In a Giving Mood: TIGER 21 High Net Worth Investors Point to Personal Connections as Driving Philanthropic Decisions – Worked for Buffett-Gates

NEW YORK (September 12, 2006) – In committing more than $31 billion to the Bill and Melinda Gates Foundation this past spring, Warren Buffett was making the most prodigious financial gift in history.  However, the fact that he targeted a charity championed by his close friend and online bridge partner is par for the course among the giving set, according to a new survey by peer-to-peer investor group TIGER 21.  (The Investment Group for Enhanced Returns in the 21^st Century).

TIGER 21 members, representing a group of the most affluent private investors in the U.S., contribute generously to a wide variety of causes, as much as 2% of their assets.  Given members’ aggregate investable assets are more than $6.5 billion that represents a tidy sum handed out annually by TIGER 21’s approximately 100 members.

In deciding how to allocate their philanthropy from among countless organizations and causes in need of help, TIGER 21 members do what Mr. Buffett does:  the majority, 61%, say they make their selection primarily on the basis of a personal connection.  Having direct ties to a charity was considered more important than self-research and even the competing advice of friends and family.

And while it is hard not to respond emotionally to news reports of disaster or human tragedy, only 3% of TIGER 21 members regard such accounts as a key factor in their choice of charitable donations.  Direct solicitation doesn’t fare much better – only 8% said they would pull out their checkbook based on a written appeal, no matter how compelling.

“Philanthropy is a highly individual decision since it not only reflects a person’s values, but is formed by personal history, family experience, religious and ethic affiliation and the charitable work of colleagues, friends and family,” said TIGER 21 President Tommy Gallagher. 

TIGER 21 members are especially partial to connectivity in that the group’s mission is to leverage collective investor intelligence and life experiences to achieve maximum long-term financial returns. 

“I think that by citing personal connections, our members are sharing their own experience, that friends who are extensively involved in charities often make the best case. In essence, Tiger members are showing another side of their trust in peer relationships as it concerns getting the most bang for the charitable buck, something apparently behind Warren Buffett’s decision.”

As a snapshot of high net-worth investors – including successful entrepreneurs, money managers and corporate executives – TIGER 21 members are active givers, averaging more than 19 different contributions annually.  And they are self-directed:  only 20% said they have ever engaged a professional to advise them on their contributions, another byproduct of their reliance on personal connections.

Other highlights of the TIGER 21 survey on philanthropy:

Ø      Members showed themselves fairly well disciplined on planning for donations – approximately half of those surveyed said they make a yearly budget for their charitable giving.

Ø      Wealth generation does appear to spur philanthropic largesse – 83% of TIGER 21 members reported that as their net worth increased, so has the amount they’ve given to charity.   And they seem to have had a good run of returns lately – only 6% said that their level of giving has dropped in the past two years.

Ø      Members clearly go for both modest and outsized gifts, relatively speaking.  Asked to cite both their smallest and largest contributions, TIGER 21 investors averaged approximately $1,200 at the low end and $284,200 at the higher end, with the richest single donation reported at $2.5 million.

Ø      While showing a broad range of charitable interests, TIGER 21 members have distinct preferences, choosing educational organizations as the Number 1 beneficiary of their philanthropy, well ahead of all other groups.  In second place came religious charities, followed by arts institutions and civic causes.  Tied for fourth were social service groups, political organizations (including candidates running for office) and science and medical institutions.  Of lesser urgency were charities supporting human rights, relief efforts, and lastly, environmental and historical groups.  “We are a  learning group at heart, so it’s not surprising that education is a high priority for many of our members,” Mr. Gallagher said.

Ø      Consistent with a previous TIGER 21 poll showing a large rate of investment activity in international markets, a notably high percentage of members – 46% – also contribute to causes outside the U.S.

Ø      In addition to being motivated by social ideals and an urge to do good, TIGER 21 members don’t ignore the practical aspects of philanthropy:  70% confirmed that tax deductions play at least some role in their giving; a quarter of the members surveyed acknowledged that tax issues were a very major consideration.

Ø      Of course, not all charity is counted in pure dollars.  Seventy-four percent of members said they also volunteer their time – just over 13 hours per month on average for various non-profit causes.  Half the group has made contributions in the form of stock, while members also cite outright physical gifts (art, real estate) and non-monetary donations.  Forty percent of members have provided additional forms of charity through their wills.

Ø      TIGER 21 members roundly supported Warren Buffett’s decision to give the bulk of his fortune away while still alive, by a two-thirds majority.  Living philanthropy is an idea that sits well with many wealthy individuals. 

Ø      TIGER 21 investors – nearly all of whom achieved their wealth through self means, with very few drawing on inherited riches – applaud Buffett on another level as well:  Nearly 80% said that the Berkshire Hathaway chairman did the right thing by not giving a greater share of his fortune to his children. 

Ø      With sizable gifts comes the question of recognition – an award’s dinner?  A plaque?  A naming ceremony for that new wing?  Or is it better to give anonymously?  TIGER 21 members are split right down the middle – half welcoming credit for their philanthropy, and half preferring to remain unnamed.   “On one hand, you yearn for some sort of visible legacy of your generosity, even though your heart knows that doing good works is its own reward,” said Mr. Gallagher, adding, “In the end there is no such thing as bad philanthropy, whether you give money anonymously or posthumously. We have no judgment if someone wants a name on a building --- we’re just glad that our members are so generous.” 

Ø      For those willing to see their philanthropy memorialized with marquee billing, the choices were varied.  Given an opportunity to have one institution named after them, TIGER 21 investors proposed the following:  an animal shelter; an international rescue committee; a scholarship; an art institution; a university; and an “institute for peace that actually accomplished something.  The leading selections for naming rights:  schools and hospitals.