All posts by Elisa Shoenberger

Fundraising insights from BCG’s The Future of Wealth Management

Fundraising Insights

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

Fundraising Insights, Wealth & Philanthropy Intel

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

Fundraising Insights

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

Capgemini 2020 Report: Wealth Grew in 2019 but Future Uncertain

Fundraising Insights

What is this report?

The World Wealth Report is an annual report about the wealth of high net worth individuals (HNWI) and the economic conditions in the Wealth Management industry. This year’s report is the 23rd year based on responses from over 2,500 HNWIs in 21 wealth markets, administered between January and February 2020.

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?

  • In 2019, global wealth grew by 8.6% with a growth of 8.8% in HNWI. North America lead growth with 11%, taking over the lead from Asia Pacific for the first time since 2012. While there was general uncertainty over trade disputes and “geopolitical unrest,” the US saw gains in the fourth quarter as US and China reached a Phase One trade deal, as well as the Fed providing money to the financial system in September and “optimizing surrounding technology companies.”
  • The top five countries with the highest population of high net worth individuals in 2019 were: US, Japan, Germany, China, and France. The top four countries have remained the top since 2017.
  • However, the first quarter of 2020 saw a loss of $18 trillion from global markets due to COVID-19. There was some recovery in April but Capgemini estimates that there was a decline in global wealth of 6-8% at the end of April 2020 compared to 2019. Capgemini expects 2020 to be “a year of unusual market growth trends.”
  • The ultra-HNWI population saw an increase in 9% in 2019 and an 8% increase in wealth in 2018. However, wealth growth was “below average compared with population growth.”
  • Equity returned to the top spot of asset allocations in 2019. In years of economic decline, investors tend to shift their assets to “safer” categories of cash and fixed income. Equity remained the top category even in the first two months of the year. However, the uncertainty of 2020 may see a shift from equity back to cash. 
  • Investors are interested in sustainable investing. 27% of HNWI have shown an interest in sustainable investing with 40% of Ultra-HNWIs interested. Capgemini notes that HNWI are planning to put 41% of their portfolio into sustainable investing by the end of 2020 and 46% by the end of 2021. In January-April 2020, investors put $12 billion into funds “that invest in ESG practices” (Environmental, Social and Governance funds).

What can I do as a result?

  • Despite the economic downturn from COVID-19, there are people and companies who are acquiring wealth and should be asked for philanthropic contributions. Some industries, such as grocery stores, sanitation manufactures, telecommunications, are doing well. However, before soliciting to potential prospects, fundraisers should talk to their prospects to assess how they are feeling before making the ask.
  • Since equity was the top asset class for 2019, fundraisers may want to explore giving from non-cash assets. While cash gifts are easier to give and receive, people often hold their wealth in other assets and may give more from their assets, such as stocks, bonds, etc. Market volatility might make gifts of stock more attractive as a way to offset taxes.
  • Given the increasing popularity of sustainable investing, there may be an opportunity for environmental and conservation nonprofits to find new prospects willing to invest in their causes. Fundraisers may want to use language related to investing to relate to those prospects.
  • Continue to communicate with donor prospects. Given the uncertainty of 2020, it’s important to talk to your donors and prospects to see where they are. While the economic downturn and pandemic have turned many established pillars of fundraising on its head, there’s opportunity and great need to adapt fundraising strategies to the new world order.

Additional Resources

Donors, Profiles, and Political Contributions: Case Study of Kanye West

Fundraising Insights

In early June, musician Kanye West made the news for something unexpected: his political contributions and philanthropy. As a result of recent events, West donated $2 million to the families of George Floyd, Ahmaud Arbery and Breonna Taylor. As a result of the gift, Distractify decided to take a deeper dive into his political contributions over the past few years and discovered that West’s contributions have been to Democratic campaigns, including Hillary Clinton’s campaign, despite his relationship with our sitting president.

