All posts by Elisa Shoenberger

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

Women Gives: The Women & Girls Index: Measuring Giving To Women’s And Girls’ Causes (December 2020)

What is this Report?

The report focuses builds on prior research of the Women & Girls Index with the inaugural report in 2019 that looked at 2016 data. The report adds additional data including 2012-2015 and 2017. The report looks at the impact of the 2016 presidential election and Women’s march had on women’s and girl’s causes but does not focus on #MeToo, Time’s Up, and COVID-19 since these events happened after the report study period.

What are key findings from the article?

  • Causes for women and girls saw an increase of 36.4% in philanthropy from 2012-2017. was comparable to the total philanthropic support growth of 36.9% over the same period. Government grants also increased to these causes by 34.4%.
  • But support of causes for women and girls still represents a small percentage of total philanthropy giving at 1.6%. “A 2020 study found that grants to women and girls of color totaled $356 million — about 0.5% of the $66.9 billion contributed by foundations in 2017.”
  • Among giving to women and girls, women’s health remains the most popular area for giving. Causes that focused on reproductive health and gender-based violence saw significant growth, 85.2% and 41.6% respectively. Reproductive health organizations saw a 33.7% increase in giving in 2017. Concerns over the election most likely fueled the increase. However, support for women’s and girl’s organizations in education saw a decrease from 17% in 2016 to 15% in 2017.
  • After 2016, alternative forms of giving saw an increase in donations to women and girl’s causes including GoFundMe and Donor Advised Funds. Schwab Charitable was second in the list of top DAF grant recipients. DAF giving, however, was rising before the 2016 election. In 2012-2015, giving to women and girl’s causes from DAFs was 3.1% of DAF grant dollars.
  • Like many organizations in COVID-19 times, leaders at women’s and girl’s organizations stress the importance of unrestricted giving and small gifts. Interviewed leaders also stressed engaging folks in non-monetary ways such as postcard writing or phone banking.

What can I do as a result?

  • Engage your female donors. The report adds to the resounding literature about the importance of cultivating women donors. In the past few years, we’re seeing more and more billionaire women donors making headlines. A 2016 Women Gives report found that women are more likely than men to give to women’s and girl’s causes. They are also more likely to give greater amounts to these causes. Accordingly, nonprofits need to better work at engaging female donors. Engage them – such as phone banking, writing postcards, etc.
  • Citing the importance of small gifts, nonprofits need to thank every donor – including the ones giving small amounts. It makes people feel more engaged and more likely to give again. Plus, there may be diamonds in the rough that could give more in the future depending on how they are treated.
  • Ask for unrestricted gifts. There have been countless articles about the importance of asking donors during the age of COVID-19, as well as calls for foundations and other giving entities to give unrestricted to reduce the burden on nonprofits during these challenging times. We’re adding to that by saying your organization might want to consider asking for unrestricted funding and explain why it’s critical.

Additional Resources

Wealth X: Covid-19 Philanthropy: Spotlight On Major Giving in 2020

What is this Report?

The report focuses on the philanthropic interests and inclinations of Ultra High Net Worth (UHNW) Individuals around the globe with an eye to how COVID-19 and social movements impacted giving.

The report defines UHNW as those with a net worth of $30M+ and are also referred to a sultra-wealthy. Very High Net Worth (VHNW) individuals have a net worth between $5M and $30M.

What are key findings from the article?

