“Philanthropic activity is now cited regularly as one of the main interests of the global ultra-wealthy population.” -World Ultra Wealth Report 2018
What is this Report?
Authored by Wealth-X, a provider of global wealth intelligence, this report relies on 2017 data to analyze the ultra high net worth (UHNW) population and its share of global wealth. The report comments on the development of the ultra-wealthy segment and examines political and market drivers, regional trends, and wealth distribution. It further illuminates asset holdings, sources of wealth, and philanthropic interests. Wealth-X defines UNHW individuals as those with a net worth of $30MM or more, who represent 1.1% of the total world population.
What are key findings from the article?
- The number of ultra-wealthy in 2017 grew by 12.9% to 255,810, with total wealth growing 16.3% to $31.5 trillion. It represents a distinct increase from 3.5% growth in 2016, and low market volatility is primarily credited. North America leads the ultra-wealthy at 35%, followed by Europe at 28% and Asia at 27%. The North American ultra-wealthy population grew by 9.5% to 90,440 individuals in 2017.
- The United States leads the world’s ultra-wealthy, with a population of 79,595 and total wealth of $9.8 trillion.
- The top ten UHNW cities are as follows: 1) Hong Kong; 2) New York; 3) Tokyo; 4) Los Angeles; 5) Paris; 6) London; 7) Chicago; 8) San Francisco; 9) Washington, DC; and 10) Osaka.
- Among UHNW individuals, the fastest growing tier is billionaires, which increased to a record high of 2,754 individuals (1.1% of the UHNW population) and demonstrates a significant increase in extreme wealth creation, particularly in Asia.
- For UHNW portfolios, liquid assets (primarily cash) accounted for the largest portion at 34.9% of the total, followed by holdings in privately owned companies at 32.2% and stock market listed equities at 26.3%. Holdings in real estate and other luxury assets was 6.6%, or about $8MM per individual.
- As for the sources of wealth, 67.4% of UHNW individuals are self-made (entrepreneurs), with 21.7% a combination of self-made and inherited wealth, and 10.9% inherited wealth.
- The proportion of women in the UHNW population has risen gradually with 34,944 individuals representing 13.7% of the global wealth. Traditionally, UHNW women have inherited their wealth; however, the number of self-made entrepreneurs is on the rise, with the U.S. being home to more than half this group.
- Initiatives such as the Giving Pledge are spurring UHNW individuals to give back, and there is growing popularity of alternative giving vehicles, such as donor-advised funds and impact investing. Among charitable causes, education ranks top, with approximately one third of UHNW individuals donating to such causes. Education is followed by social services, healthcare, arts and cultural causes, children and youth, the environment and animals, and museums and libraries (in descending order).
- Individuals gifting in excess of $5MM are generally found among the very top tiers of the UHNW wealth pyramid, and they hold substantial levels of liquidity. The U.S. is home to more than 75% of the major donor group, and their average net worth is $484MM. UHNW major donors tend to be an average of 6 years older than the global UHNW population, and a larger share of them have inherited wealth.
What can I do as a result?
How do I identify and connect with UNHW individuals?
- Keep an eye out for major donors from the top 10 UHNW cities. In the U.S., look for New York City, Los Angeles, Chicago, San Francisco, and Washington, DC.
- If you find a prospect with at least $8MM in real estate and other luxury items (yachts, airplanes, artwork, cars, etc.), that’s an indicator that you may be dealing with an UHNW individual, one who likely has high liquidity.
- While you don’t want to ignore potential prospects in Asia, Europe, Latin America, and elsewhere, the vast majority of major gift donors live in the United States, so focus your primary efforts there.
- Since DAFs are attractive giving vehicles to UHNW individuals, begin to build relationships with wealth advisors. As you cultivate the advisors, they may be more likely to recommend your organization to their clients.
- UHNW individuals have an affinity for philanthropy, so don’t be afraid to court them. Many feel motivated to give back to society, so do your homework. Can you find an article in which an individual discusses her philanthropic priorities or perhaps how she rose to such great heights or overcame adversity? Was there a particular organization that facilitated her advancement? Then be creative in your approach. How might your mission align with her priorities? Remember, these are individuals with great liquidity who may be ripe for cultivation.
- Wealth-X World Ultra Wealth Report 2018
- The Rise of the Mega-Donors | Catherine Cheney via Devex | April 27, 2018
- How the Giving Habits of the Super Rich are Changing | Karsten Strauss via Forbes | October 16, 2017
- Trends Among Ultra High Net Worth Individuals | Bentz Whaley Flessner | July 19, 2017