In this age of misinformation, I decided to see if I could confirm any of this giving with our prospect research resources, notably OpenSecrets. I was able to confirm the three federal contributions: $1K to Barack Obama in 2012, $15K to DNC (Democratic National Committee) Services Corp in 2014 and $2.7K to Hillary Clinton in 2015. Interestingly, West gave the maximum amount that an individual can give to a candidate with his $2.7K gift to Hillary Clinton in 2015. (The maximum has been raised to $2.8K for 2019-2020). His $15K gift to the DNC was not the maximum gift that he could have given in that year, which would have been $33.4K (now $35.5K).

It also made me curious to find out what other celebrities have given to political campaigns. Beyoncé gave $2.7K to Hillary Clinton in 2015 but Kim Kardashian didn’t yield results. Tom Hanks has been giving through the years including $2.7K to Kamala Harris in 2016.

While people have been interpreting these contributions and other local contributions to suggest that Kanye’s public politics may be different from his private politics, I have to think of a recent question about a recent profile I completed on a prospect. While political contributions are only one part of the profile, we had a specific question about a prospect’s political contributions: he told the development officer that he had given $100K and more to Democratic campaigns and we were asked why we hadn’t found that giving.

So we went back to the drawing board, and looked deeper into the prospect’s political giving. No dice. Few gifts showed up on any resources. That’s when we realized that it’s possible that he hadn’t given directly, but rather through an LLC or corporation, a shell company. Called “Dark Money,” giving from an incorporated entity would not be transparent. If you know the LLC, you might be able to glean information about political giving from the LLC, but if you do not, it’s much harder to know.

So has Kanye West given to Republican campaigns and/or Donald Trump? It’s hard to know for certain. But I think it’s a good example to understand that while there is a lot of information publicly available, a lot of information is not. As fundraising research professionals, we are familiar with the data points we can find …and that they are only a part of the story.

Want more information about political contributions?

Check out Aspire Research Group’s white paper Prospect Research and Political Contribution Data 2020.

Additional Resources

New Forms of Giving in a Digital Age: Powered by Technology, Creating Community

Fundraising Insights,

What is this report?

This report looks at how gender impacts how men and women use the Internet and social networks and the impact on giving by looking at case studies of platforms, apps and movements. The data came from four datasets from online donation platforms and apps—Charity Navigator, GlobalGiving, Givelify, Global Impact’s Growfund tool—that total 3.7M+gift transactions over at least two years.

What are the key findings from the article?

  • Women give a greater amount of gifts to charities than men. Women gave nearly 2/3 of gifts across all platforms. While men’s gifts were larger in dollar amount, women gave more money overall from the volume of their gifts.
  • Women are more likely to give to smaller sized organizations than men. For instance, Giving Tuesday data found that women gave 66.3% of gifts to organizations with revenue less than $5M. GlobalGiving similarly found that women gave 65.8% of gifts to organizations with revenue less than $5M.
  • Women give significantly more to women’s and girl’s organizations. For instance, Giving Tuesday found that women gave 72.3% of gift count and 69.4% in amount of dollars to women’s and girl’s causes. The only major exception was Growfund, where while women gave 57.1% in total gifts to such causes, which only accounted for 13.5% of total dollars given.
  • Going beyond dollars will better engage donors than just dollar amounts. Giving Tuesday is a case in point. Initially, Giving Tuesday was just concerned with amounts of donations and dollars raised. But Giving Tuesday realized that there are more ways to take action and they have broadened their scope to include volunteering, asking others for money, and networking assistance.
  • While giving online allows donors to find causes that best suit their needs, it presents an opportunity for platforms to “curate” causes for prospective donors. GlobalGiving uses an algorithm to “provide more visibility to certain projects.” While there’s a debate about the benefits and negatives to algorithms, this presents an opportunity.
  • However, there were some interesting differences with Growfund, a “$0-minimum donor-advised fund.” The data found a more even split in number of contributions to accounts by both genders. However, women gave less overall their accounts than men. Moreover, men distribute more funds from their accounts to nonprofits but women give in greater amounts to nonprofits in terms of gift size and total dollars.

