This document discusses strategies for identifying and cultivating major and planned gift donors, referred to as "top of the pyramid" or "principal" donors. It provides an overview of research on donor profiles and giving behaviors. Donors who make major gifts or planned gifts tend to share demographic characteristics like age, household size, wealth indicators, and philanthropic histories. The document outlines approaches like wealth screening, predictive modeling, and cluster analysis that nonprofits can use to identify and understand top prospective donors based on their giving behaviors and characteristics.

1. Investing in the Top of the Pyramid Lawrence C. Henze, J.D. Principal Consultant, Target Analytics

2. Agenda
•Define Top of the Pyramid Giving
•What We Know
•Research and Studies
•How We Identify Top of the Pyramid Prospects
•Questions and Discussion

3. Principal Giving
3 #bbcon

4. Different Terms, Same Concept
•Principal
•Lead
•Transformational
•Inspirational
•Ultimate
•Major?
•Planned?

5. Traditional vs. Reality?

6. Principal Giving – Beyond Wealth
Your Database
Wealth Analysis Analysis of hard assets for complete assessment of donors and prospects
Propriety Models for Inclination and Capacity Developed by examining over 150 organizations and 100M gift transactions
Giving History Analysis Examination of the trends and patterns of giving in your house file
Principal Giving Pool
$250K prospect
Naming opportunity
$1M+ prospect

7. Principal Giving Profile
360 Donor View
•Giving history is trending positively
•Confirmed patterns of philanthropic donations
•Well educated and affluent
•Live in areas with higher quality of life index
•Benchmarked against peers giving principal and lead gifts
•Higher incomes and known public assets
•Purchase expensive homes and vehicles
•Do not rely on credit to make purchases
•High real estate valuation
Inclination
Wealth
Indicators
Capacity
Asset Valuation

8. 31
2,684
3,334
8,393
Sample PGS Results
$50,000
$100,000
$250,000
$500,00+
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P

9. The Other Type of Principal Gift
Millionaires contributinging through planned gifts
Most (97 percent) are homeowners.
Live in homes currently valued at an average of $320,000.
About half have occupied the same home for more than twenty years. Most enjoy significant increases in the value of their homes.
Have more than six and one-half times the level of wealth of our non-millionaire neighbors, but, non-millionaires outnumber these households more than three to one.
Stanley, Thomas J. and William D. Danko, The Millionaire Next Door, MJF Books, New York, 1996, p. 9-10.

10. Planned Giving Profile
360 Donor View
•Giving history is trending positively/consistently, or long-term giving history
•Volunteerism
•Engagement
•Generational correlations to planned giving
•Conservative use of credit
•Preservation of assets
•Political contributions
•Giving to other nonprofits
Loyalty to You
Fiscally
Conservative
Age/Cohort
Engagement with Others

11. Planned Giving Likelihood (PGL)
•Individuals most likely to make a planned gift belong to specific demographic and lifestyle segments that range from retirees who are empty-nesters, living quiet, comfortable lives, to very prosperous and powerful middle-aged and older executives who enjoy more affluent lifestyles with prestigious careers and educations.
•They have been philanthropic with your organization and others, particularly to health-related causes, and make political donations as well.
•However, they are likely to use credit in a conservative manner whether their outward lifestyle consists of luxury items or not and they are further identified by the small number of people living in their households.

12. Bequest Profile
•In addition to being a recent and frequent donor to your organization, your best prospects for a bequest will also be more likely to support religious non- profits.
•Among other demographics, they typically have few people living in their homes and are both retirees, living quiet, comfortable lives, to very prosperous and powerful middle-aged and older executives who enjoy more affluent lifestyles with prestigious careers and educations.
•Lastly, your best prospects maintain strong credit and tend to purchase a large amount of consumer products via postal mail/catalog sales.

13. Annuity Profile
•Individuals likely to contract for a charitable gift annuity with your organization tend to be recent past donors living in smaller households.
•They are at certain life stages that range from retirees who are empty-nesters, living quiet, comfortable lives, to very prosperous and powerful middle-aged and older executives who enjoy more affluent lifestyles with prestigious careers and educations. They own their homes outright or have very small mortgage balances remaining, have established credit histories and keep lower credit balances.
•Though somewhat diverse, they share an interest in business and financial magazines, but at the same time are community-minded and philanthropic in nature, making both political contributions and giving to humanitarian organizations.

14. Charitable Remainder Trust Profile
•Individuals likely to donate through a life income trust invest in their community through gifts to political organizations and to a variety of charitable organizations including yours.
•They share specific demographic and lifestyle segments that point to either well- established neighborhoods whether in urban and suburban cities or in smaller town and country areas. Regardless of their location, they tend to choose areas that have high employment in science-related professions.
•They are nearing retirement or may already be retired and exhibit conservative financial patterns such as holding well-established accounts with low balances and have no or low mortgage balances. They most likely live alone or with only one other person in the household.

