All posts by Elisa Shoenberger

Are NFTs the next best fundraising opportunity? And what are they, anyway?

As someone who writes about cryptocurrency and art (separately) for Aspire Research and other publications, I’ve been getting a lot of public relation emails about NFTs. A lot. I know earlier this year, an artist named Beeple sold “Everydays: The First 5000 Days” for $69.3M at an auction at Christies’ so maybe it’s big money that’s getting people’s attention.

I read this humorous example from a user named “queersamus”:

Imagine if you went up to the mona lisa and you were like “I’d like to own this” and someone nearby went “give me 65 million dollars and I’ll burn down an unspecified amount of the amazon rainforest in order to give you this receipt of the purchase” so you paid them and they went ‘here’s your receipt, thank you for the purchase” and went to an unmarked supply closet in the bank of the museum and posted a handmade label inside it behind the brooms that said “mona lisa currently owned by jacobgalapagos” so if anyone wants to know who owns it they’d have to find this specific closet in the specific hallway and look behind the correct brooms, and you went “can I take the mona lisa home now?” and they went “oh god no are you stupid? You only bought the receipt that says you won it, you didn’t actually buy the mona lisa itself, you can’t take the real mona lisa you idiot. You CAN take this though, and gave you the replica print in a cardboard tube that’s sold in a gift shop. Also the person selling you the receipt of purchase has at no point in time ever owned the mona lisa.

Unfortunately, if this doesn’t really make sense or seem like any logical person would be happy about this exchange, then you’ve understood it perfectly.

I vaguely knew what they were – something to do with unique digital images – but knew there was a lot of backlash against them from the artists I follow on Twitter. An artist tweeted last week that they discovered that their early work was turned into NFTs without their consent. The Atlantic previously published a piece about how NFTs don’t help artists. There’s also concerns about the environmental costs to compute NFTS.

But there was a lot of money involved so, as a researcher, I became naturally curious about what was going on. Chronicle of Philanthropy reported that New Jersey based health clinic Sostento received about $58K from the sale of “The NFT Guild Philanthropist – Healthcare Heroes.” The artist also matched the sale price. And most intriguing, Chronicle reports, “The NFT will also continue to benefit charities in the future. It was created with a provision that obliges proceeds of future sales to be given to charity.”

Light bulbs went off in my head, much like when I realized how useful 3D printing is after watching a TED talk on 3D printing organs to solve the organ donor crisis.

So, What Exactly is an NFT?

NFT stands for Non-Fungible Token. Investopedia defines it as “a cryptographic assets on blockchain with unique identification codes and metadata that distinguish them from each other.” Or more simply, it is a digital asset, such as a picture, a sound, etc. Wall Street Journal defines NFTs as “vouchers of authenticity for digital assets.” Someone likened it to like a trading card, which makes sense for me.

Harvard Business Review provides an in-depth explanation of what that exactly means:

NFTs have fundamentally changed the market for digital assets. Historically there was no way to separate the “owner” of a digital artwork from someone who just saved a copy to their desktop. Markets can’t operate without clear property rights: Before someone can buy a good, it has to be clear who has the right to sell it, and once someone does buy, you need to be able to transfer ownership from the seller to the buyer. NFTs solve this problem by giving parties something they can agree represents ownership. In doing so, they make it possible to build markets around new types of transactions — buying and selling products that could never be sold before, or enabling transactions to happen in innovative ways that are more efficient and valuable.

The thing that gets me in that description is the idea that “markets can’t operate without clear property rights.” Not sure if that makes sense since we have been functioning just fine on the internet without NFTs – for decades. Sharing images and videos without attribution is a problem, and tagging with data would help with that. Except you can still download an image and share it without crediting the creator if I understand things correctly.

Plus, there’s big concerns on how it isn’t doing what people hoped – helping artists. In the Atlantic earlier this year, Anil Dash who worked on putting together one of the first NFTs with artist Kevin McCoy in 2014 said, “Our dream of empowering artists hasn’t yet come true, but it has yielded a lot of commercially exploitable hype.”

He later writes, “In the meantime, the current NFT market is drawing an extraordinary range of grifters and spammers. People are creating NFTs of artists’ works without asking permission or even letting the artists know.”

Harvard Business Review does point out that NFTs are “a completely novel asset class and we don’t see new assets classes appear that often.” Granted we just saw the creation of crypto as its own asset, but it’s useful to think of it in those terms. Designating NFTs as an asset puts it in the same category as real estate, jewelry, and stocks and bonds.