What can I do as a result?

  • Find out how you can leverage your online giving to attract women donors. In Kathleen Loehr’s Gender Matters, she writes about what image you are putting out to prospective donors. What does your website, your social media, giving platforms and other marketing collateral say about your organization? What kind of images of people are you showing? Are you showing images of just men or just women or both? What stories are you telling? Your organization may want to think about what their digital presence says about the values of your organization as a whole. Moreover, have you identified possible “influencers” in your donor population who may champion your cause.
  • Since fundraising is about relationships, platforms need to create community online. The report explains: while giving online presents new opportunities, there is the challenge of how to maintain engagement with donors and increase their trust. The report aptly says: “The online world should enhance and add to the in-person experience, rather than replace it.” How can your organization build community with online donors? Maybe consider having special webinars/online meetings, forums, and other tools to help create that sense of community.
  • Figure out how you are stewarding your online donors. Do you send them a personalized email thanking them for their gift, as Penelope Burk recommends? Or do you rely on the automatic email receipt to do the job for you? Do you treat your online donors like your other donors? Double the Donation found that only 25% online-only first time donors were retained in the next year, which suggests there may be an issue with stewardship of these donors. Are you also being inclusive of philanthropy that isn’t strictly dollars? What about volunteering and networking?
  • If you are a small-sized organization, you might want to see how you compare with the data. Do you know the gender breakdown of online giving at your organization? Many organizations don’t track gender (and this study noted that it used first names which was imperfect) so it may be tricky. But it might help you have a better sense of your constituency.

Additional Resources

Corporate Giving Opportunities

Fundraising Insights,
Corporate Giving Opportunities

Companies are trying to respond to the devastation that coronavirus has had on people’s lives, whether personally or professional. Recently, at least 20 companies have expanded their matching gift programs in response to the pandemic. For example, companies like AbbVie and Apple are upping the match from 1:1 to 1:2. Nonprofits can gently remind their donors who work at these companies about the increased opportunities to double or triple their gift.

Chronicle of Philanthropy has been keeping track of corporate donations to coronavirus relief efforts. So far, LEGO Foundation and LEGO Brand Group have given the largest publicly known donation of “$50 million to Education Cannot Wait and other partners to bring play-based learning to children and families around the world who are experiencing school closures as a result of the coronavirus pandemic.” These publicly announced gifts can help fundraisers have a sense of what these companies prioritize in this time of crisis and may want to adjust their corporate fundraising strategies accordingly.

Join us for our corporate fundraising panel

Aspire Research Group partnered with DonorSearch for a panel on Corporate Fundraising at their Virtual Conference UnBound. You may have missed it live, but you can always watch the replay.

Jen Filla led a discussion with frontline and research fundraising practitioners who answered questions about corporate fundraising strategies and the role of prospect research in support of those strategies. The panel covered topics such as strategy during the pandemic, corporate capacity ratings, and audience questions.

Panelists:

  • Tracy LaMondue, Vice President, Development at American Geophysical Union
  • Christine A. Mildner, CFRE, Prospect Research Analyst at The Nature Conservancy
  • Dixie Ost, Director of Corporate Giving and Sponsorship at the Field Museum of Natural History
  • Elisa Shoenberger, Research Consultant at Aspire Research Group LLC

Click Here to register and view the replay.

Additional Resources

SMU Data Arts: The Fundraising Report 2019

Fundraising Insights

What is this Report?

fundraising-roi-smudataarts-2019-1_Page_01

This report is Southern Methhodist University (SMU) Data Report Fundraising Report. The report looks at 2017 fundraising results for 2,421 organizations in 11 arts and culture sectors in the US. There’s also data about 1,888 organizations from 2014-2017.

What are the Key Findings from the Article?