15. Planned Giving – Overall Profile
•Individuals most likely to make a planned gift belong to specific demographic and lifestyle segments that range from retirees who are empty-nesters, living quiet, comfortable lives, to very prosperous and powerful middle-aged and older executives who enjoy more affluent lifestyles with prestigious careers and educations.
•They have been philanthropic with your organization and others, particularly to health-related causes, and make political donations as well.
•However, they are likely to use credit in a conservative manner whether their outward lifestyle consists of luxury items or not and they are further identified by the small number of people living in their households.

16. What We Know
16 #bbcon

17. Biggest Motivations for Giving
Additional Note:
The most common motivations for stopping support are an organization soliciting the donor too frequently or asking for an inappropriate amount.
Bank of America Merrill Lynch/ Center on Philanthropy at Indiana University Center for Philanthropy http://www.philanthropy.iupui.edu/research-by-category/the-2012-study-of-high-net-worth-philanthropy ; accessed on 11/5/12

18. In the Words of Principal Gift Donors, Philanthropy is Engagement
Matching the right person to the right projects
About fundraising, friend-raising and matchmaking

19. Internal Obstacle to Engagement
Annual giving
Donor relations
CRM
Shadow database
Membership
Special events
Major giving
Planned giving
Prospect Research
Prospects

20. Target Analytics’ Studies
20 #bbcon
20 Organizations, $1.2 Billion in Total Gifts

21. Giving Trajectory Prior to Making $10k+ Gift
0%
20%
40%
60%
80%
100%
1 year before
2 years before
3 years before
4 years before
5 years before
Give nothing
> 0 to < $1,000
>= $1,000 to < $2,500

22. Transitional cultivation
% Giving a Major Gift ($10k+)
Gift Total in Year 6
Donors (active and lapsed)
1 year after
2 years after
3 years after
4 years after
5 years after
3 year cumulative
5 years cumulative
No Giving
1,604,017
.02%
.03%
.04%
.05%
.06%
.08%
.15%
$1 to $99
254,414
.02%
.03%
.03%
.03%
.03%
.06%
.10%
$100 to $499
110,420
.07%
.09%
.11%
.12%
.12%
.23%
.39%
$500 to $999
17,819
.17%
.22%
.22%
.26%
.36%
.51%
.87%
$1,000 to $2,499
27,658
.29%
.35%
.34%
.42%
.45%
.72%
1.15%
$2,500 to $4,999
4,016
1.17%
1.07%
1.12%
1.42%
1.37%
2.61%
3.96%
$5,000 to $9,999
2,235
7.83%
6.80%
6.04%
6.58%
6.09%
13.78%
16.78%

23. What Do We Take From This Data?
•Study parameters need to be adjusted?
•Timeline:
•Too short?
•Overlaps recession?
•Best fundraising practices not implemented?
•Why do we struggle to convert mid-level donors to major gift donors?

24. The Search Begins
24 #bbcon

25. Identification Best Practices
Descriptive Statistics and Past Behavior
Predictive Modeling
Wealth Screening
Research
Field Qualification

26. The Goal – More Top Prospects

27. Mid- Level
Transitional Giving
Major
Primary
Transitional
Transitional

28. N/A – has not made a gift in 3 years
At Risk Donor – giving is decreasing
Slow and Steady Donor – giving is staying the same
Rising Star – giving has gone up
Velocity Rating (Descriptive)
•Calculation: total giving in the most recent year divided by the average giving in the last 3 years
Increase
Rising Star
2,218
Same
Slow and Steady
6,721
Decrease
At Risk
2,147
No Rating
NA
8,025

29. At What Level Does Giving Begin?
Gift Level in 12-Months
# of Unique Donors at this Level
% of Donors at this Level
$0
75,175
73.25
$1-$49
4,223
4.12
$50-$99
4,239
4.13
$100-$249
8,464
8.25
$250-$499
3,444
3.36
$500-$999
2,302
2.24
$1,000-$2,499
2,482
2.42
$2,500-$4,999
756
0.74
$5,000-$9,999
549
0.53
$10,000 +
988
0.96

30. Source of Original Gift
Direct Mail
Telemarketing
DSE
0
10
20
30
40
50
60
Direct Mail
Telemarketing
Special Events
Email/Online
Social Media
Recurrent Giving
% of Donors

31. What Path Do They Take to the Top?

32. Years of giving to first gift of $1,000-$9,999
Direct Mail
Telemarketing
DSE
0
5
10
15
20
25
0
1
2
3
4
5
6
7
8
9
10
11+
Percent of Donors
Percent of
Donors

