Affluent South Africans give considerably less time and money

You can also listen to this podcast on iono.fm here.

This transcript is a translation from the original interview, which was conducted in Afrikaans and aired on RSG Geldsake, here.

RYK VAN NIEKERK: Nedbank recently published its fifth Nedbank Private Giving Report. It’s a report that looks at the philanthropic behaviour of South Africans. It analyses how wealthy South Africans give of their time and money to certain institutions and how their behaviour has changed over the past few years. The research was compiled from interviews conducted with more than 400 wealthy individuals. It found that these individuals donated R4.2 billion last year in cash, as well as R2.6 billion in services and goods, and 3.2 million hours of their time to welfare organisations.

That was unfortunately considerably less than in 2020, and the study ascribes this drop to the financial consequences of the pandemic. The research also found that the value of individual donations was lower and that individuals on average donated less than R10 000.

Read: SA’s wealthy donated R6.8bn to needy causes in 2021

The research also looked at diverse subjects, why these individuals would in fact open their wallets, their reasons for doing so, which institutions received much of the money, and how these individuals identified the institutions to which they then donate their time, money, goods and services.

Hein Klee, head of International at Nedbank Private Wealth in South Africa is on the line. He will chat with us from Windhoek, of all places. Hein, a warm welcome to the programme. Let’s begin with a definition of a ‘wealthy individual’ or a ‘high net worth individual’ as you describe such a person in the research. How much money must one have to qualify?

HEIN KLEE: Good afternoon, Ryk. It’s nice and warm here in Windhoek and a pleasure to chat with you. As you mentioned, this is the fifth report. With the first report in 2010 we asked ourselves what we would define as someone within that classification. Well, we said, at the outset we were looking at someone earning a minimum annual income of R1.5 million. Then we went on to look at the trends among people with investable investments or asset values, let’s say, and we set a minimum of around R5 million. So those were the two criteria we looked at.

Our second report was the first in South Africa for which we gave ourselves a total data point where we more or less estimated that there were about 148 000 individuals in South Africa who fitted within those two categories.

RYK VAN NIEKERK: So one has to earn more than R1 500 a year, or basically have more than R5 million in financial assets to fall within this category. You say that there are about 148 000 – do these fall in South Africa? That actually sounds rather a small number if we consider that we have a population of over 60 million. But how many of those put their hands in their own pockets and give money or time or products and services to charity?

HEIN KLEE: I think you are a hundred percent correct. I think that group of people has shrunk, but what is positive in reports four and five is that our estimate is that about 83% of those in some way or another donate cash or goods – as well as their time, of course.

The pandemic we experienced gave us a positive indication that there is at least a stable level of individuals who are still donating, and we estimate that they comprise 83% of those.

RYK VAN NIEKERK: So 83% of wealthy people in South Africa are giving money or other things like time to charity. That sounds a large percentage. How does this compare with the percentages in other countries?

HEIN KLEE: That’s an interesting question. Of course, the study we did was on individuals. That does not include organisations and companies. The trend that I picked up was that there is a very large and growing market consisting of ‘giving’ or ‘philanthropic’ clients coming from Asia. And of course, you have your large bases like England, Europe and the US. The indication there, we found, was that the international trend is for individuals to rather create a structure – in other words, a foundation or a trust or the like – then via a trust or an organisation they create to give particular amounts of cash, time or goods.

Interestingly in South Africa, of the 148 000 people, whom we believe to be in industry, 409 whom we interviewed, only 4% use any structure. Thus 96% of people just give cash or time; they don’t use a formal structure. So I think the South African industry, when it comes to wealth and what people donate, varies widely with regard to what people give on their own, and they don’t really make use of structures to distribute the benefits they wish to donate to organisations.

RYK VAN NIEKERK: I find it interesting that you have found that the average individual donates less than R10 000 a year. If one thinks of an income of R1.5 million-plus, R10 000 sounds like a drop in the ocean.

HEIN KLEE: You are absolutely right. It’s also interesting that that amount we looked at had unfortunately declined from the amounts in our previous reports, which were closer to R50 000-R100 000. So what we really feel at this stage is that the individual prefers to give something rather than nothing.