  • Ultra-high net worth individuals were responsible for over 20 percent of giving in 2020. This group includes 290,720 individuals worldwide. It’s definitely a case of the 80/20 rule. However, this figure does not include private foundations. Donations from the UHNW class, including their private foundations, represents a substantial 36% share.
  • The number of VHNW and UHNW individuals in a region does not necessarily determine philanthropic giving. Other factors including history of philanthropy, tax structures and incentives, and more also play a factor. The US has a large number of both groups and a developed climate of philanthropy. Other regions of theworld may have similar number of UHNW and VHNW individuals but do not have the same level of giving.
  • The ultra-wealthy gave $7.4 billion to Covid-19 and social justice causes from January to October in 2020, which may even be an underestimate since not all giving is public. Donors to these causes tend to be younger, give more, and connected to technology than the average major Ultra High Net Worth philanthropists. There is a higher percentage of women who give in these categories than the average UHNW philanthropists. There is a perception that wealthy individuals have risen to the challenge of COVID-19.
  • Both organizations and major gift prospects have adapted to the world of digital connections fairly quickly. Video-conferencing has been effective. Some gift officers note that it is easier to find people since most are now at home due to the shutdowns. But Wealth-X thinks that the full impact of digital connecting compared to face-to-face meetings in person is not known and that data from 2021 will give a more complete picture
  • Other changes in 2020 include: the increased importance of giving, openness to unrestricted funding, and more collaboration. The pandemic has exposed economic disparities and people have been responding. Unrestricting giving allows nonprofits to apply the giving to where it is most needed – likely salaries and other operating costs. Donors are coming together to give to causes.

What can I do as a result?

  • While UHNW individuals and foundations gave a lot to nonprofits in 2020, do not forget that $304 billion was given by non-UHNW individuals. While this figure does include VHNW individuals, there are many people who give but are not in these upper echelon categories. As the virus has taught nonprofits, diversifying giving is a must.
  • Be aware that collaborative giving with UHNW and VHNW individuals maybe come more common. Including the spouse (don’t forget the women) and possibly the entire family may critical to securing gifts. Giving circles are becoming more popular forms of giving; leveraging one’s networks is becoming even more important.
  • While Wealth-X thinks the jury is still out, cultivating in a digital format has been working. It’s critical to keep in contact with your donors, anyway that you can that is beneficial to everyone involved. For example, small online events can create a way for top donors to have an intimate relationship with your mission and program staff. Digital expands access while demanding less time from your top donors.
  • The UHNW philanthropic landscape is changing and you have to be prepared to approach different segments of UHNW individuals differently. We are seeing how the demographics of UHNW who give to COVID-19 and social justices are different from the average UHNW. These trends are likely to continue to change as new generations become a larger percentage of the UHNW pool.

Additional Resources

Exceed Fundraising Goals in 2020? Some did! A Year in Review

2020 has been a year filled with new challenges and heartbreaks. The coronavirus has impacted every part of our lives. At the same time, we are experiencing increased economic uncertainty as a result of the virus as well as other global shocks. We’ve also seen the rise in social movement concurrent with a presidential election.

Nonprofits across the US have been hit hard as arts organizations had to close their doors and rethink their offerings while other nonprofits, like food pantries and other human service organizations, have seen increased demand for their services.

What has changed?

We’ve seen a significant change in the way that most people do work. While telecommuting had been increasing over the past few years, the shut-downs across the country have caused more people to telecommunicate than ever before. Nonprofits and employees had to learn quickly how to work remotely, use new (to them) technologies like Zoom, while potentially having to deal with other family members — spouses, children, siblings — who may also be working or learning from home. While there are advantages to working from home, such as eliminating a potentially costly and time-consuming commute, there are definite and potentially unseen costs — security, home office costs, and mental and physical costs.

For fundraising, these changes in work habits are profound. We’ve been saying that fundraising is all about relationships; most fundraisers get to know their prospects through face to face meetings over coffee, meals, events, and more. Since social distancing is a necessity to help reduce infection, fundraisers and other nonprofit staff have had to pivot how they cultivate and solicit their prospects. Organizations have had to cancel key events or try to adapt them for the virtual environment, with varying success. Some prospects may also have had to pull back their giving due to economic uncertainty.

With the economic uncertainty, there’s been an increased focus on organizations holding funds for distribution to nonprofits, notably foundations and donor advised funds (DAFs). Advocates, nonprofits, and donors have called on foundations to reduce reporting and grant requirements to allow quicker dispersal of much needed money to nonprofits as well as reducing the onerous cost (in time and money) of fulfilling requirements.

