Even if your not-for-profit’s fundraising results have been lackluster recently, one high-net-worth philanthropist’s donation can turn your year around and make it a fundraising success. The question is: How do you find ultra-wealthy individuals with philanthropic intentions?
Who They Are
A 2022 BNY Mellon study found that most individuals with at least $5 million in assets under professional management work with wealth management advisors on their charitable giving strategy. But 32% of these individuals have worked directly with charities. Ultra-high-net-worth (UHNW) individuals (defined as those with at least $30 million in assets) were responsible for making $85 billion in charitable donations in 2020 alone, according to a 2022 report by data analytics company Wealth-X.
Most UHNW donors are men, but the rate of women making large gifts is increasing as more women found successful businesses and benefit from intergenerational wealth transfers. In North America, the average UHNW philanthropist is age 68, and almost 75% of these donors are “self-made,” or haven’t inherited their wealth, according to the Wealth-X study.
The study also found that educational institutions receive the greatest percentage of gifts from UHNW donors, but arts and culture, social services, and healthcare and medical research organizations are also popular with this demographic. Some UHNW philanthropists helm private foundations (which must spend at least 5% of their net investment assets annually), but many, particularly younger, self-made donors, don’t.
Building Relationships with Philanthropists
One of your not-for-profit’s best ways to reach wealthy donors is to build relationships with their financial advisors. These include estate planners as well as advisors to donor-advised funds (DAFs), family offices and private foundations. Work to customize your communications to this audience — for example, provide them with financially sophisticated materials and deploy your charity’s most knowledgeable staffers to meet with them.
DAFs are the fastest growing charitable giving vehicles in the United States. Due to a lack of regulatory rules about minimum payouts, many are sitting on hefty cash cushions. But public pressure and potential legislation might force DAF owners to step up their charitable donations in the near future.
To attract the attention of DAFs, include in your marketing and fundraising materials ways they can support your organization. If you know the names of DAF owners (Fidelity Charitable says 97% of its DAF grants release the donor’s name), try to engage them directly. Many big donors want to be personally involved in the charities they support. You might invite them to tour your facility, meet with board members or observe one of your programs in action.
Don’t Neglect Them
Although small donors are likely critical to your continued success, you simply can’t afford to ignore high-net-worth philanthropists. Make sure your collateral addresses these potential donors and that your development team is capable of making a case to them and their advisors. Contact us for more information.
To learn more about how PKF Texas serves not-for-profits, visit www.PKFTexas.com/NotForProfit.