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APRA 2012 Where Have all the Wealthy People Gone_Swank_Session 212

APRA 2012 Where Have all the Wealthy People Gone_Swank_Session 212



America’s wealthy royals are well-known. Couples and families such as Bill and Melinda Gates and the (Sam) Walton family members top the list. Their philanthropy is legendary, and many nonprofit ...

America’s wealthy royals are well-known. Couples and families such as Bill and Melinda Gates and the (Sam) Walton family members top the list. Their philanthropy is legendary, and many nonprofit organizations’ staff and leadership look for ways to connect with them. What options does your organization have to acquire major and planned gifts if you aren’t on the top of their list? More than 15 million households in the U.S. are affluent and have the means to make transitional gifts. In this session, learn who they are, what motivates the wealthy to give and how you can find them within your donor rolls and the best way to cultivate and solicit them for major and planned gifts.



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APRA 2012 Where Have all the Wealthy People Gone_Swank_Session 212 APRA 2012 Where Have all the Wealthy People Gone_Swank_Session 212 Presentation Transcript

  • Session Code: 212Where Have All theWealthy People Gone?Katherine Swank, J.D.Senior ConsultantTarget Analytics®, a Blackbaud®Company
  • Your Presenter• Target Analytics® (Blackbaud®) since 2007• Author and Frequent Presenter on Major Gifts, Planned Giving, Prospect Research and Industry Topics• Member, State Bar of Arizona > Drake University School of Law 1985• Over 20 years as a development officer, including > National healthcare, public broadcasting, law school > National Director of Planned Gifts $300M healthcare organization > Lead manager, $20 MM Capital Campaign; raised over $215 MM in career• 12 years as affiliate faculty for Regis University’s Masters in Global Nonprofit Leadership program
  • Our Agenda
  • Wealth in the World
  • Wealthy Americans
  • Wealthy Canadians
  • Ultra High Wealth
  • How Much Money is There?
  • Canadian Wealth Family wealth in Canada is similar to the U.S. and sets up a comparable intergenerational transfer of wealth Age of Number Average Total Wealth Families (millions) Wealth (billions) 25-34 1.2 $18,750 $22.5 35-44 2 $135,408 $271 45-54 2.3 $231,900 $533.4 55-64 1.6 $407,417 $651.9 65+ 1.6 $303,167 $484.8 Totals 8.7 $225,701 $1,963.6
  • Philanthropy in North America
  • 2011 U.S. Contributions by Source Total Giving = $298.42 Billion Individuals Corporations Foundations Bequests Source: Giving USA 2012, a publication of Giving USA Foundation, researched and written by the Center on Philanthropy at Indiana University.
  • The Euphoric Effect
  • Giving Channels (U.S.)
  • “The Millionaire Next Door”• Profile of a “millionaire” (Stanley, Danko 1996)• 57-year old, married man with three children• Self-employed > Business owner, Farmer, Contractor, etc.• Household income of $131,000 (median)• First generation “affluent”
  • “The Millionaire Next Door”• Changing Profile (2008)• Younger• Entrepreneur > Technology, Real estate, Athletics, Entertainment, Corporate leader, etc.• Just as likely to be Minority• Just as likely to be Female
  • “Millionaire Woman Next Door”• Profile of a female “millionaire” (Stanley 2001)• 49 yrs• 1 in 20 have never been married > Of those married, half are divorced at least once• Homeowner, Self-employed (many)• Earn 71% of household income• Give more to charity than millionaire men > Are charity “worker bees”
  • Millionaire Profile• Average age 58• 45% are retired• 19% own professional practice or business• Average net worth $2.2M • $1.4 million in liquid or investable assets
  • Giving and “The Great Recession”
  • Feeling Wealthy• Perception is reality• Survey of 1,000 millionaires > 42% stated that it would take "at least $7.5 million" to make them feel wealthy > Average respondent had $3.5 million in assets — Roughly half the amount of money they would need to feel secure
  • Giving DecisionsMajor Gift Objectives Reasons Giving Has Ended 23.40% Capital gift Memorial gift 23.60% Specific program 31.60% Growth opportunities 34.10% for the organizationLong-term investment 37.20% in the organization General Operating 56.70% Support (56.7%)
  • Giving by Sector• U.S. studies have looked more closely at these subsectors: > Arts & Culture > Education > Health > Religion > Combined Purpose Funds