And because it really sounds like an Onion article, Wall Street Journal recently tweeted: “Your grandmother gave you cash in an envelope for the holidays. Should you consider giving her an NFT or cryptocurrency?”

The Chronicle of Philanthropy pointed out that NFTs occupy an in-between space from a regulatory standpoint: “Regulators, including the Securities and Exchange Commission, are beginning to examine how and when to treat NFTs as collectibles or securities. The eventual result of those decisions could have ramifications for charitable-accounting offices.” Cryptocurrencies, in contrast, right now are treated as property, not securities.

The Gift that Keeps on Giving

But the second part of the explanation about “enabling transactions to happen in innovative ways” does catch my eye. We already see it with respect to the Sostento gift above; subsequent sales of the NFT will give a portion back to charity.

Chronicle of Philanthropy also reported how other nonprofits are making money off of NFTs, like Beneath the Waves that auctioned off “dozens of NFTs that each represent a real-life shark tag, with starting prices ranging from $500 to $20,000. The owners get the right to name their tagged shark and will receive updates on its movement through the oceans.”

Macy’s auctioned off ten of its Thanksgiving Day parade balloons as NFTs and planned to give the money to Make-A-Wish Foundation of America. And if they are resold, 10% will go to Make-A-Wish.

Recently, Shutterfly announced that it was auctioning off NFTs featuring fashion icon Iris Apfel to raise money for Boys & Girls Clubs of America. One-hundred percent of the proceeds will be given to the nonprofit, including a $25K donation from Shutterfly.

Now all that is very intriguing to me.

But that’s not all. Harvard Business Review points out that NFTs are almost functioning like memberships that get you into special communities. For example, “The Bored Ape Yacht Club, comprises a series of NFT ape images conferring membership in an online community. The project started with a series of private chat rooms and a graffiti board, and has grown to include high-end merchandise, social events, and even an actual yacht party.” Restaurants are reportedly using NFTs for reservations as well.

This might have some interesting uses by nonprofits, especially museums and other membership based nonprofits.

The Verdict

Digging into NFTs has been useful to deepen my understanding on a topic that I had initially written off. I see the potential, but the environmental costs, the unregulated landscape, and the challenges that artists are facing are some big problems. I’m not quite on board in the same way that I am with cryptocurrencies.

NFTs are so new, in a way that cryptos are not, that I think with time and some regulation, maybe NFTs could develop from “passing fad” and grow some legs. I’m thrilled that charities are using NFTs to generate donations, whether by accepting NFTs (through sales) or auctioning them off.

What is your organization doing about NFTs? Is your organization ready to accept cryptocurrencies? Please comment and let me know. I’d love to hear your experiences and thoughts about it!

Additional Resources

Gender and Crowdfunding: September 2021 by Women’s Philanthropy Institute

What is this Report?

The report focuses on how gender may impact crowdfunding. It’ll dive into how men and women may act and give money differently when faced with a crowdfunding campaign. The report is based on sample size of 1,535 in September 2020.

What are the key findings from the article?

  • Almost one in three women have given to crowdfunding in the past. Female donors tend to be younger, more education, in the Western US compared to nondonors. Other research at the WPI suggests that women tend to give collaboratively. Also, women use the internet differently, which may impact the way they behave with crowdfunding campaigns.
  • But men and women are just as likely to give. Slightly less than a third of men and women give to a crowdfunding campaign in a given year. But women are more likely (34%) to give to a social media campaign than men (31.4%).
  • Women of Color tended to give to crowdfunding at higher rates than white women. 33.3% of Black women, 31.2% of Hispanic women give to crowdfunding campaigns compared to 30.2% of White women. The report theorizes that it might be that crowdfunding is a blend of formal and informal generosity, which women of Color tend to give in higher rates that women.
  • Personal connection to the person behind the crowdfunding campaign is important. Women are more likely to give to family members or close friends. They are less inclined with campaigns associated with celebrities, influencers and for-profit.
  • Donors are more comfortable sharing campaigns, rather than asking their connection to give directly.
  • 94.6% of former female donors plan on giving the same or more in future campaigns.
  • Finally, crowdfunding may be seen as another way to be generous, rather than a replacement of giving. This is different from impact investment, which men are more likely to view as a replacement for crowdfunding, rather than another venue forgiving.

What can I do as a result?