  • On average, arts and culture organizations earned $8.59 for every dollar spent on fundraising. However, 2017 ROI was lower compared to the past three years. SMUData Arts attributes this decrease to the decrease in spending on fundraising in 2017 (when adjusted for inflation). Most organizations spent the majority of their fundraising expenses on staff, which increased each year in the study. The report repeats the old adage: You have to spend money to make money.
  • Over the four-year period, individual giving was the only category that saw an increase from 7.0% in 2014 to 8.3% in 2017. Other categories (government giving, trustee giving, foundation giving, and corporate giving) stayed constant or dropped slightly.
  • However, when adjusted for inflation, 5 of the 11 sectors saw a decrease in total contributed revenue over the time period: Art Museums, Dance, Opera, Performing Arts Centers, and Symphony Orchestras. Other museums (not art museums) and arts education saw the largest positive change.
  • More opera companies in an area raises total contributed revenue for all arts and culture organizations, but having lots of art organizations in the area lowers it for the sector. Having more arts organizations in an area causes fundraising expenses to go up but having more opera companies drives down the fundraising expenses. “In other words, more intense competition leads organizations in this sector to spend less on fundraising.”
  • “Fundraising expenses are higher for organizations in communities with higher percentage of young adults, Asian Americans and African Americans. Also, the fundraising expense level tends to be higher in places with elevated socioeconomics. On the flip side, the fundraising expenses tend to be lower in communities with higher total population and median age. The increased individual philanthropy also lowers the spend on fundraising.”

What Can I Do as a Result?

SPECIAL NOTE: This report was published before the pandemic created direct economic consequences for so many arts and culture organizations. If there was ever a time to take risks and fundraise differently, now is the time. We’ve provided some ideas below, but will continue to seek out case studies and other reports on fundraising differently in the digital age.

  • It’s important to stay connected with your donors and constituents. While the writers of the report affirmed the adage that you have to spend money to make money, the arts and culture funding environment has dramatically changed with the coronavirus. Many organizations have to make hard decisions about their organizations, including their fundraising. But many experts agree that nonprofits need to keep their constituents and donors informed about what is going on, what you are doing ,and depending on the circumstances, what you may need. Donors and constituents will remember how you treat them in a crisis.
  • Engage first, then ask. In a recent Gravty webinar “Fundraising During A Crisis 2.0”, experts reminded nonprofits to help bring community together. Arts and culture nonprofits are especially suited given their resources, such as videos of performances, pictures of art works, even art classes. This will help your community feel a sense of togetherness and hope. Other nonprofits leverage their resources, such as West Virginia University that encourages supporting WVU alumni businesses, professional development and more.
  • Nonprofits should continue to fundraise. Right now, in the middle of the COVID-19 pandemic, arts and culture organizations have had to cancel live performances, exhibitions, classes, etc. Experts recommend that they need to continue fundraising, but may have to take extra steps to connect with donors. In a recent webinar “Fundraising During A Crisis 2.0”, experts suggested including a humanity step into the donor pipeline. In other words, check in with your donors and see how they are doing. Don’t assume they won’t want to give, but don’t be tone deaf. Also be aware of what is happening at your organization.
  • Nonprofits might want to check in with their fundraising volunteers. While the report found that smaller organizations had a better ROI than bigger organizations, the report ascribes part of their success to their reliance on volunteers. Checking in on your fundraising volunteers is the right thing to do and it’s important to continue fundraising. Experts believe that nonprofits that rely on volunteers (such as service organizations) may have issues with continued social isolation, but that might impact volunteer fundraisers differently. If volunteers cannot continue fundraising, your organization may need to pivot (more than it has already).
  • Consider implementing a ‘digital fundraiser’ position. Way back in 2018, Josh Birkholz of Bentz Whaley Flessner argued that “An emerging trend will be the digital fundraiser with a portfolio entirely comprised of social platform prospects.” You probably are using social platforms such as Facebook, Instagram, and peer-to-peer fundraising. While you might not have implemented digital-touch portfolios before, as you practice social distancing it might be easier to conceive of ways to integrate digital fundraising into your overall development plan.