You have also touched on a very important point, something that we at Nedbank Private Wealth currently feel very strongly about, which is to chat to people, asking them what they think the impact of their R10 000 or R50 000 donation would be. Wouldn’t it be to your advantage to look at which organisations or individuals donate to similar types of organisations – such as, say, education – and then create a ‘collective’ so that R10 000 from 10 people would have a much great impact than R10 000, because R100 000 would mean much more than just R10 000?

So it is small, but we think it’s because we have gone through a pandemic in which people have become a little more cautious. But, ultimately, it’s still a case of ‘I’m giving something rather than nothing’.

RYK VAN NIEKERK: Do you know if people give spontaneously? Are they proactive or do many of these individuals give only when someone phones them and says, “There are hungry children in a children’s home, please help” – and then they respond. Did you look at that?

HEIN KLEE: Interestingly we looked at the major motivational spurs. The top one among those we interviewed was at the end of the day they said “we care about the outcome of something”, or “we care about the cause”. That’s the biggest. The second one is people saying, “I want to make a difference”, and the third is what you coincidentally mentioned: “Someone told me about someone in need, and that’s why I decided to donate money.” Those are really the three big reasons we came across.

Another one that came through that we also found interesting is the feeling of wanting to give back to my community. Many of those we interviewed in this report also told us: “The money I am giving I would rather donate to my own community than to a major international institution. I want to make a change in my community, in my town, in my city, instead of having it go to a national organisation.”

RYK VAN NIEKERK: Now, how do individuals identify these organisations needing support in their local communities? Of course, they first have to identify whom to donate to, and then they have to donate. But where do they find out about these institutions?

HEIN KLEE: That’s interesting. I think where this report was born in 2010 was because some of our clients came to us and said, “What should I do with this donation, where do I go?” I think that’s where the philanthropic services of Nedbank Private Wealth come through so strongly. It’s that we have specialists who will sit down with a client and say, “Very well, where do you think you can make a difference? Is that with respect to feeding programmes, is it with respect to education, is it learning, is it a teacher when we give a student a bursary? So we then do specific research into organisations linked to what the client wants to do.

So I think the other thing that often happens is that many organisations that do fundraising, in many cases tell a client that it’s good to support a fundraising effort, but what is important to us is that you must really have an interest, you must grow alongside that organisation at the end of the day. Don’t make it a once-off amount. Spread it over a period of three to five years. Become involved in it. Ultimately that’s where you will see the R10 000 move up to R100 000, and the R100 000 move up to R1 million. It’s that type of behaviour that we want to instill in clients.

But I think fundraising is of course the biggest organisational resource, and naturally divisions within banks like ours focus specifically on philanthropic services to our clients.

RYK VAN NIEKERK: So you have a division within Nedbank Private Wealth that helps your rich and wealthy clients donate money to charity. How big is this division?

HEIN KLEE: The division has existed for some years. Different organisations – for instance you will remember Syfrets, the Board of Executors. Many clients come from those former companies. What we then do is we see philanthropic advice as an advisory component. It does not operate alone. What we ultimately do with a client is to say, okay, what do you need and where do you want to go?

If I remember, according to our data we probably have north of 300 clients inside the philanthropic division, and if memory serves our asset value which specifically looks at that, and here I’m referring not to the amount donated to organisations, but to the asset value – the last number that I looked at was I think R9 billion which specifically resides within our division for philanthropic services.

RYK VAN NIEKERK: I assume most other wealth managers would also have such divisions?

HEIN KLEE: There are several competitors who I know are looking into that. I think what we are doing differently is that you can’t see it as a discrete product. The most important thing we of course have to discuss with many of our clients is to ‘leave something in your will for an organisation close to you’ because many organisations’ biggest resource is someone declaring in his will that 10% of his money must, for instance, go to animal welfare or education, etc. That’s many of our clients’ point of departure. We really see that as an integral part of our service to many clients.

