All posts by Elisa Shoenberger

Capgemini 2021 World Wealth Report

Fundraising Insights

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.

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

Fundraising Insights

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.”

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Due Diligence: The Time is Now

Fundraising Insights
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

Fundraising Insights

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

Fundraising Insights

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

Fundraising Insights

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)

Fundraising Insights

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.

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

Fundraising Insights

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.

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

Fundraising Insights

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

Fundraising Insights

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