Additional Resources

To Use or Not to Use Corporate Capacity Ratings

Fundraising Insights,

Recently Aspire Research Group put together a panel on corporate fundraising as part of Donor Search’s Unbound, a virtual conference. We invited three speakers to speak about corporate fundraising and posed the question about capacity ratings.

While capacity ratings are the typical researcher’s bread and butter, we asked our panelists about the use of capacity ratings when it comes to corporate prospects. This is a critical challenge for many prospect researchers and organizations to tackle. Capacity ratings are used to help prioritize prospects and also used to help quantify an ask amount. How do gift officers evaluate a company as a prospect for their organizations?

Chris A. Mildner, CFRE, Prospect Research Analyst at The Nature Conservancy, explained they used their capacity ratings with companies in addition to individuals. She mentioned the use of an affinity rating to help identify the possible intersections between the company’s mission and the nonprofit.

Tracy LaMondue, Vice President, Development at American Geophysical Union, says the first thing she looks for is alignment between the organization and the company. That’s essential. She looks to see where the company has given, how much they have given, as well as looking at the company overall to see their behavior over 30-120 days, or longer. She takes a holistic approach to a company to ensure that the relationship could be win win as well.

Dixie Ost, Director of Corporate Giving and Sponsorship at Field Museum of Natural History, takes a similar approach to evaluating a prospect. At her organization, they use research to determine if they should cultivate a corporate prospect, or not, or wait for a better opportunity. An organization may approach companies at different levels at your organization, such as corporate board, corporate membership program and/or exhibition/event sponsorship.

Ost prefers this strategy over using a strict numerical capacity rating that tries to quantify what a company may give, which most prospect researchers think of when it comes to capacity ratings.

From the panelists, it seems clear that affinity and alignment are key to prioritization. The quantified capacity can also help with prioritization, but it may be more critical further down the line when an ask is made.

In a 2018 #ChatBytes interview, Sarah Anderson, Research Analyst, Development & Alumni Engagement, University of British Columbia (UBC), talked with Jen Filla about corporate and foundation capacity ratings. She had done panels on the topic at APRA International and has fielded lots of questions from other research shops. She says many organizations are looking at the same factors, notably financial indicators, previous giving, and linkages, but treat the factors differently in the final evaluation. She also found that the relationships between the nonprofit and corporation are critical.

But quantifying a corporation’s capacity can be tricky. Some experts have used a percentage of profits or revenues, but that can be unreliable if you’re dealing with a private company. Anderson notes that what companies give may not be commensurate with their profits. At UBC, they have three factors such as capacity rating based on financials; level of inclination; and interest codes. They are intended to be viewed together but that may not happen. UBC was working on dealing with overvalued capacity ratings. They were thinking about implementing something akin to University of Alberta where they weight the capacity rating with likelihood to give to the organization.

Other people in the industry have suggested looking at the published gift amounts to organizations like yours as a guide. If a company has a foundation, it’s possible to use the company foundation’s IRS Form 990 to see their grants and make an estimate based on gifts to organizations like yours in a year.

Moreover, how do you quantify a corporation that gives in many ways, such as direct giving, foundation giving, matching gifts, etc.? There may be “different pots of money” depending on the program and part of the company, which you may not know about without the help of a gift officer, Anderson says. Then again, it’s common to see individual donors giving directly as well as through family foundations, their companies and/or their donor advised funds.

If you do go the route of coming up with a quantified dollar amount as a capacity rating, Anderson suggests using corporations you know to develop that formula to see if it passes muster and then working from there.

Ultimately, the best strategy is what works for your organization. Gift officers and prospect researchers should talk about what is the best way to communicate priority and alignment to help unpack those nice corporate dollars for your organization.