DAFs are seeing increased scrutiny over the past few years given the increase of giving to and giving from DAFs. Fidelity Charitable reported that they made $7.3B in grants in 2019. Many critics of DAFs are concerned with how much money is being parked in these funds that should go to nonprofits. One California couple, David and Jennifer Risher, started the #HalfMyDAF challenge to encourage people to use their funds held in DAFs. Others are advocating for legislation that requires minimum payouts from DAFs and even increasing minimum payouts for foundations from 5 to 10 percent.

Other people are concerned about the anonymity of DAFs and related LLCs. Some are concerned that these giving vehicles reduce transparency about who gives and where, which is especially concerning during these times of political factions and crises. Some proponents of DAFs say that the number of anonymous donors is small compared to named donors.

There’s reason to believe that DAFs are stepping up in the crisis. In June, Fidelity Charitable noted that their account holders made $2.4 billion in recommendations to give to charities in the first four months, a 16 percent increase in comparison of the prior year. The Boston Foundation saw DAFs fund grants totalling $43.8 million in March and April, representing a 246 percent increase for the time period last year! Others note that DAFs will step up to meet the funding gap if an economic downturn does occur, as evidenced by DAF performance and giving patterns in prior recessions.

Philanthropist John Arnold and Boston College law professor Ray Madoff have started The Initiative to Accelerate Charitable Giving to reform DAF and Foundations, which may influence how we talk about DAFs and Foundations in the future. No doubt the future of DAFs and requirements remains an open question for the upcoming years.

Wealth reports are also seeing the rise of new generations with different values and ways of thinking about wealth and philanthropy. Younger high networth individuals are volunteering at earlier ages, giving to fewer organizations, and have an interest in sustainability, equity, social issues than ever before. Nonprofits will have to appeal to these new generation of prospects by appealing to their interests.

We’re also seeing the rise of collaborative and/or peer group giving. While this is not a trend specific to 2020, there is a rising trend for people to give collaboratively, talking with their families, or even participating in peer group giving, such as giving circles. Fundraisers need to start thinking of prospects more holistically, not just individuals, but as a part of larger circles of people who want advice and input on philanthropy. Fundraisers not only need to deal with this change in decision making but may want to consider giving opportunities for pooled resources.

What has not changed?

With all of the profound changes that 2020 has brought, there are key elements that have not changed. While some prospects have seen their economic fortunes diminish, such as people with their fortunes tied to air travel and travel, others may have seen an increase in their wealth, especially in key fields such as insurance, healthcare, and consumer goods. Asa recent Boston Consulting Group’s Global Wealth 2020 report points out, wealth is resilient.

While reaching out to prospects is always critical in fundraising, it’s especially critical now. Nonprofits need to reach out through phone calls, letters, emails and social media as appropriate, to check-in with their constituents to let them know what they are doing and/or what nonprofits can do for them. A Gravyty webinar “Fundraising During A Crisis 2.0” recommended adding a “humanity step” to the pipeline.

Even more important, there are prospects that want to support their charities monetarily and otherwise. We have seen some nonprofits surpass their fundraising goals for the year! This suggests that not only is there wealth but there are prospects who want to support charities and see them succeed during these important times. Fundraisers should not be afraid to ask their prospects for gifts. We should be giving prospects the opportunity to make a difference in these uncertain times!

We’ll see what the future holds for fundraising in 2021!

Additional Resources

Fundraising Insights from Harvard Kennedy School’s Global Philanthropy Report

What is this report?

In its first year, the report aims to explore institutional philanthropy across the world. There is a lot of missing information about the size and practice of philanthropy on a global scale. This report is meant as a first step to address this gap of information. The writers hope to publish it biennially, adding more countries and more detailed information.

However, the writers note that this is a sketch of institutional philanthropy. There are gaps in the data as well as a lack of norms, standards, and definitions of philanthropy and legal structures between countries.

What are the key findings from the article?

