HNW Philanthropy Distributions Surge Amid Pandemic

Tom Burroughes

5 June 2020

High net worth philanthropists have used private foundations and donor-advised funds to sharply hike customary distributions amidst the pandemic-induced upheavals, bringing forward their donations to the spring.

Senior philanthropy figures at Schwab Charitable and Morgan Stanley say that clients aren’t waiting for the usual “giving season” towards the end of the calendar year – usually around Thanksgiving – but pressing the button now. People are digging deeper into their donation-linked portfolios.

Grant-giving has risen by 50 per cent year-on-year by Schwab Charitable clients, Kim Laughton, president of Schwab Charitable, told Family Wealth Report. “People have granted more than $800 million during this three-month period, substantially more than a year ago. It is an unprecedented volume of giving for this time of the year.”

Melanie Schnoll Begun, managing director, Morgan Stanley Philanthropy Management, agreed that donations have risen sharply. “Clients ask should they step up and go beyond their usual grant-making….that is huge and I’m speaking to people about that on a daily basis.”

The minimum distributions they are required to make from foundations is 5 per cent under current US law, she said.

“Every foundation is free to determine its own pay-out percentage so long as it exceeds 5 per cent…..We are advising clients over how to exceed their normal spending patterns. There’s a mindset shift there,” she said.

Some of America’s most renowned businessmen and women have stepped up. In March, this news service reported that a cluster of business leaders donated a total of $75 million to support New York City-based social services and non-profits hit by the coronavirus pandemic, for example. Such payments are part of the “big gifts” trend in philanthropy. The donors in this example included former NYC mayor and media business leader Michael Bloomberg, medical equipment company heir Jon Stryker and hedge fund founder Ken Griffin. They paid into the NYC COVID-19 Response & Impact Fund.