We also of course have many clients without assets of value, but they say, “Okay, I do have money over at the end of the month that I would like to donate to charity”… That’s where the Nedbank Affinity Programme has been running for some years where we tell clients we have the Affinity Programme that looks at certain sectors, and you can go to your bank account via an app and make a donation to Affinity. There are two components Old Mutual the app that we are really driving when it comes to giving money, services or time for organisations.

RYK VAN NIEKERK: I’m chatting with Hein Klee, head of International at Nedbank Private Wealth in South Africa, about the recently published fifth Nedbank Wealth Giving Report on South Africans’ philanthropic behaviour.

Hein, I would [now] like to chat about time, the time that donate, because I think many people understand that if you give money, you give cash and the institution can use it as it sees fit, but what does giving one’s time involve?

HEIN KLEE: I think we’ve found that the time people give revolves around helping with feeding children or feeding the homeless. We have seen many who give of their time to, say, help children with maths and physical science when it comes to extra classes. I think we have also seen, especially in Natal with the floods and of course the unrest, the rebuilding and the cleaning of streets, etc.

So it’s very difficult to say how people give of their time. We would just like to see more professional people giving their time free to these organisations, and what I am referring to here is that many of these organisations are of course institutions that don’t pay tax, non-profit organisations, and they of course have particular requirements in terms of finance. So an auditor, for example, might give some of his time to perhaps compile reports for such organisations, as attorneys might when it comes to legal aspects in terms of what they may or may not do.

So I think that’s an area to which a little more time can be given, but I think the most time we see [being given] is of people who roll up their sleeves and get involved in the community to help many of these institutions that needs hands at the end of the day.

RYK VAN NIEKERK: Yes, I think the time of professional people can be highly, highly valuable to help others.

The organisation Gift of the Givers, for example, is an institution that gives professionals the opportunity to give back to communities, because then you can get doctors, engineers and the like to help people in need. These professional people are not paid for doing so, but if you give a donation to the Gift of the Givers, that money is basically applied for that purpose. Is that the type of model to which you are referring?

HEIN KLEE: Absolutely correct. When the report was launched, we of course had the privilege of having the founder of the organisation with us.

RYK VAN NIEKERK: Dr Imtiaz Sooliman.

HEIN KLEE: Right. That’s what it’s all about. What the doctor also told us is that ‘I’m getting a call right now’. I don’t know if you saw that they were very involved in the Eastern Cape over the past few days, close to East London, around that area where there were a large number of fires, where they suddenly had to get helicopters, food for the firefighters, etc. I think that’s where many believe at the end of the day they can get involved.

But I think what often happens is people volunteer their time to particular organisations like the fire service, where fires and the like regularly occur in the Western Cape. So I think those are types or organisations where time is of the essence. The time of an additional hand helping is in many instances of the greatest asset – and of course donations of food, goods, water for the fire fighters and so on. I think that’s what I referred to earlier.

RYK VAN NIEKERK: Are there particular institutions that are more popular than others, if I can put it like that, or that receive more donations because they are better known in South Africa and are well respected, such as Gift of the Givers?

HEIN KLEE: I think it’s a bit wider that just a name. I think it really is around sectors. That’s what we picked up in the report, where the largest component of giving money and becoming involved is around social community development. It is about uplifting society and the community. Of course, religious institutions were another area, education another component, although it was concerning that this had declined some 10% – from 32% to 22%.

The other one that came to the fore in this report was what people had done regarding Covid-19 with regard to help, time, etc. There is a large component around the environment; safety and security is another. Sport, strangely enough, slid from 10% to 4%.

The biggest rise we saw in the report to which people were donating and where there were declines in certain sectors, was the 18% jump in Covid-19 responses and the time and money around that.

It’s therefore a difficult question to answer in respect of organisations as such, because the data we received from the report is more in terms of sectors than individuals, or individual organisations.

RYK VAN NIEKERK: There are also certain financial benefits for people donating money to charitable organisations, and you can get a so-called 18A certificate from a registered organisation that you can then use to reduce your tax liability. Do you see that many people donate money just to receive a tax benefit later?

HEIN KLEE: A very interesting question. Let me give a bit of background. Every year, just before we start on the data and the research, we do what we call a calibration of the types of questions to be asked – where we stand in the economy, and if something has happened, such as Covid-19. And what we decided in this report is to set an open question to ask what should change for me to give more. One of the questions was around tax.