  • Attitudes about whose role it is to deal with societal problems have changed. Historically, government and the public believed it was the government’s role to deal with social issues, not the citizenry. However, that is now changing; people are seeing private philanthropy as a way to deal with societal ills. Some countries like Germany and France are changing laws and creating policies to encourage the creation of philanthropic institutions.
  • There are 260,000+ foundations in the world in 38 countries. The majority are concentrated in Europe and North America; ~60% and 35%, respectively. However, as researchers gather more information on other countries, these numbers may change. “Nearly three-quarters of identified foundations we reestablished in the last 25 years.”
  • Types of foundations vary per country. Of 115,660 foundations in 20 countries and Hong Kong, 90% identified as independent/family foundations. 96% of foundations in the US and 87% in Europe identify as independent foundations. In Latin America, 50% of foundations were corporate though there is regional variation. 38% of foundations in China are government-linked.
  • Depending on the country, there may be limitations on what foundations may do. Government may limit activities or there may exist a societal belief that “philanthropy should be a complement to and not a substitute for government services and activities.”
  • Education is the top priority of foundations. The study found that 35% of the 28,988 foundations had some focus on education. Foundations may focus on education because it can have potential to assist with growing the economy. Other areas of interest are human services (21%), health (20%) and arts and culture (18%).
  • Foundations may run their own programs instead of making grants. The report notes, “In 12 of 14 countries and Hong Kong in this data set, more than half of the foundations in each country develop and operate in-house initiatives.” The US and Australia are the exceptions. Only 3% of foundations in the US run their own programs and none in Australia. In other countries, grantmaking is central to the work of foundations, such as the US. The report notes, “And more broadly, in countries where there is low societal trust, grantmaking is likely to be less common.”
  • In interviews with foundations, there is a recognition that partnerships can help foundations accomplish their goals, but that those partnerships can be very challenging to put together and keep going.

What can I do as a result?

  • As your organization looks to non-US based foundations, make sure you understand the work of the foundation. Not all foundations make grants; many run their own programs.
  • However, if a foundation runs their own programs, perhaps there is an opportunity to collaborate with them. It can be a lot of work to start a relationship with a foundation operating its own programs, but the rewards will be great for both organizations and the program beneficiaries.
  • Recognize that philanthropy is not practiced the same way in the US as it is elsewhere. The role of philanthropy in societies around the world is changing but each country will have its own particular context. It’s critical to understand the philanthropic landscape before trying to cultivate individuals or institutions in that country.
  • But remember there is wealth outside of the US. It may take a bit of extra effort to cultivate donors and institutions, but the effort can help position you to achieve your fundraising goals long-term.

Are you considering prospecting outside your home country? Schedule a free consultation with Aspire.

Additional Resources

Fundraising insights from BCG’s The Future of Wealth Management

What is this report?

In its 20th year, Boston Consulting Group is producing its Global Wealth Report looking at how wealth has grown and how it will expand in the future. The report looks at 97 markets and looks forward through 2040.

What are the key findings from the article?

  • Wealth is resilient. Over the twenty years of the report, BCG has found wealth to continue to grow despite crises. There is more wealth in more hands now than at the beginning of the century, from $80.5 trillion in 1999 to $226.4 trillion at the end of 2019. The number of millionaires has gone from 8.9 million in 1999 to 24 million by 2019. This group holds over 50% of total financial wealth.
  • High Net Worth ($1m – $100M) and ultra-High Net Worth ($100M+) segments have a higher share of their wealth tied up in equity than other segments. In contrast, the $250K and below segment only invested on average 9% of their assets in equities and investment funds so this segment’s wealth grew more slowly.
  • Younger generations view wealth differently. “Generations X, Y, and Z will also be more educated and economically empowered than prior generations… For these younger generations, wealth won’t just be about money. It will also be about meaning, purpose, connection, and making a positive difference in the world.”
  • The wealthy have higher expectations, but it’s still about relationship building. With the onset of chatbots, AI, robots and more, clients will have high expectations of wealth managers and their technological offerings. However, these tools will be needed in conjunction with deep relationships with wealth managers. Trust will remain key. But transparency and metrics will play a bigger role, especially with younger generations. And the wealth generation will be more than just a yield: “Many clients want their investments to have a bolder, purpose-driven narrative that creates engagement along with real-world outcomes.”
  • Cross-border wealth will decline in the short term. In the twenty years, cross-border wealth increased from $3.1 trillion in 1999 to $9.6 trillion in 2019. However, BCG believes that it will decline by 5.4% in 2020 to 10.2%“driven by the performance of capital markets.” From 2021 to 2024, investors may “repatriate assets to make it easier to access liquidity” depending on how deep the economic downturn. In 1999, Western Europe was almost 50% of cross border wealth but now Asia is projected to reach 40% by 2024. Switzerland remains the number one destination but Hong Kong and Singapore are growing as havens for cross-border wealth.

