apra 2012 where have all the wealthy people gone_swank_session 212

Session Code: 212

Where Have All the Wealthy People Gone?

Katherine Swank, J.D.Senior Consultant

Target Analytics®, a Blackbaud® Company

Your Presenter

• Target Analytics® (Blackbaud®) since 2007

• Author and Frequent Presenter on Major Gifts, Planned Giving, Prospect Research and Industry Topics

• Member, State Bar of Arizona> Drake University School of Law 1985

• Over 20 years as a development officer, including> National healthcare, public broadcasting, law school

> National Director of Planned Gifts $300M healthcare organization

> Lead manager, $20 MM Capital Campaign; raised over $215 MM in career

• 12 years as affiliate faculty for Regis University’s Masters in Global Nonprofit Leadership program

Our Agenda

Wealth in the World

Wealthy Americans

Wealthy Canadians

Ultra High Wealth

How Much Money is There?

Canadian Wealth

Age of Families

Number (millions)

Average Wealth

Total Wealth (billions)

25-34 1.2 $18,750 $22.5

35-44 2 $135,408 $271

45-54 2.3 $231,900 $533.4

55-64 1.6 $407,417 $651.9

65+ 1.6 $303,167 $484.8

Totals 8.7 $225,701 $1,963.6

Family wealth in Canada is similar to the U.S. and sets up a comparable intergenerational transfer of wealth

Philanthropy in North America

2011 U.S. Contributions by Source

Total Giving = $298.42 Billion

Individuals

Corporations

Foundations

Bequests

Source: Giving USA 2012, a publication of Giving USA Foundation, researched and written by the Center on Philanthropy at Indiana University.

The Euphoric Effect

Giving Channels (U.S.)

“The Millionaire Next Door”

• Profile of a “millionaire” (Stanley, Danko 1996)

• 57-year old, married man with three children

• Self-employed

> Business owner, Farmer, Contractor, etc.

• Household income of $131,000 (median)

• First generation “affluent”

“The Millionaire Next Door”

• Changing Profile (2008)

• Younger

• Entrepreneur

> Technology, Real estate, Athletics, Entertainment, Corporate leader, etc.

• Just as likely to be Minority

• Just as likely to be Female

“Millionaire Woman Next Door”

• Profile of a female “millionaire” (Stanley 2001)

• 49 yrs

• 1 in 20 have never been married

> Of those married, half are divorced at least once

• Homeowner, Self-employed (many)

• Earn 71% of household income

• Give more to charity than millionaire men

> Are charity “worker bees”

Millionaire Profile

• Average age 58

• 45% are retired

• 19% own professional practice or business

• Average net worth $2.2M

• $1.4 million in liquid or investable assets

Giving and “The Great Recession”

Feeling Wealthy

• Perception is reality

• Survey of 1,000 millionaires

> 42% stated that it would take "at least $7.5 million" to make them feel wealthy

> Average respondent had $3.5 million in assets

— Roughly half the amount of money they would need to feel secure

Giving Decisions

Major Gift Objectives

General Operating Support (56.7%)

Long-term investment in the organization

Growth opportunities for the organization

Specific program

Memorial gift

Capital gift

56.70%

37.20%

34.10%

31.60%

23.60%

23.40%

Reasons Giving Has Ended

Giving by Sector

• U.S. studies have looked more closely at these subsectors:

> Arts & Culture

> Education

> Health

> Religion

> Combined Purpose Funds

Giving By Sector: Arts and Culture

Who Gives?

• Comprises 14% of donations to secular causes

> On average Arts donors contribute to 3.7 causes

> Gifts average 2.1% of income

• 8% of all households

Positive factors related to giving to the arts

• College and Post-graduate education

• Accumulated wealth

• Age

• Living in metropolitan area

• Volunteer; Giving to other sectors

• Catholic/Protestant affiliations and the presence of children in the home are both negative factors

Giving By Sector: Arts and Culture

Household Income % of Households Contributing

Average Gift Amount

% of Giving by Income

Group

< $100,000 6.2% $163 4.4%

$100,000 - $200,000 16.5% $332 1.9%

$200,000 - $1 million 71.8% $8,166 59.3%

> $1 million 77.4% $50,945 34.4%

The Sweet Spot

Giving By Sector: Education

Who Gives?