  • Don’t ignore crowdfunding for your organization. Fundly estimates that $34.4 billion was raised through crowdfunding in 2020.
  • Remember the women prospective donors. As the reported noted, the findings resonate with other studies about women’s behavior when giving. Women tend to want to have a personal connection to the organization before giving. Women also tend to be more uncomfortable directly asking for money.
  • It’s critical to make fundraising appeals, whether for a crowdfunding or traditional philanthropy, that is segmented for women. Celebrities and famous people aren’t going to get women to give but their friends and family can.

Additional Resources

Boston Consulting Group: Innovations in Wealth Management 2021

What is this Report?

The Boston Consulting Group’s 21st annual report looks at global wealth as well as the field of wealth management. Ultra-high net worth individuals are those individuals with assets over $100M.

What are the key findings from the article?

  • Global wealth expanded by 8.3%in 2020. This came as a surprise to BCG! It had predicted global wealth would decline, since after the financial crisis in 2008, global wealth contracted by 8%.
  • BCG predicts that financial assets will surpass real asset growth in Asia and that “investment funds will become the fastest growing financial-assets class.” In mature countries such as the US, wealthy people hold more of their wealth in financial assets such as cash, deposits, and securities. In growing countries, wealthy people hold more of their wealth in real assets, such as real estate, jewelry, fine art, and gold coins.
  • The US currently has the largest number of Ultra High Net Worth Individuals, but China is projected to surpass them in 2029 with an annual rate of 13%.
  • BCG advises that its new“simple-needs segment whose wealth is $1 million or less” are a missed opportunity for wealth management. There are 331 million individuals in the segment with $59 trillion in investment wealth. These people have money to invest, just not quite as much. This segment requires a different approach, such as more financial education tools and digital tools such as dashboards, that provide customization that can be scaled.
  • In the upcoming decade, the segment currently aged between 20 and 50 will become an important wealth segment. In interviews with BCG, people in the segment note that they do not want to be treated like their parents. They want “exclusive opportunities, specialized lending and investment expertise” — not the same run of the mill investment advice. BGC notes: “Collectively, the next gen has longer investment horizons, a greater appetite for risk, and often a desire to use their wealth to create positive societal impact as well as solid returns.”
  • Retirees are a fast-growing demographic. BCG predicts that by 2050, 1.5 billion people across the globe will be at least 65. This segment is trying to figure out what to do with their accumulated wealth or rather how to get rid of wealth, whether it’s spending it to live a comfortable life or leaving it to their children or elsewhere. And community is important. However, wealth management is not meeting this segment’s needs given the industry’s focus on wealth accumulation not decumulation.

What can I do as a result?

  • Don’t ignore the assets of your mid-level prospects. Just as BCG recommends that wealth management firms cannot ignore their simple-needs segment, nonprofits should not ignore the same segment when it comes to fundraising. They may not need an intense relationship to make an asset gift, but are likely to take advantage of educational tools on making asset gifts and would appreciate customized stewardship that could be automated using digital tools.
  • Are you underestimating capacity? Much of wealth is held in financial assets that are not easily visible, especially in mature markets like the US and Europe. This is something that Aspire and the prospect research field has been advocating for awhile. The report notes that financial assets constitute 59% of wealth, leaving real estate and other tangible goods at 31%. So, visible, public assets such as real estate only show a small part of the picture for the very wealthy.
  • Engage your younger and older donors. Just as wealth management needs to better work with these demographics, fundraising needs to look at these groups as distinct and worthy of effort. The next generation have different needs and wants from their parents are likely to be interested in learning how their wealth can make a philanthropic impact. People on the cusp of retirement want help figuring out to best give away their “extra” money. What planned giving efforts have you made? Also, developing social opportunities for retirees through programs and volunteer engagement, is essential.
  • Segmentation, segmentation, segmentation. These groups are not monolithic and within these donor groups, there are different needs. Practicing segmentation that works for demographics and your organization will yield short and long-term fundraising results.

Additional Resources

America’s Charity Checkout Champions 2021 Report

What is this Report?

Engage for Good’s biannual report looks at point of sale fundraising campaigns that raise over $1M. The 2021 report looked at 76 campaigns that raised over $1M in 2020.

What are the key findings from the article?