What can I do as a result?

  • Despite the economic volatility and uncertainty of the past few months, wealth still exists. There are people who will want to continue to give or start to give to organizations like your own. They want engagement, purpose, and impact–all things that fundraising can provide.
  • Just as wealth managers will have to be more technologically savvy and provide more customized service to their clients, prospects may expect more from fundraisers and nonprofits. They will want greater transparency about their giving (use, metrics, etc.) and more of a personal touch from fundraisers. They may want to give their money to social impact funds. But fundraisers and nonprofits have to be attuned to how prospects want to be contacted, kept informed about projects, their giving and more.
  • Since younger generation is becoming a greater force in philanthropy, nonprofits should consider a closer relationship with community foundations. Younger folks are starting to increase their giving from Donor Advised Funds (DAFs). Working closely with community foundations that hold DAFs may help your organization see more funding from these popular giving vehicles.
  • Since HNW and ultra HNW have more wealth tied up in equity, your organization needs to get more savvy about non-cash gifts. Your organization should explore more complex forms of giving, including mixed gifts (like a part cash, part bequest, part trust gift).
  • Nonprofits may want to take advantage of repatriated wealth from cross-border wealth in the near term. If nonprofits can provide real advantages to prospects, they may be able to garner greater rewards from these monies before they move across borders again. Offering complex gifts, as noted above, may be a great strategy.

Additional Resources

Wealth X Report: Billionaire Census

What is this Report?

In its seventh edition, the Wealth-X Billionaire Census looks at the billionaire class throughout the world. The report looks at both how billionaires fared in 2019 as well as how they are doing in 2020 with the coronavirus and economic setbacks.

What are key findings from the article?

  • In 2019, the number of billionaires grew by 8.5% (2,825 number of billionaire). Their wealth grew by 10.3% from 2013 ($9.4 trillion). Asia and US led with the largest percentage increase in billionaire: 12.0% in Asia and 11.2% in the US. The Pacific, Europe, and Africa had gains as well with 10.0%, 6.9% and 5.1% respectively. Latin America and the Caribbean and the Middle East saw decline of -1.4% and -1.1% respectively.
  • North America saw the largest gain in wealth with an increase of 13.8% to $3.5 trillion. Wealth gains are ascribed to the robust stock market, US Fed’s monetary policy easing and a US-China trade agreement. Asia’s wealth increased by 11% to $2.4 trillion with gains accredited to the stock market but influenced by depreciation against the US dollar, US-China trade dispute and more.
  • While billionaires constitute just 1% of the Ultra High Net Worth Population ($30M+ in net worth), their wealth holdings constitutes 26% of the group’s wealth. Since the report started, that percentage increased from 22% to 26%. The wealth distribution is skewered even further with billionaires who hold over $10 billion or more number 153 individuals (5.5% of the total number of billionaires) who hold 35% of the total billionaire net worth.
  • The US has the highest percentage of billionaires with 28% of the global billionaire population. The report notes: “Cumulative billionaire wealth in the US increased by 14% to $3.4trn, more than the combined net worth of the next eight highest-ranked countries and equivalent to a 36% share of global billionaire wealth.” 
  • New York is number one in top 15 billionaire cities. San Francisco is number 3 and Los Angeles is 7. The report notes: “Indeed, there are more billionaires in New York than in almost every country in the world, with the exception of China and Germany.”
  • With the onset of COVID-19, the number of billionaires in insurance, technology and healthcare increased 6% to 9% while apparel, shipping and aerospace declined in the first five months. Wealth-X calculated that billionaires in the technology sector saw increases in wealth by 18% and those in insurance saw 11% in growth. But not all billionaires fared well with the economic uncertainty and setbacks that came with COVID-19. Wealth-X believes that over half of billionaires saw a decline in number and their wealth.
  • Philanthropy is the top interest, passion and hobby for both billionaires and Ultra High Net Worth Individuals. Sports is second for both categories. Over half of billionaires are active in philanthropy. Women and people who inherited wealth are more likely to give than men and people who earned their wealth.
  • Education is the top philanthropic cause for billionaires, followed by social services and then healthcare and medical research.