• 26% of households that give to secular causes give to education

> Gifts average 1.5% of income

• 75% of education donations are for higher ed

> 24.7% to endowments; 6.4% to scholarship funds

• 10% of these donations are for private schools

• 15% to libraries, tutoring & literacy programs

Positive factors related to giving to education

• Income

• Accumulated wealth

• Female, Married or widowed

• Children in the home

• Post-graduate education

• New England region (South region is negative factor)

• Volunteering

• Giving to other sectors

Giving By Sector: Education

Household Income % of Households Contributing

Average Gift Amount

% of Giving by Income

Group

< $100,000 11.2% $243 5.9%

$100,000 - $200,000 31.9% $439 2.9%

$200,000 - $1 million 82.2% $15,327 63.5%

> $1 million 82.9% $78,138 28.2%

The Sweet Spot

Giving By Sector: Health

Who Gives?

• 37% of households that give to secular causes give to health

• 1/3+ of these donors give only to health causes

• 59.7% goes to Hospitals/Foundations, Clinics

• 25% goes to Disease specific organizations

• Motivated by the cause or need

• Gifts to health average 1.2% of income

Positive factors related to giving to health

• Income and Accumulated wealth

• Age and Female; Head of household is retired

• B.A./B.S. degree• Religion identified as Jewish• Live in New England region• Volunteer and Give to other

sectors• Presence of children in the

home is a negative factor

Giving By Sector: Health

Household Income % of Households Contributing

Average Gift Amount

% of Giving by Income

Group

< $100,000 17.8% $173 13.9%

$100,000 - $200,000 34.3% $401 5.1%

$200,000 - $1 million 74.1% $2,805 21.9%

> $1 million 70.4% $92,289 59.1%

The Sweet Spot

Giving By Sector: Religion

• 75% of donations go to Congregational operations

• Around 25% of religious contributions are benevolences

> Budget benevolences – food banks and other community needs

> Overseas ministries

> Gifts to other organizations

> Non-budgetary benevolences such as special offerings

Giving By Sector: Religion

Household Income % of Households Contributing

Average Gift Amount

% of Giving by Income

Group

< $100,000 42.4 $1,423 59.4

$100,000 - $200,000 60.7 $2,316 11.3

$200,000 - $1 million 75.0 $12,105 20.8

> $1 million 70.9 $61,060 8.6

The Sweet Spot

Giving By Sector: Combined Purpose Funds

• Allocated to a number of different types of charities

> Examples include United Way, donor-advised funds at financial institutions, Jewish federations

• At-risk youth and families in crisis received 52.6%

• Missions usually represent missions that serve the poor or near-poor

> Seniors, legal, economic sufficiency, ex-offender programs, etc.

• 11% went to mission that focus on important community needs; not focused on the poor

Giving By Sector: Combined Purpose

Household Income % of Households Contributing

Average Gift Amount

% of Giving by Income

Group

< $100,000 23.4% $330 34.8%

$100,000 - $200,000 48.1% $554 9.8%

$200,000 - $1 million 62.1% $7,087 46.1%

> $1 million 60.3% $17,072 9.3%

The Sweet Spots

Specific Donor Segments to Watch

• Women Donors• African-American Donors• Emerging Donor Segments

> Hispanic Heritage Donors> Asian-American Donors> Gay and Lesbian Donors

Women Donors

• 46.3% of top wealth-holders are women (IRS, 2005)

• 10.4 million privately-held women-owned firms> Accounts for 2 out of 5 U.S. businesses

• Single women are significantly more likely than single men to make philanthropic gifts

• Legacy giving:> More likely than men to name a health

organization

> Make gifts to organizations concerned with animals and pets

> Want to understand legacy giving impact from others

Women Donors

• Recipient organizations:

> Organizations that serve the needs of children

> Opportunities for women

> Diversity

> The Arts

> Education

> Economic opportunities for all

> Health issues

> Environment

African-American Donors

• > 2 million African Americans living in households with annual income of $75,000 or more

• Comprises 13 % of the total U.S. population

• Traditional wealth comes from family businesses

> Recent wealth:

— Entrepreneurial businesses or self-employment

— Real estate

— Certified professions

— Sports, media and entertainment

African-American Donors

• Traditional recipient organizations:

> Religious

> Educational

> Social

> Political

• In recent years, increasing donations

> AIDS causes and

> Genocide in Africa

Hispanic-American Donors

• > 50 million in the U.S.