  • Despite COVID-19, these retail fundraising campaigns have increased 24% from $486.3 million to $605 million in 2020. But the number of campaigns that raised over $1M went down from 79 in 2018,to 76 in 2020.
  • Employees were keen to participate in these campaigns. Again, it shows the importance of employee engagement in company-related fundraising.It helps with morale and helps raise more funds for a good cause.
  • Point of sale campaigns that were integrated with online shopping helped raise funds as well. This shouldn’t be too surprising since eBay for Charity still remains number 1 with $82M raised in the US alone in 2020 ($123M annually). Sellers and buyers can donate to charities of their choice. Albertsons Companies was number two with $67.8M a campaign for “Nourishing Neighbors” initiative. PetSmart and Panda Express came in number 3 and 4 with $44M for animal welfare and $40M for undeserved youths and disaster relief, respectively.
  • Hybrid models can also be effective. Dutch Bros. raised $1.39M for the Muscular Dystrophy Association in 2020 by allowing customers an option to donate online and by donating a part of the proceeds from a single day of shop sales.

What can I do as a result?

  • Donors want to give. Fundraisers need to ask. The increase in giving from 2018 to 2020 shows that people wanted to give and give in different ways despite COVID-19.
  • Make it easy to give to your organization. A recent Tampa Bay article notes that while these campaigns are effective, people don’t like them. But one takeaway is that people still donate. Making it easy to give is key.
  • While effective, misinformation is rife about these campaigns. Uninformed memes and articles have been written about how companies get to claim tax write off from consumer donations. This might provide some insight into why some people don’t like these campaigns. Companies and nonprofits need to ask, but also communicate how these campaigns work and the impact they have.
  • Technology is your friend. Adding a point of sale to online purchases with your corporate partners can be effective at raising funds.
  • Get creative with the campaigns. Dutch Bros raised a lot of money with the hybrid model of online as well as a percentage of days sales. It’s a great way to get people motivated to buy… and give.

Additional Resources

Capgemini 2021 World Wealth Report

What is this Report?

The World Wealth Report is an annual report about the wealth of high-net-worth individuals (HNWIs) and the economic conditions in the Wealth Management industry. This year’s report is based on responses from over 2,900 HNWIs in 26 wealth markets, administered between February and March 2021.

Capgemini defines HNWI as those who have “investable assets of US $1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.”

What are the key findings from the article?

  • Wealth increased despite the disruption of the coronavirus, with a rise in global High Net Worth Individuals (HNWI) of 6.3% and financial wealth of 7.6%.
  • “72% of HNWIs have invested in cryptocurrencies and 74% have invested in other digital assets (e.g., website domain names). ”Fidelity is reportedly launching a bit-coin exchanged traded fund as well as Robo-advisor Wealthfront announced the availability of crypto investment options for its investors.
  • Demographics are changing. Women own 40% of US Businesses with 114% more women entrepreneurs than 20 years ago, the report says. Family structures are also changing. 41% of HNWIs from LGBTQ+ thought their needs were being met.
  • In 2020, North America passed Asia-Pacific for both wealth and population of HNWI. The report credits the big change due to rising equity markets and government stimulus. North America saw growth of 10.7% in HNWI population and 11.9% in wealth.Capgemini speculates the increase in wealth is from equity as well as tech stocks rising dramatically since 2019.
  • 62.9% of global HNWI population is in United States, Japan, Germany and China. Brazil’s ranking dropped three spots to 22.
  • Financial markets are not tied to the real economy anymore. The market bounced around, but kept rising, while the economy on Main Street faltered as people left the workforce, hunger rose, etc. Capgemini ascribes the decoupling as a result of Tech stock dominance, and liquidity from retail investors due to digital investing platforms. “Earlier this year, a Deutsche Bank survey found Americans aged 25-34 planning to invest 50% of their stimulus checks on stocks–a potential US equity market infusion of USD170 billion.”
  • HNWI want to play a more hands-on approach with their investments. Looking back at 25 years, Capgemini notes that HNWIs were interested in philanthropic investments and socially responsible investing. The 2008 crisis saw a decline in this area but after the crisis faded, interest increased. Capgemini also found that HNWIs tend to be self-sufficient in making financial decisions during good economic periods, but want advice during market crises. “43% of Ultra HNWIs and 39% of HNWIs age 40 or younger are likely to request an environmental, social, governance score for products offered by their firm.”
  • There are over 7,300 family offices with estimated $5.9 trillion in assets. Family Offices are companies that manage the wealth of a single individual or a family. These offices can also help with succession planning, philanthropy, trusts and estate planning. North American has the majority of them at 42%, followed by Europeat 32%.

What can I do as a result?