What can I do as a result?

  • While COVID-19 has impacted everyone, even billionaires, there are opportunities for large gifts. Billionaires in the insurance, technology and healthcare industries have seen gains in their wealth.
  • For organizations looking for funds specific to coronavirus, they may want to look at younger self-made billionaires since billionaires who have already given to coronavirus have been younger side than other philanthropic billionaires. This group may also be less well-known given their age and recency of making their fortune since they tend to be self-made.
  • Since billionaires favor education, social services and healthcare/medical research right now, there may be opportunities for substantial gifts in those areas. As the world rushes to find a vaccine, there may be significant opportunities for gifts to fund vaccine and coronavirus research.
  • When reviewing prospects for your organization, it may be worth looking at New York City, San Francisco and Los Angeles. These are the three US cities with the greatest number of billionaires.
  • This may be a squeaky record but keep talking to your prospects. Some prospects want to give gifts to organizations but the only way to know is to talk to them.

Additional Resources

Transparency and Power: Financial Disclosures for Congress

Did you know that members of congress and key government figures have to report on their finances on a regular basis to ensure transparency? 

Aspire staff had the opportunity to attend a webinar held by OpenSecrets University called “Members of Congress and their personal finances” that outlined exactly what information may be found.

As a result of Ethics in Government Act of 1978, members of congress and other key positions in government are required to disclose their finances annually. And in 2012, after an insider trading scandal, the STOCK ACT or “Stop Trading on Congressional Knowledge Act of 2012” was passed that required lawmakers to disclose securities transactions after a maximum of 45 days, rather than a year, OpenSecrets explains.

What this means for researchers and other people is that there is a lot of available information about the financial positions of members of congress and other key figures in the government.

There are ten parts of financial disclosures including outside income (including spouses), their assets, gifts, liabilities, agreements like publication deals. Using this data, OpenSecrets calculates net worth for individuals. However, there is a lag time between reporting; right now, 2018 data is the most recent year of reporting for overall finances.

However, OpenSecrets does point out that net worth may be negative if a member of congress has more liabilities than assets, such as new freshman class of congress people who are coming in with student debt.

While the information is by no means perfect or necessarily easily understood (and lacks philanthropic data aside from any honorariums given to nonprofits instead of a speaking fee), it’s still an impressive amount of information. OpenSecrets explains that they take the filings and make them digestible for public consumption. There’s even information to know which company has lobbied specific politicians and whether they made contributions to their campaign.

OpenSecrets also notes that there’s information about members of congress at state level but access and availability differs per state.

Taking “Personal” to a Deeper Level

For OpenSecrets, transparency is absolutely key. During the webinar, they explained that this was how they were able to figure out about Senator Richard Burr’s recent sale of stock during the start of the coronavirus through these required disclosures. The result of that information landed the Senator in hot water for insider trading.

For OpenSecrets, they see this information as not an overview of finances but an indication of whether they are involved with conflicts of interest.

It’s a level of information that I suspect people think Researchers normally have access to: stock portfolio, bank account, trust funds, etc. Obviously, this level of detail is not normally publicly available for the majority of our prospects, just in these extremely limited cases for purposes of government transparency.

For researchers, it’s a useful tool for prospects who may serve in congress or another governmental position whether for purposes of wealth capacity or due diligence.

Personal or Public: Be Responsible!

But I think it’s even more a reminder that publicly available information is a gift and something to be used with care. As anyone who has had the experience of researching across borders, US researchers are lucky to have so much data available at our finger tips whether it is real estate records, securities information for public company directors, and so much more.

But with that availability of information comes great responsibility. Just as politicians and other government officials have a responsibility to their constituents and the American people in general, researchers have an important role of safeguarding information of prospects and other people.

Additional Resources