How does retirement affect charitable giving?
Throughout their lives, the Baby Boomer generation has had an outsized impact on society – from culture to politics and from work to leisure.
Much has been written about how the unprecedented number of Boomers turning 65 daily through 2030 is stressing Social Security and Medicare, and how Boomers are reimagining retirement. However, little has been written about the role of charitable giving at this stage of their lives.
The Women’s Philanthropy Institute (WPI)’s newest study, How Women & Men Give Around Retirement, is the first known research to examine how retirement affects charitable giving. It looks at whether gender differences in giving and volunteering occur in retirement.
Backdrop for the study
Philanthropy is a journey; people approach the giving of time, talent, and treasure differently at different points in their lives. With the volume of people approaching or in retirement, understanding how they think about charitable giving at this transition may help fundraisers engage this important population more effectively in their work. As we began the research, we knew three key points about retirement, gender, and charitable giving.
- Men and women approach retirement differently. Women are generally less confident than men about their financial security during retirement. Four factors affecting women’s concerns about their financial viability that WPI reported in Women Give 2012 are: risk aversion in financial decision-making, longer life expectancy, being single as they age, and less money available in retirement.
- In general, households reduce their spending in retirement, about an average of 16 percent decline in consumption.
- Men and women approach charitable giving differently. They have different motivations for giving and practice their philanthropy in different ways.
Generally, both men and women maintain their charitable giving after retirement, especially compared to other types of spending. Gender differences do emerge as this infographic illustrates.
- Single women and married couples are more likely to give and give more than single men around retirement.
- Giving by single women and married couples is more stable than giving by single men around retirement.
- Single women and married couples are more likely to volunteer, and their likelihood of volunteering is more stable, compared to single men around retirement.
Strength of the study
Retirement is an increasingly fluid period today. To better understand the impact of this moment, the study refers to giving “around retirement.” Analysis examined five years prior to and five years after retirement, reflecting that while retirement may be one point in time, household spending and giving patterns may change in the years leading up to and following retirement. Researchers checked results by using various windows of time to be sure results were consistent. The longitudinal analysis ensures that the findings are robust.
Implications for the field
Some of a nonprofit’s most loyal donors may be those approaching retirement who have supported the organization for decades. This study suggests that nonprofits should continue to engage them and steward them in meaningful ways.
Our LinkedIn post suggests seven ways for donors to be philanthropic during retirement. Nonprofits may wish to build on these ideas to provide new, creative, and enriching opportunities for donors to remain active and involved with their organization.
The gender differences illuminated in this study highlight the importance of reaching men and women donors in strategic ways. As women tend to be more loyal and consistent donors, stewarding them well throughout their lives and planting seeds for planned gifts and bequests may generate short- and long-term results.
The report also sparks discussion about how fundraisers can better generate more consistent giving from retired men. Creating new opportunities for their engagement may expand the donor base. Knowing that men more than women are influenced by tax benefits for their giving provides opportunities to engage this demographic in conversations about augmenting their charitable giving through donor-advised funds and the IRA minimum distribution requirement.
Baby Boomers will continue to influence all aspects of retirement for the foreseeable future. Women are more likely than men to want to use their wealth for the common good or a greater purpose; as younger women close the gender gap in financial literacy, they may accelerate women’s philanthropy in untold ways. At the same time, when nonprofits and fundraisers find creative ways to engage more men around charitable giving in and around retirement, we may experience a powerful boost in giving by all.
Andrea Pactor is the associate director of the Women’s Philanthropy Institute.