  • Wealth was created in the US despite the economic downturn and coronavirus. Don’t assume people are hesitant to give big. There are still opportunities to reach out to new and known prospects to raise funds for your organization.
  • More wealth may be held in equity than cash so be prepared to get creative when asking major gifts. Being receptive to securities and other holdings might bea way to get big gifts through the door. If your gift officers don’t have experience with assets, consider partnering with a financial advisor to offer educational experiences for your donor prospects to learn about gifting assets.
  • Cryptocurrencies are here. The debate about whether cryptocurrencies are a fad is less relevant. People are investing in them so charities need to start thinking about whether they should accept them and if so, how they should do so.
  • Don’t forget the women. 40% of US businesses are run by women, so that’s a lot of potential from women prospects as well as their companies. As we know, fundraising, especially major giving, isn’t really one size fits all. Figure out how to attract and cultivate your female donors. And given shifting family dynamics, figure out how you can cultivate LGBTQ+ prospects, too.
  • Family offices are a significant wealth indicator. The vast majority of family offices are located in North America. It’s suggestive that the family not only has the money to afford a private office to manage their wealth (and other related activities), they have the wealth that needs to be managed.

Additional Resources

The Cryptocurrency Merry-Go-Round: Are you on?

Reading the headlines about cryptocurrency feels a lot like a merry-go-round. So many ups and downs. For instance, in the past few months alone:

  • In April, Coinbase, a company that allows people to buy and sell cryptocurrencies, had an initial public offering of $100B.
  • But then, in May 2021, China announced that banks and firms “were not allowed to offer clients any services involving cryptocurrencies,” according to the Guardian.
  • But also in May, Wharton School of University of Pennsylvania announced a $5 million gift in Bitcoin to support financial technology programs at the Stevens Center for Innovation in Finance, per The College Post.
  • In June 2021, El Salvador made bitcoin legal tender in the country and Paraguay may follow suit.

And up and down it goes, like a merry-go-round.

But while there are lots of questions about the future of cryptocurrencies, there’s no question that people are making money… and donating the proceeds to charity.

Some major organizations have already bitten the bullet and have been accepting cryptocurrencies for several years, like Save the Children and Lutheran World Relief. In 2020, donors gave $28 million in cryptocurrencies to Fidelity Charitable — up from $13M in 2019. And don’t forget the $5M gift to Wharton School.

Given the reality of these gifts, organizations might want to consider whether they should accept cryptocurrencies and develop policies about accepting those types of gifts.

To Take Bitcoin or Not to Take Bitcoin?

Just like the merry-go-round of news surrounding cryptocurrencies, there are reasons for and against accepting cryptocurrency donations. There’s the obvious opportunity noted above with more donations coming in each year. The Giving Block estimates that $300M is given in cryptocurrency each year.

But there’s a lot of volatility. Tweets by Elon Musk and government regulations in China have caused various cryptocurrencies to tumble. And there’s also the use of cryptocurrencies in illegal operations; hackers demanded ransom over the Colonial Pipeline in cryptocurrency. So, there’s a bit of a Wild West element even today with these currencies.

One of the big considerations is whether it makes sense for your specific organization to accept these new currencies. Could your donor and constituent base give cryptocurrencies?

If you have a lot of tech folks in your database ranks, then it might be a good idea. But even if you don’t or don’t know enough about your donors to know, there may be folks in your donor rolls who are interested. Some organizations are accepting cryptocurrencies as a way to encourage new donors to give back.

Planning, Planning, Planning

If your organization does decide to go ahead with cryptocurrency donations, it’s absolutely critical to have a plan. It’s a bit like due diligence; better to have a policy first than have to scramble after the fact.

For instance, what cryptocurrencies will your organization accept? There are 4,000+ according to Investopedia as of January 2021. That’s a lot of cryptocurrencies! But not all are equal. The Giving Block reports that 90% of donations are in bitcoin. Your organization might want to find the most popular cryptocurrencies and set up a digital wallet for those currencies.

Then you’ll need a plan on how to handle the donations coming in. Who will check the digital wallet? How often? What do you do with the donation? The best practice is to sell the cryptocurrencies, like stock transactions, when they are received, especially given the volatility. But what if a donor asks for your organization to hold on to it? There’s a question of donor intent there that is worth investigating.

Also, given the association of cryptocurrency and illicit activities, maybe your organization will want to investigate prospective crypto-donors before the gift is made? It could be a“trigger” for due diligence work, especially for donations over a certain amount.

But there are also fresh opportunities for fundraising growth, too. Should your organization consider having a crypto-campaign to let people know that you are accepting these types of donations? Maybe targeted material might be the right thing to get new donors?

There is some exciting potential with cryptocurrency, but it’s important to be prepared.

