US Households Also Reduced Donations Due to High Interest Rates

BofA and Indiana University Joint Study
Number of Donor Households and Donation Amount Both Decrease Compared to Two Years Ago

Last year, as economic uncertainty increased due to the rapid interest rate hikes by the U.S. Federal Reserve (Fed), donations from households with relatively ample funds significantly decreased.

On the 9th, Bank of America (BofA) and the Lilly Family School of Philanthropy at Indiana University jointly conducted a survey targeting households with a net worth of over $1 million (approximately 1.35 billion KRW) or an annual household income exceeding $200,000 (approximately 270 million KRW). The results showed that about 85% of the surveyed households made donations last year. This represents a 3 percentage point drop from 88% in the previous survey conducted in 2020.

Not only did the number of donating households decrease, but the donation amounts themselves also declined. The average donation amount from these households was found to have decreased by 19% compared to two years ago.

In the 2020 survey, household donations had significantly increased due to the COVID-19 pandemic, which amplified social anxiety and expanded vulnerable groups. However, following the rapid interest rate hikes by the Fed starting in March last year and the resulting impact, asset values such as stocks fell, leading even households with relatively comfortable financial situations to reduce their donations. The Fed raised the benchmark interest rate by 4.25 percentage points last year alone, and the S&P 500 index dropped by 19% during the same period. Inflation surged, and loan interest rates rose, worsening household financial conditions.

[Image source=Yonhap News]

According to the report, more than 50% of the surveyed households said they donated funds to support basic living needs. Additionally, 39% of respondents donated for religious or spiritual services.

BofA stated, "Due to economic uncertainty last year, some charitable activities were suspended," adding, "Last year shows a break from two years ago in various aspects, including charitable donation activities."

This content was produced with the assistance of AI translation services.