  • Giving By Sector: Arts and Culture Who Gives? Positive factors related to giving to the arts• Comprises 14% of donations • College and Post-graduate to secular causes education > On average Arts donors • Accumulated wealth contribute to 3.7 causes • Age > Gifts average 2.1% of income • Living in metropolitan area• 8% of all households • Volunteer; Giving to other sectors • Catholic/Protestant affiliations and the presence of children in the home are both negative factors
  • Giving By Sector: Arts and Culture Household Income % of Average % of Giving Households Gift Amount by Income Contributing Group< $100,000 6.2% $163 4.4%$100,000 - $200,000 16.5% $332 1.9%$200,000 - $1 million 71.8% $8,166 59.3%> $1 million 77.4% $50,945 34.4% The Sweet Spot
  • Giving By Sector: Education Who Gives? Positive factors related to giving to education• 26% of households that give to • Income secular causes give to • Accumulated wealth education > Gifts average 1.5% of income • Female, Married or widowed• 75% of education donations • Children in the home are for higher ed • Post-graduate education > 24.7% to endowments; 6.4% to scholarship funds • New England region (South region is negative factor)• 10% of these donations are for private schools • Volunteering• 15% to libraries, tutoring & • Giving to other sectors literacy programs
  • Giving By Sector: Education Household Income % of Average % of Giving Households Gift Amount by Income Contributing Group< $100,000 11.2% $243 5.9%$100,000 - $200,000 31.9% $439 2.9%$200,000 - $1 million 82.2% $15,327 63.5%> $1 million 82.9% $78,138 28.2% The Sweet Spot
  • Giving By Sector: Health Who Gives? Positive factors related to giving to health• 37% of households that give to • Income and Accumulated secular causes give to health wealth • 1/3+ of these donors give only • Age and Female; Head of to health causes household is retired• 59.7% goes to • B.A./B.S. degree Hospitals/Foundations, Clinics • Religion identified as Jewish• 25% goes to Disease specific • Live in New England region organizations • Volunteer and Give to other• Motivated by the cause or sectors need • Presence of children in the • Gifts to health average 1.2% home is a negative factor of income
  • Giving By Sector: Health Household Income % of Average % of Giving Households Gift Amount by Income Contributing Group< $100,000 17.8% $173 13.9%$100,000 - $200,000 34.3% $401 5.1%$200,000 - $1 million 74.1% $2,805 21.9%> $1 million 70.4% $92,289 59.1% The Sweet Spot
  • Giving By Sector: Religion• 75% of donations go to Congregational operations• Around 25% of religious contributions are benevolences > Budget benevolences – food banks and other community needs > Overseas ministries > Gifts to other organizations > Non-budgetary benevolences such as special offerings
  • Giving By Sector: Religion Household Income % of Average % of Giving Households Gift Amount by Income Contributing Group< $100,000 42.4 $1,423 59.4$100,000 - $200,000 60.7 $2,316 11.3$200,000 - $1 million 75.0 $12,105 20.8> $1 million 70.9 $61,060 8.6 The Sweet Spot
  • Giving By Sector: Combined Purpose Funds• Allocated to a number of different types of charities > Examples include United Way, donor-advised funds at financial institutions, Jewish federations• At-risk youth and families in crisis received 52.6%• Missions usually represent missions that serve the poor or near-poor > Seniors, legal, economic sufficiency, ex-offender programs, etc.• 11% went to mission that focus on important community needs; not focused on the poor
  • Giving By Sector: Combined Purpose Household Income % of Average % of Giving Households Gift Amount by Income Contributing Group< $100,000 23.4% $330 34.8%$100,000 - $200,000 48.1% $554 9.8%$200,000 - $1 million 62.1% $7,087 46.1%> $1 million 60.3% $17,072 9.3% The Sweet Spots
  • Specific Donor Segments to Watch• Women Donors• African-American Donors• Emerging Donor Segments > Hispanic Heritage Donors > Asian-American Donors > Gay and Lesbian Donors
  • Women Donors• 46.3% of top wealth-holders are women (IRS, 2005)• 10.4 million privately-held women- owned firms > Accounts for 2 out of 5 U.S. businesses• Single women are significantly more likely than single men to make philanthropic gifts• Legacy giving: > More likely than men to name a health organization > Make gifts to organizations concerned with animals and pets > Want to understand legacy giving impact from others
  • Women Donors• Recipient organizations: > Organizations that serve the needs of children > Opportunities for women > Diversity > The Arts > Education > Economic opportunities for all > Health issues > Environment