And for those folks who still think cryptocurrency is a passing fad, I cannot help but recall the wise words of John Taylor of Principal at John H. Taylor Consulting, in a 2019 interview:

“I had these same conversations in the late 1980s/early 1990s when donors were asking [about accepting] Discover Card. We had CFOs didn’t want to take on another credit card [because it would be hard to reconcile]… Cryptocurrency is not a big deal.”

Additional Resources

Due Diligence: The Time is Now

Due Diligence: The Time is Now

Every day it seems there’s a new scandal in the headlines about a nonprofit and a board member. Or a current or former donor. Mid-June was the end of 10 weeks of protests against the Museum of Modern Art in New York; activists protested against “toxic philanthropy” including the ties of board members to Jeffrey Epstein and more. In the UK, there have been protests against museums for accepting gifts from BP and other oil companies.

So how can nonprofits avoid these kinds of protests and headlines? The answer is due diligence or in other words, risk assessments. It’s something that some organizations have been doing, notably in the United Kingdom, but many organizations may not have considered it or only did it in special circumstances.

Now with greater scrutiny of nonprofits and their boards and donors, nonprofits should think more seriously about implementing due diligence for their board members and donors, both current and prospective, and any potential award nominees.

Alyce Lee Stansbury of Stansbury Consulting, explains that due diligence is looking to answer the following questions: “Do we have shared values? And is this a good fit? Is your donation to us going to reflect well on our nonprofit? And is our nonprofit’s work going to reflect well on you as a donor?”

But it’s more than just asking questions. Having a formal policy for due diligence will give you the road map to deal with potential issues that may come up and hopefully keep your organization out the headlines. Association of Advancement Professionals (AASP) and APRA both have recently published best practices and toolkits (links in the additional materials section).

But one of the key areas that nonprofits should consider is having specific policies related to gift acceptance and board service. A gift acceptance policy should be the gold standard to which all gifts are measured. This can mean everything from what kinds of gifts can be accepted to situations where the nonprofit may consider returning a gift if information comes to light.

For instance, Stansbury notes that in her early career she was working at a statewide drug prevention company when Tropicana approached them to give a gift. But at the time, Tropicana was owned by Seagram’s, which sold alcohol. The organization decided that it was a conflict to accept the money and declined it.

Every nonprofit is going to have different gift acceptance policies, depending on its mission. No one size fits all in this situation.

Board policies are also a must. These policies need to outline the roles and responsibilities of board members, board terms, and more. In an interview last year, Hardy Smith of Hardy Smith Consulting noted that board members have fiduciary and governance duties, so there are significant repercussions if these duties are not met.

But nonprofits may want to dig deeper and look at the conduct of its current board members, not just the nominees. Stansbury notes that she’s been seeing nonprofits including a clause about how to remove board members (outside of term limits) or even what to do if a board member is convicted of a crime. But she asks what do you do about a board member who has been arrested but not convicted of a crime?

Gift acceptance and board policies are just a starting place. Figuring out responsibilities, timelines, etc. are all part of implementing due diligence process at your organization. And it’s a process that should ideally involve lots of folks. Leadership should develop the policies and make the decision regarding questionable gifts/board members. Donor relations can be the keeper of the policies and bring up possible issues.

Prospect research also plays a special role in doing the research to uncover the possible risks to the organization. We can use our suite of tools to look into the backgrounds of potential donors and board members to your organization and communicate our findings in an effective way.

While it takes careful time and thought to craft a due diligence policy and implement it, the repercussions are larger. “I think people are paying more attention to this than they ever did before. Much of this information is publicly available,” Stansbury concludes, “There’s a greater likelihood that it could backfire on them if they’re not doing their due diligence.”

Additional Resources

Fidelity Charitable Donor Advised Funds in 2020

What is this Report?

This report is a review of Fidelity Charitable Donor Advised Funds (DAFs)in 2021. By looking at 153,430 accounts (which is a snapshot since the number fluctuated during the year), Fidelity Charitable reported on the demographics of donors to DAFs, causes supported, and other metrics through 2020.

What are the key findings from the article?

