Tuesday, March 18, 2008

Recessions, the wealthy and philanthropy

Given the chaos on Wall Street these past weeks, a report on the declining rate of growth in American millionaires may not come as any surprise. But since philanthropy is ever-occupied with transfers of wealth and such, I thought it appropriate to bring to your attention this report from the Spectrem Group:

"The number of Affluent and Millionaire households has continued to grow for the fifth consecutive year. Growth rates have, however, slowed considerably."

For the record, Spectrem's definition of Affluent and Millionaires is those worth $1m or more, not including value of their primary residence. Given housing prices, the value of their homes may not be helping things anyway.

How considerably? Well, millionaires increased in number by only 2% in 2007, having grown in number by 8% the year before, 11% in 2005, and 21% in 2004.

The report still found 9.2 million households and Robert Frank, over at WSJ Wealth Report, notes that wealthy households tend to increase in number even during recessions. He points to data from 2002
that show "the number of millionaires... grew by 2% and their wealth grew more than 3%... The next year, growth was even stronger."

So, what might this mean for giving? Well, if history is any guide recessions will still create millionaires and giving will still increase (though slowly). According to Giving USA, from 2001-2002 giving grew by an inflation adjusted rate of 0.6 percent, from 2002-2003 it grew by an inflation adjusted rate of 0.5%.

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