33. Demographic and Lifestyle Cluster Analysis
•Groupings of individuals by common characteristics such as affluence, interests, behaviors and passions
•May be used to segment donors by gift type, appropriate message, and potential contributors
•Cluster data products include:
•Mosaic
•Niche
•Prizm
•Personicx

34. Transitional Donors
Major Donors
Annual Donors
Demographic Cluster Analysis (Descriptive)
•Prospecting - Who on your database share characteristics with these donor groups?
•*Mosaic from Experian
•Upper middle class “Boomers” in suburban homes
•Mature couples and upscale retirees along with empty nesters
• Mature upscale couples and singles in suburban homes
•Prosperous couples living in suburban areas in their peak earning years
•Power Elite individuals with the highest incomes in the country
• Wealthy, influential, and successful couples and families living in prestigious suburbs

35. Giving History
Biographical Information
Demographics
Predictive Modeling
Capacity and Wealth
Lifestyle & Behavior
Organization Data
Principal Giving
Major Giving
Transitional/ Leadership Giving
Annual Giving

36. Money on the Table
Public Higher Education
Private Higher Education
Environmental
Community
Hospital
Human/Social Services
Gift Level
in 12-Months
Actual
Potential
Actual
Potential
Actual
Potential
Actual
Potential
Actual
Potential
$10,000 +
0.02
0.17
0.07
0.43
0.15
.39
0.08
.78
0.04
0.35
$5,000-$9,999
0.03
0.25
0.04
0.47
0.1
0.55
0.27
.73
0.08
0.54
$2,500-$4,999
0.02
0.58
0.08
0.78
0.16
0.93
0.19
1.30
0.13
1.05
$1,000-$2,499
0.14
1.23
0.33
2.46
0.49
2.18
0.67
2.45
0.66
2.54
$500-$999
0.12
2.71
0.26
5.18
0.43
4.19
0.39
5.63
0.99
5.12
$250-$499
0.17
5.68
0.45
9.11
0.62
10.46
0.56
9.20
1.73
10.38
$100-$249
1.2
22.80
1.8
16.60
2.54
16.56
2.14
30.49
5.04
17.37
$50-$99
0.98
36.71
1.47
35.75
2.89
35.70
2.49
20.17
3.91
34.60
$1-$49
1.92
29.89
2.41
29.23
8.34
29.04
10.51
29.26
6.58
28.05
$0
95.41
--
93.08
--
84.27
--
82.7
--
80.85
--

37. The Researcher’s Challenge: Hidden Assets
<$10K
$10K-$24K
$25K-$100K
$100K+
Assets >$1M
3.7%
17%
20%
22%
Assets >$5M
.3%
3.2%
4%
6%
Asset Mean Estimated Total Value
$273K
$2M
$2M
$7.3M
Income Estimator
$157K
$218K
$195K
$232K
Discretionary Spending Estimator
$58K
$144K
$140K
$150K

38. Power of Combining Modeling and Wealth
0%
20%
40%
60%
80%
100%
Higher
Education
Advocacy
Healthcare
Total Gifts Identified
Only with Modeling
Total Gifts Identified
with Wealth and
Modeling
Total Gifts Identified
Only with Wealth

39. Putting It All Together
39 #bbcon
Grouping
Predictive Model #1
Predictive Model #2
Estimated Capacity*
# of People
1: Principal Giving
PGS Tier 1
N/A
$500K
11
2: Principal Giving
PGS Tier 2
N/A
$250K -$500K
81
3: Principal Giving
PGS Tier 3
N/A
$100K - $250K
208
4: Principal Giving
PGS Tier 4
N/A
$50K - $100K
546
5: Major Giving Top Prospects
MGL 701-1000
TGR 9-10
$10K-$50K
743
6: Major Giving Second Tier
MGL 701-1000
TGR 8
$5K-$10K
869
7: Major Giving Future
MGL <701
TGR 8-10
$5K-$50K (statistically less likely)
369
8: Bequest Top Prospects
BL > 601
Included above
Included above
579
9: Annuity Top Prospects
AL > 701
Included above
Included above
496

40. Without a doubt, there are top of the pyramid prospects hidden in your database? Why not find them?
40 #bbcon

41. 41 #bbcon
Don’t forget to complete a session survey! Each completed survey enters you into a drawing to win a complimentary registration to bbcon 2015 in Austin, Texas*.
*Blackbaud reserves the right to change or withdraw this promotion at any time, without advance notice. Promotion has no cash value and may not be exchanged, applied to, or combined with any other offer.
Did this session give you the jolt you needed?

42. Thank You! Lawrence Henze (843) 991-9921 lawrence.henze@blackbaud.com Link to Blackbaud’s Whitepapers: https://www.blackbaud.com/nonprofit-resources/fundraising- whitepapers