  • In 2020, donor advised grants totaled $9.1 billion from over 2 million grants that supported 170,000 unique charities. That’s an increase in volume of 31% and grant dollars of 24% from 2019. In 2020, donors made more grant recommendations (10.8 in 2019 to12.8in 2020), made 36% more grants of $1M+, and 93% of accounts made 1 or more grants. The average size of grants however, only increased in size by 6%, from $4,358 to 4,614. Most funds (63%) gave grants that were unrestricted.
  • The cumulative lifetime giving of Fidelity Charitable’s Donor Advised Funds is over $51 billion to 328,000 unique charities. Donors increased from 88,672 in 2011 to 254,655 donors in 2020.
  • Donor advised fund money is moving. “On average, three-quarters of donors’ contribution dollars are granted within five years of receipt.” Even though the economy was quite volatile given the virus, Giving Account investments went up by $15 billion in net dollars from $1.4 billion in 2011. The median account balance is $21,637 with 10% of accounts holding over $250K
  • In 2020, two-thirds of contributions were non-cash assets and a majority of them were publicly traded securities. “More than $1.6 billion in contributions were non-publicly traded assets, such as private stock, limited partnership interest or cryptocurrency,” totaling 11%. Cryptocurrency contributions went from $13M in 2019 to $28M in 2020!
  • Most donor advised funds gave to organizations they had supported in the past. But 27% were new grants.
  • Anonymity is not key. Only 4% of DAF donors were anonymous in 2020.
  • Religion, Human Services and Education were the top three categories for 2020. Human Services rose 12 percentage points from 2019 while Education saw as light decline.The top three charities were Doctors without Borders USA, The Salvation Army, and St. Jude Children’s Research Hospital. Fourteen of the top 20 organizations are either health or human services.
  • $490 million was given to pandemic relief. 2017 Hurricane season (Harvey, Irma, and Maria) relief came in second with $52.7 million in grants. Grants to the Centers for Disease Control Foundation went up by 9,582%; Meals on Wheels America went up 2,679% and the NAACP Empowerment Program saw 1,724% increase as well. (Yes! Those percentages are correct!)
  • Over 54,000 accounts have made a memorial grant. Over 17,500 have made grants to sponsor a friend or family in a charity event.

What can I do as a result?

  • Track and create an outreach strategy for donor advised fund givers. Only 4% of DAF account holders are anonymous. While it might take extra time and effort to find these donors, the payoffs can be great. Track these donors in your database and create materials to target them directly. 27% of grants were made to new charities which suggests an opportunity for nonprofits.
  • Remember that some donor advised fund account holders have several ways of giving. They may give directly, through their foundation and corporation, and even through a trust. Considering a donor’s DAF may be just one part of your strategy.
  • While there have been significant critiques and moves to increase regulation of Donor Advised Funds, DAF contributions are moving and responsive to the needs of the moment. In 2020, Jennifer and David Risher started the Half My DAF movement to encourage people to donate DAF monies to charity by September 30th. While DAF holders were generous last year, it is unclear how many DAF holders actually halved their DAFs.
  • Repeating from last year’s review, given the popularity of converting non-cash assets into DAFs, your organization should review how it can help its donors with these assets. Non-cash assets may be even bigger than cash gifts. Russell James, Professor of Charitable Financial Planning at Texas Tech University, explained in a webinar that“Asset gifts remind us of our wealth.”
  • When working with DAF holders, try to leverage the personal connection. Memorial gifts and gifts to friends and family in charity events are popular and maybe a way to engage the DAF holder.

Additional Resources

Women Gives: How Households Make Giving Decisions 2021

What is this Report?

The report looks at how charitable decisions get made in the household alongside other financial decisions. The study also includes LGBTQ+ individuals and same-sex couples. The study uses prior Women Philanthropy Institute’s survey on U.S. household charitable decision-making. WPI surveyed 3,449 people in mid-May 2020 looking age, income, race, region, ethnicity, marriage or cohabitating, different household arrangements—nuclear families and multi-generational. The survey focused on donations in 2019.

What are the key findings from the article?

  • 6 out of 10 couples make decisions jointly (61.5%). If one person makes decisions, it tends to be more likely to be the woman (15.3% compared to 12.1%). Compared to the 2005 survey, the percentage of separately deciding and joint deciding households has gone down while women deciding went up by 8.8% and men deciding went up by 8.2%.
  • However high-net households reported a bit differently. “In 2018, 49.9% of high-net-worth households made giving decisions jointly, 25.3% separately, 19.3%with the man deciding, and 5.6% with the woman deciding.” Prior surveys suggest that women have been playing an increasing role in these decisions over the past few decades.
  • Households view charitable giving more akin to short term decision-making. The study found “Overall, women are more likely to decide about day-to-day household expenses and management, whereas men are more likely to decide about larger purchases or longer-term financial management.”
  • Demographics of age, education, children in the household make a difference. Older households and households with children under the age of 18 tend to make decisions together while younger households and households without children under the age of 18 tend to have men giving alone. Education gap in the household meant that the person with the higher education tended to make the decisions, gender aside.
  • However, households where the man makes the decisions give more while households where couples give separately give the least. Couples who give together tend to give 3.4% of their household income compared to 2.9% if one person decides by themselves.
  • Most households have agreement on giving; 74.6% of couples agree to the amount and 77.5% agree on giving. However, 1 in 7 disagree on where and how much to give to charity.