> Comprises 13 % of the total U.S. population; 1 in 6 people in the U.S. is Hispanic/Latino

> 126% increase in U.S. Hispanic households making more than $100,000 per year

> 75% of Hispanics live in the nine states

— Arizona, California, Colorado, Florida, Illinois, New Mexico, New Jersey, New York and Texas

• Consider the Hispanic population in individual terms, each with a common language and different ancestry

> Chicanos, Cuban, Mexican, Latinos, Puerto Rican or Spanish American

Hispanic-American Donors

• Traditional recipient organizations:

> Family

> Church

> Mutual assistance associations

• Traditionally, support relatives abroad or other family members before contributing to nonreligious institutions

• In recent years

> Community-based self-help organizations

> Institution building

• Personal connection to the organization is essential

Asian-American Donors

• 181% increase in Asian-American families with incomes of $200,000 or more

> 312,228 households

> 22 wealthy Asian suburbs have been identified

— California, Maryland, Texas, NJ, NY, Virginia and Illinois

• Philanthropy is part of this culture; celebration and recognition are not common nor expected

• Expect high accountability, effective use of funds, greater impact

Asian-American Donors

• Recipient organizations:

> Universities – alma mater, as parents, as family members

> Museums and Cultural Centers

> Nursing Homes

> Religion (Filipino-Americans)

• 3rd generation shows wider range of philanthropy

How to Find Affluent Donor Groups in Your Database

Age Analysis Example

• All major donors plotted by age for XYZ Organization• This example may/may not be true for your organization

• Plot for your own organization

Major giving peaks around age 55 and

declines dramatically by age 85

Real Estate Values Example

• Wealth and asset data, such as real estate, can be used to better understand specific groups of donors

• Grouping individuals of similar characteristics into respective categories

• Way of taking a lot of data and grouping people into subsets in a meaningful way

• Prizm, PersonicX, Niches are all pre-made cluster data overlays you can purchase

Cluster Analysis Example

Clusters on Database

• Household level clusters

• http://www.equifax.com/consumer/marketing/en_us

• Group people by life stages - 26 Niches

• How to use:

• Append Equifax Niche Clusters to major gift donors in fundraising database

• Looked at % of file that fell into each Niche

• For example: For one client 76% of major gift donors were in 7 Niches

Example

• Average age: 67

• Average income: $91,000

• Children in home: No

• Average home value: $146,000

• Career: Retired

• Interests: Golf; Mail responsive

• Niche I – IRA Spenders

Group Major Donors

% of Major Donors in XYZ’s Database

Applications of Cluster Data

XYZ Organization’s Custom Donor Model Example

Donors of Gifts of $10,000 or more to XYZ Organization share these characteristics

This donor model is not shared with any other organization

Scoring the Prospect pool

Each individual is scored against the model and an ordered prospect pool

results

Top Prospects for $10,000 GiftsTop Prospects for $10,000 Gifts

Predictive Analysis Insights

Summary and Questions

• North Americans are generous• Want to make a difference in the world around them• Among other things, they give because they are asked• Charitable priorities may change as income increases• Understand your unique constituencies• Collect and use data in ways that work for your

organization• Consider time, fiscal commitment, human resource

limitation when choosing data and analysis method

Contact and More Information

Katherine Swank, J.D.

Senior Consultant, Target Analytics, a Blackbaud Company

Katherine.swank@blackbaud.com

800-443-9441 ext. 3926

TA Consulting Team provides other Fundraising and Prospect Research White Papers:

http://www.blackbaud.com/resources/white-papers.aspx