  • African-American Donors• > 2 million African Americans living in households with annual income of $75,000 or more• Comprises 13 % of the total U.S. population• Traditional wealth comes from family businesses > Recent wealth: — Entrepreneurial businesses or self-employment — Real estate — Certified professions — Sports, media and entertainment
  • African-American Donors• Traditional recipient organizations: > Religious > Educational > Social > Political• In recent years, increasing donations > AIDS causes and > Genocide in Africa
  • Hispanic-American Donors• > 50 million in the U.S. > Comprises 13 % of the total U.S. population; 1 in 6 people in the U.S. is Hispanic/Latino > 126% increase in U.S. Hispanic households making more than $100,000 per year > 75% of Hispanics live in the nine states — Arizona, California, Colorado, Florida, Illinois, New Mexico, New Jersey, New York and Texas• Consider the Hispanic population in individual terms, each with a common language and different ancestry > Chicanos, Cuban, Mexican, Latinos, Puerto Rican or Spanish American
  • Hispanic-American Donors• Traditional recipient organizations: > Family > Church > Mutual assistance associations• Traditionally, support relatives abroad or other family members before contributing to nonreligious institutions• In recent years > Community-based self-help organizations > Institution building• Personal connection to the organization is essential
  • Asian-American Donors• 181% increase in Asian- American families with incomes of $200,000 or more > 312,228 households > 22 wealthy Asian suburbs have been identified — California, Maryland, Texas, NJ, NY, Virginia and Illinois• Philanthropy is part of this culture; celebration and recognition are not common nor expected• Expect high accountability, effective use of funds, greater impact
  • Asian-American Donors• Recipient organizations: > Universities – alma mater, as parents, as family members > Museums and Cultural Centers > Nursing Homes > Religion (Filipino-Americans)• 3rd generation shows wider range of philanthropy
  • How to Find Affluent Donor Groups in Your Database
  • Age Analysis Example • All major donors plotted by age for XYZ Organization • This example may/may not be true for your organization • Plot for your own organization Major giving peaks around age 55 and declines dramatically by age 85
  • Real Estate Values Example• Wealth and asset data, such as real estate, can be used to better understand specific groups of donors
  • Cluster Analysis Example• Grouping individuals of similar characteristics into respective categories• Way of taking a lot of data and grouping people into subsets in a meaningful way• Prizm, PersonicX, Niches are all pre-made cluster data overlays you can purchase
  • Clusters on Database• Household level clusters • http://www.equifax.com/consumer/marketing/en_us• Group people by life stages - 26 Niches• How to use: • Append Equifax Niche Clusters to major gift donors in fundraising database • Looked at % of file that fell into each Niche • For example: For one client 76% of major gift donors were in 7 Niches
  • Example• Niche I – IRA Spenders• Average age: 67• Average income: $91,000• Children in home: No• Average home value: $146,000• Career: Retired• Interests: Golf; Mail responsive
  • Group Major Donors % of Major Donors in XYZ’s Database
  • Applications of Cluster Data
  • XYZ Organization’s Custom Donor Model Example Donors of Gifts of $10,000 or more to XYZ Organization share these characteristics This donor model is not shared with any other organization
  • Scoring the Prospect pool Top Prospects for $10,000 Gifts Each individual is scored against the model and an ordered prospect pool results
  • Predictive Analysis Insights
  • Summary and Questions• North Americans are generous• Want to make a difference in the world around them• Among other things, they give because they are asked• Charitable priorities may change as income increases• Understand your unique constituencies• Collect and use data in ways that work for your organization• Consider time, fiscal commitment, human resource limitation when choosing data and analysis method
  • Contact and More Information Katherine Swank, J.D. Senior Consultant, Target Analytics, a Blackbaud Company Katherine.swank@blackbaud.com 800-443-9441 ext. 3926 TA Consulting Team provides other Fundraising and Prospect Research White Papers: http://www.blackbaud.com/resources/white-papers.aspx