What can I do as a result?

  • Ask your donors how they make decisions in their home. Don’t assume decisions are made by the man of the household. Talk to the women! Remember MacKenzie Scott announced nearly $6 million in grants and gifts in 2020.
  • Demographics of households have been changing over decades. Women are increasing in number as sole decision-makers. As the next few years and decades continue, the percentage of women-decision-makers may continue to rise. Taken in conjunction with recent studies on giving circles, data suggests women will be key decision-makers for philanthropy in the years to come.
  • Make your communications relevant for everyone. Don’t just show images of white men in your materials. Since the landscape of who is giving has changed, it’s important that the materials on your website, direct mail, social media reflect that new reality since who gives is becoming more complex.

Additional Resources

Zillow and SNL: Why We Do What We Do

I imagine that many of you chuckled when you saw the recent Saturday Night Live’s fake commercial for Zillow. Friends and family all over social media were talking about the commercial and admitting that it was completely spot on. More people than I thought like to look at property listings on the popular website to see dream houses and imagine getaways. What was even more surprising was that people had preferences for looking at houses – some preferred Redfin. I mentioned that Zillow was our professionally preferred website for real estate and a friend asked me why.

I know that real estate is always a tricky point when talking with fundraisers, development officers and other researchers. Some have expressed wariness over real estate as an indicator of wealth. Understandably so, we know that prices can be inaccurate or inflated, but the problem is that it is often the only asset that we find on many prospects. Other assets, notably securities, are only publicly reported if the prospect is an officer, director, or a 10 percent owner, which is a much smaller subsection of people in the United States.

So why do we use Zillow out of all the other resources out there like Redfin or Trulia? I never had thought about it before. It was just the preferred website at my prospect research jobs. DonorSearch even has links to Zillow in its real estate records, which is another mark in Zillow’s favor. But I had never thought to ask why until this Saturday Night Live (SNL) fake ad came along.

Asking Jen Filla, my boss at Aspire Research Group, why we prefer Zillow at Aspire over other websites, she said, “I used Zillow through the Great Recession when there was a lot of price volatility and I got to know where and why it failed. I’ve never looked at Redfin. Zillow includes lots of additional data like sale history that has clued me in numerous times that I should double-check current ownership.”

Zillow has a lot of useful information – such as square footage, number of bedrooms, and photos. Delicious photos. (Cue the SNL commercial here). It has cooperative and apartment information, which is super helpful especially since some sites don’t have that kind of breakdown.

But like any website that collects a lot of information, it’s not always the best information. I’ve found property that Zillow reports as an apartment when it’s really a cooperative, which is a big difference. No website that collects the amount of data like Zillow is going to be perfect all the time.

Zillow also is not a one stop shop for real estate. It’s great for residential and has some vacant land. But if you have a prospect that has lots of commercial properties, agricultural properties, or even property with mineral rights, it’s not the best place to go. I like to use iWave since it has these other types of properties.

I asked other researchers about their preferences on real estate websites. Tamar Pearson, Prospect Research Analyst at Foundations of Nuvance Health uses a few websites including Zillow for different purposes: “I tend to use Zillow because either ResearchPoint sends me or because it comes up first when I search an address in Google. That being said, I tend to use the lower number in their valuation range. For NYC co-ops and such, I use Street Easy to see sales, rentals, etc. and use those to make my valuation. Sometimes I use Redfin, which I find more useful for the West Coast, though most of our prospects are East Coast.” Wealth Engine has also added a link to directly take people to Zillow.

Pippa Comfort, Senior Prospect Researcher at Smith College, also uses Zillow since it is easy to navigate and has sales/purchase information.

Lydia Ross goes to the source data: “After checking WealthEngine and AlumniFinder I go to the property assessor for the city or county to verify the accuracy of the information. Also, I have often checked local papers for real estate transactions that might be more current than assessor records.”

So does Kathryne K. Janeiro, Prospect Development Specialist, UCF Advancement: “I use Florida Property Appraisers and Christina Pulawski Consulting. I can get the latest and actual county assessed/market values plus sales information.”

From this very informal and tiny survey, Zillow seems to be a favorite resource among some researchers and fundraising data companies, but not the only resource used.

Additional Resources