We mentioned this before. Among the 148 000 people in the wealth category who were reasonably well off, such as having high-income assets, one would have thought that that tax certificate certainly played a huge role. It’s interesting that of the 409 people we interviewed not one gave an indication that for them a tax deduction decided where they wanted to go, and why they were donating at the end of the day.

So, according to us, the tax benefit is not a factor when it comes to how people donate.

RYK VAN NIEKERK: That’s very interesting. I also see that more and more women open their hands – many more than in the past. So there are many more women who donate money. And I also see more black people donating money.

HEIN KLEE: Correct. It was the first time in the report we did where women represented more than 50% of ‘givers’, if I may put it like that. And I believe the report gave us an indication of transformation in the South African economy, even in the areas we looked, where 21% or 22% were individual black South African givers. That’s a pretty big jump.

Read: More wealthy women leaning into philanthropy in SA, Giving Report shows

RYK VAN NIEKERK: If you stand back and look at the report, do you think rich or wealthy South Africans have open hands?

HEIN KLEE: I think they have. Ryk, the reason I mentioned it is that in the report we looked at the age distribution of people giving. From our point of view there are two types who give, not because of who they are but how they can help. I’m speaking of cash donations.

You have someone with a reasonably large asset value, and that individual directs those assets, dividends and interest, etc, towards certain welfare organisations to which they donate.

Then there is a second component, that of a person who has money over the month-end after paying everything, and feels it his duty to donate money. You will find that most people who have money over at the end of the month are among the younger group. We’ve seen for the first time that the age group between 35 and 50 has risen strongly. So we are seeing the younger guard now coming to the fore in terms of the money and time they wish to donate.

So from our point of view giving in South Africa is very healthy. As to the question you put to me earlier around the R10 000 and its decline, I think Covid-19 had a large effect, but I believe as for other factors like economic growth and where we are going, in the next report in two years’ time I believe we are going to see a trend once again lifting its head when it comes to the amounts given at the end of the day.

RYK VAN NIEKERK: To me it’s rather a small amount, less than R1 000 a month for the top 10%, and I hope it improves.

It would be interesting to do a study about people who earn less than R1.5 million – which of course is a much, much greater group of people – and whether relatively speaking they give more than these rich people do. Are you aware of such a study?

HEIN KLEE: Not that I know of. I know that the report, the Giving Report that we do, is the only one in South Africa and in Africa. That is something that I will chat to the bosses about to see if there is a way for us to take this study further. We could look at, say, R750 000 to R1.5 million. The study field would be much bigger; in other words, the individuals with whom we need to do interviews would jump from, say, the 409 that we looked at to a couple of thousand.

Ryk, I think that’s definitely something one could look at, because I think there probably would be a very strong correlation. If we see it in the age group 36 to 50, we would probably also pick that up among people with a lower income level. You would probably find that the amount that they give may be a little smaller, but that they indeed give at the end of the day. But those small amounts, counted together, eventually make a big difference.

RYK VAN NIEKERK: Hein, thank you so much for you time this evening. It is really a very interesting report and if we chat again in two years’ time – because you announce this report every two years – the amount could jump from R10 000 to R50 000 because our country is so unequal. There is so much need, and I often think the people in South Africa that pick the best fruit and pick most of the fruit, can give back – not always through tax but direct to good institutions that are really doing incredible work in South Africa.

HEIN KLEE: Ryk, I think what would be important is for listeners to go to our website… The report is available to download free. Why I mention that specifically is that we also asked a couple of experts to write certain articles for us around things they find in the current economy that are real pressure points. Four or five excellent articles have been written which I think many of your listeners would also find interesting.

RYK VAN NIEKERK: Or one can Google the Nedbank Private Wealth Giving Report.

HEIN KLEE: All five are available on the website. That’s even better. That would be something good to read during December while on holiday.

RYK VAN NIEKERK: Thank you, Hein, for your time. That was Hein Klee, head of International at Nedbank Private Wealth.