North America, Europe, Japan and, increasingly, China.

We know from a major philanthropy study by Harvard University that three quarters of foundations and trusts have been established in the past 20 years. Their growth is in step with the rise in high net worth. As people acquire wealth, they establish charitable vehicles to channel their philanthropy. Increased wealth sets the pace for increased philanthropy.

However, another measure on a HNWI’s social impact is what it is they are investing in. 40% of ultra HNWI are and wish to pursue sustainable investments. The research highlights climate change and environmental risks, but also references socially conscious business policies and practices. Why?

Well, according to the Milken study (read my next blog), this is about demographics. For me the really eye-catching headline from Cap Gemini’s wealth report is about age – 48% of the world’s HNWI are under 40. And it’s the under-40s – who we know as millennials – who are generous, in fact, very generous.

According to a US study published by Fidelity Charitable and published in Forbes, millennials give more than twice as much of their money and time to charitable causes as their parents’ generation. What can we conclude from these studies? First, high net worth wealth is increasing significantly. Second, it’s a safe bet that philanthropy will continue to boom as millennials push out older generations to become the most significant cohort among HNWIs. Third, with more wealth and philanthropy coupled with a rise in sustainable investment, the opportunities for university philanthropy will continue to increase.