Let’s talk about women and philanthropy. As noted in BMO Wealth Management’s Women In Philanthropy 2019 Report, The Economist estimated that private wealth held by women globally increased by 50 per cent between 2010 and 2015; growing from US$34 trillion to US$51 trillion. Looking forward, these numbers are only expected to keep growing, with most of the private wealth changing hands in the coming decades expected to go to women. Further, it’s been shown that women give about twice as much of their wealth away though philanthropic initiatives compared to their male counterparts (3.5 per cent versus 1.8 per cent). With more wealth in the hands of women who are likely to partake in such initiatives, there’s a lot for the charitable sector to look forward to.
Why women give differently
Generally speaking, women tend to be more attuned to the needs of their communities, including issues surrounding mental health and poverty. Due to this, they’re more likely to pitch in when there is an identifiable need that they can support. An in-depth study conducted by the Center on Philanthropy at Indiana University explored the gender gap when it comes to giving and established four possible reasons why women lead in philanthropy.
Socialization: Women have been socialized to be the caregivers of their families.
Morals: Women view philanthropy as a way to show they care and express their moral beliefs.
Compassion: Women experience emotions more strongly than men.
Equity: Women are more egalitarian than men in reciprocal behaviour, whereas men are more competitive.
Given these reasons, it’s no surprise that wealth managers have observed that male clients tend to favour charitable contributions for their tax advantages, whereas female clients give largely because they want to help others.
The following different types of women investors have also been identified according to how they approach philanthropy:
The Wife/Mother: Makes decisions about amounts to donate, which charities to support, tends to support family-related and community issues, donates money as well as time to causes, and cares about involving children in giving;
The Widow: Has inherited significant wealth and wants to honour their late partner by supporting issues of interest to them or relevant disease-related organizations;
The Professional or Business Woman: Has earned their wealth, has less time to volunteer than others, tends to support environmental/global causes and women’s issues, is concerned with charity transparency, and aims to drive change through giving; and
The Socialite, who is the spouse/partner of a successful business person who feels that philanthropy is their contribution to society — she often raises large amounts of money for major arts, healthcare, and educational institutions, and makes the social element an important part of her fundraising efforts.
COVID-19’s philanthropic consequences
The pandemic has disrupted the giving habits of many by shifting their charitable interests to the immediate issues at hand. Affluent women have increased their giving and have become particularly concerned with mental health issues among youth in their communities. Many female philanthropists have also become concerned with the impact of COVID shutdowns on women’s safety in unhappy home environments, and have been funding programs that support women and children fleeing abusive relationships.
One of the biggest aspects of the shift in giving caused by the pandemic is a greater emphasis on the local community. As Marvi Ricker, Managing Director of Family Philanthropy and Legacy at BMO Family Office puts it, “COVID has unmasked the extent of the needs in the community and the fact that there is no integrated system to deal with some of these needs. Essentially, the pandemic has revealed many weaknesses in our health and social welfare programs, including low-income housing and long-term care services.”
As is often the case, women are caught between looking after their families, helping their children with virtual learning, as well as performing their own jobs to the best of their ability. With the pandemic, the pressures that women face while they try to balance it all has increased significantly. Despite potential impediments, Karen Sparks, Director, Philanthropic Advisory Services, has “not witnessed increased hesitation” rather, she says that “more than ever, women are now looking at ways to support other women.” The hope is that this support and attention will translate into political pressure if more women decide to show support for things like low-cost daycare and a guaranteed minimum income.
COVID has also given many clients cause to review their wealth plans, both from a cash flow perspective, as well as from an estate plan perspective. Sparks has observed that, “In some cases, clients have accelerated their retirement. Some of that may have been in reaction to market volatility, but there was no question that the global pandemic has caused many to stop and look at their future plans and consider the possibilities.”
An optimistic behavioural shift
During these unprecedented times, many women have sought involvement in philanthropic initiatives specifically because of the increased need for support. In reaction, “We provided information to our clients on ways that they could be helpful during this period,” reflects Ricker. “For some of our foundation clients, we presented them with attractive and urgent needs that they might consider supporting. Essentially, we provided information about the charitable sector’s needs and advice on how best to align their philanthropic interests with the needs of the community at this time.”
Although the impact of COVID is not over and will undoubtedly have long-lasting effects, Sparks has observed “a significant portion of society that has been able to save substantially because their previous lifestyle was put on hold. It will be interesting to see if we will return to the same level of pre-pandemic consumerism and busyness.” Will the impact be a new understanding that less is more, and sharing is caring? Regarding behaviour towards philanthropy, the response so far has been surprisingly optimistic.
Instilling philanthropic values in children
All parents want to see their children give back to the community in meaningful ways. So, how can parents foster this attitude and raise the next generation of philanthropists? “Ask your children their thoughts on issues that impact the community and the issues that concern them, and have regular conversations with them. Engage them with the family’s philanthropic decisions,” advises Sparks. When children are exposed to issues that resonate with their family, their idea of having an important role becomes much stronger, and hopefully the work their family does can be carried forward in even more impactful ways.
For more information, please speak with your BMO financial professional.
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