Additional Resources

Fidelity Charitable 2020 Giving Report: Inside Donor Advised Funds

Fundraising Insights,

What is this Report?

This report is a review of Fidelity Charitable Donor Advised Funds (DAFs)in 2020. By looking at 138,019 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.

What are Key Findings of this Report?

  • Donor Advised Funds are continuing to grow. 225,000 donors at Fidelity Charitable made 1.5M donor-recommended grants totaling $7.3B in 2019, a 39% increase from 2018. In 2019 Giving USA reported that donor advised funds were 3% of all charitable giving in 2018.
  • Demographics of who is opening an account is changing. While most donors establish accounts in their 50s (79% of account holders are over 50), younger folks are starting to ramp up their giving through Donor Advised Funds. Millennials opened 13% of DAFs in 2019 compared to only 6% in 2014. But they are more likely to make a donation to the ALCU or Wikimedia, environmental organizations, and health organizations.
  • Categories of causes supported by Donor advised funds mirror USA’s general giving. Religion is number one with education as number two. This remains true with Millennials. However, International Affairs are included in Millennial’s top 5. But the most popular charities in 2019 were Planned Parenthood and ACLU.
  • Donors are using Fidelity Charitable to convert non-cash assets into contributions. Over 60%of contributions came from non-cash assets, like stocks.
  • It doesn’t take a lot to open an account. Donors can open an account for $5,000. 54% of accounts have less than $25,000; 37% have between $25,000 and $250,000; and 9% have more than $250,000. In the National Philanthropic Trust 2019 report on DAFs from 2014–2018, the average size of a donor-advised fund was $166,653 in 2018, a big difference from Fidelity Charitable.
  • Donors are loyal to their charities with DAFs. In 2019, 74% of grants went to a nonprofit that the donor had already supported in the past. Twenty-five percent or so were pre-scheduled or recurring.
  • Donors make the majority of their grants unrestricted. 60% of grant recommendations are for unrestricted funds. This is a contrast with other modes of thought that donors want their funds to go to restricted funds.
  • Great news for prospect researchers: Most donors include their names and addresses on grants. Eighty-eight percent of donors include this information; 9%only include their giving account name and 3% are anonymous.
  • Contributions do not sit in accounts. Three-quarters of grants are made within 5 years. According to Pam Norley, president of Fidelity Charitable, Fidelity now has a policy that if the DAF has not made a grant in three years, Fidelity will take five percent and donate it via an independent board of trustees. If the fund doesn’t give in the fourth year, Fidelity will give it all to charity.

What Can I Do as a Result?

  • Nonprofits should keep a close eye on grants from donor advised funds. Donors behind the DAFs should still be tracked and thanked with care because they are showing obvious support of your organization. This may require a tweak to the gift entry process to identify DAF owners via DAF name or otherwise.
  • Fundraisers should realize that this new tool doesn’t necessarily mean the end of fundraising as they know it. DAF giving categories are similar to the general trend. Donors, moreover, are giving through many vehicles; DAFs are only one tool of many to make a gift.
  • Charities should look at ways to facilitate the conversion of non-cash assets. Since donors are donating a lot of non-cash assets to DAFs, this suggests a need for charities to do a better job at facilitating conversions of stock, cryptocurrencies, etc. Charities ought to make it easy for donors to give in the way they want to give. The National Philanthropic Trust notes that in the 2018, the growth of contributions to donor-advised funds was higher than the growth of grants made from donor advised funds, possibly as a result of the tax law. However, they predict that donors may soon reverse the trend and give more from their donor advised funds.
  • Be on the lookout for companies that make employee matching gifts to DAFs. National Philanthropic Trust notes that there is a rising trend for some companies to allow payroll deductions to DAF and/or match employee giving to funds from DAFs. For example, American Express will match contributions from a DAF but not made to a DAF or to establish a DAF.

Additional Resources