Women in philanthropy: Their motivations, the numbers and its impact on advisors

Fifty years ago, women were a no-show when it came to charitable giving, let alone competing with their spouses as the breadwinner of the family. Thankfully, that has changed. Today, women are a growing segment of wealth management and household income alike.

Looking through the lens of philanthropy is a great way to show just how much women have become involved in financial planning. While they are also interested in investing, retirement planning, asset protection and a whole host of other wealth management topics, philanthropy provides a clear window into the extent of women's involvement - not to mention their likes, wants and desires.

This window will better help financial advisors understand the growing trend of women in wealth management, and what they can do to provide more beneficial, clear services to this demographic.

"The wage gap is narrowing, especially for younger women."

Pay inequality down, but still present
A key element behind how much women invest into wealth management - and charitable giving - is their income. A heated debate recently has revolved around equal pay since historically, women have earned less than their male counterparts.

According to the Pew Research Center, a survey released in April 2015 found that women earn 84 percent of men's yearly earnings. For example, this would mean women have to work roughly 40 extra days per year to earn the same amount as men. However, younger women have a smaller pay gap - 93 percent earn the same as their male counterparts. 

Pew contributed some of the pay gap today to several factors:

• Time off from work
• Reduced work hours
• Family or caregiving duties

Based on the study, 39 percent of women polled had taken a substantial amount of time off from work, while 42 percent had decreased work hours to care for family. The percentages were much lower for men.

Are younger women better philanthropists?
The interesting statistic from the Pew research is that younger women have a narrower pay gap. That, combined with the overall declining wage inequality, means that women have more household wealth. 

Separate research from the Women's Philanthropy Institute at the Indiana University Lilly Family School of Philanthropy found that young women are actually more inclined toward charitable giving. According to the study, young, single women with no religious affiliation are considered "generous" givers.

This may contradict two common assumptions:

• Younger generations are less likely to give
• Religion inspires philanthropy

While additional Women's Philanthropy Institute research has shown these assumptions hold true on a large scale, young women appear to be bucking the trend. The study noted that young, single women without a religious affiliation are roughly 2.5 times more likely to donate to charity than middle-aged or older women with the same traits. They are also twice as likely to give than their male counterparts.

"Gender and age clearly matter and have a substantial influence on giving choices," stated Debra Mesch, Ph.D. director of the Women's Philanthropy Institute. "This study shows that different patterns in charitable giving exist between young men and young women."

Women just as motivated to give
There could very well be a link between the growth of younger, female philanthropists and a rise in income for this demographic. When it comes to other reasons for charitable giving, the Colorado Nonprofit Association provided a snapshot of its segment of donors.

A recent survey from the organization compared male and female philanthropists. When asked for reasons, beliefs and motivations, women were more agreeable on all of these points:

• Everyone should support charities (89 percent of women to 81 percent of men)
• The need is greater now than five years ago (84 percent to 78 percent)
• Religious beliefs inspire giving (58 percent to 44 percent)
• Charities need support in current economy (87 percent to 75 percent) 

Women approach giving differently
The bottom line is that women and men take different approaches to philanthropy. Younger women are more likely to give, their motivations are different, and even the amount of the gift and the length of time are different.

This was explained by Gena Rotstein, the CEO of technology firm Dexterity Ventures Inc., in an article for Wealth Management. She recapped a panel she had moderated in late 2014 covering women in philanthropy.

"Emotions always factor in to charitable giving."

The consensus from that panel was that women are greatly influenced by an opportunity to volunteer at the charity, the charity's financials - clear, traceable and transparent were key - and an acknowledgement of previous donations. Overall, women take longer than men to make a sizeable donation, and they are more likely to give large sums if they've devoted hours to that specific charity. 

What does this mean for financial advisors?
You may be asking what this means for financial advisors. There are two main points to keep in mind:

• Younger women are more likely to give
• Financial responsibility and security are incredibly important to women

These factors will greatly impact how women manage charitable giving, as well as their existing wealth management strategies. Women in financial planning - from both a client and advisor perspective - is an underserved market, and current professionals should incorporate women into their management and marketing strategies.

Tap into the emotional side of philanthropy
What you can do to help grow the number of female philanthropists is to take a more holistic view of charitable giving. Money is about numbers, yes, but this is just one aspect. It is also incredibly emotional. When you ask about investment risk, or an asset protection strategy, you are talking about feelings: "Do you feel safe? What investment do you feel is right for you?"

Connect with the emotional side of philanthropy to better serve women. As noted above, women give because they feel charities deserve support and because there is a strong need to give today. They are also less likely to donate if the charity has opaque finances, and the exact opposite if they'd volunteered at the organization. These are all emotional ideas. You can't properly guide your client without thinking from their perspective.

With that said, remember to target women in your marketing. Women are an untapped demographic, and the number of women involved in philanthropy and the other areas of wealth management will only continue to grow.

To learn more on this topic, register for our Certified Wealth Strategist®program.

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