Emergent Philanthropists

America’s Evolving Ethnic Donor Groups Monday, April 12, 2010

Katherine Swank, J.D.Consultant, Target Analytics, a Blackbaud Company

Your Presenter Law degree, Drake University School of Law 20+ years as Development Professional, including

• Nat. Dir. Planned Gifts & Lead Manager, $20M Capital Campaign• Internal fundraising consultant to 60+ national/chapter offices • Over $215 million raised during career

10 years as Adjunct Faculty, Regis University, Masters in Nonprofit Management Program• Courses: Wealth & Philanthropy; Financial Resource Development

Our Agenda Philanthropy in the United States Defining the “Affluent” in America

• Giving Patterns of the Affluent Emergent Philanthropists: Donor Groups to Watch How to Find and Talk with Affluent Emergent Donor Prospects

in Your Database

Philanthropy in America Charitable giving in the U.S. grows faster than the economy

• GDP has risen 150% in past 50 years• Giving has risen 190%

Per capita, Americans give• 3 ½ times as much as the French• 7 times more than Germans• 14 times more than Italians

Philanthropy in America Approximately 80% American households donate annually Yet I.R.S. tax deductibility plays only a small role

• Only itemizers take a charitable deduction• 33% of Americans itemize

∙ 40% of households with incomes >= $120K itemize

Average Household Charitable Gifts

40-Years Charitable Giving

2008 Contributions by Source $307.65 billion total estimated contributions

Facts about 2008 Contributions Contributions declined from $314.07B raised in 2007

• Exceeded $300B for the second year in a row• Decrease of 2% (-5.7% when adjusted for inflation)• Decline was much less than feared

Only two other declining years since 1956• 1974 and 1987

38% of organizations said they had an increase; 35% reported a decrease

2008 Percent Change in Giving

Giving from Individuals Individuals accounted for 75% of all charitable giving in 2008

• Consistent % of total giving• $229.28 billion

Lowest level of giving by individuals since 2003• Remains the single most important source

Individuals + Charitable Bequests = 82% of total• 88% when factoring in Family Foundations

2009 Year to Date Findings Target Analytics 2009 Index of National Fundraising Performance –

4th Quarter

Source: http://www.blackbaud.com/files/resources/downloads/cam/TargetIndexResultsSummaryQ42009.pdf

2009 Preliminary Results Declines in both 2008 and 2009 for many key measures

• i.e., Donor retention, new donor acquisition, revenue• Largest declines in 2008 to 2009 Q1 & Q2 comparisons• Small upswing in Q4

2008 saw revenue per donor growth 2009 saw revenue per donor decline

• First time since Index began in 2002

Six-Year Trending Target Analytics 2009 Index of National Fundraising Performance –

4th Quarter

Successful Fundraising Trends Organizations putting more focus on Development activities

especially individual donor relations including Major Donor Development appear to be faring well• More engaged board members actively participating in

fundraising, cultivating relationships, and being ambassadors for the organization

• Nonprofit leaders more visible and more involved with individual donor fundraising

Top Motivations of Giving Primary motivator: Because they are asked and presented with

a giving opportunity that motivates them Hate to say no person to person

• Success doubles when a donor knows the asker Control where their money goes and how it is used Belief in the organization Make a positive difference They give because someone made it easy or convenient to give

Contributions by Income

Annual Household Income

% of Households in Income Category

% of all Charitable Donations

< $100,000 90.4 35.6

$100,000 - $200,000 7.4 7.9

$200,000 - $1 million 2.1 36.2

> $1 million 0.2 20.3

9.7%

Wealthy Americans “Rich”

• Top 1% of household incomes • Equates to about $500K annual income

“Millionaire Households”• Based on net worth; 7% of all households; 9.3M

“Affluent”• Households with an annual income of $77.5K+• Around 20% of households

Profile of the Affluent Household - Past Caucasian man Average age in mid-50’s or older Married with children Self-employed

• Business owner, Farmer, Contractor, etc. First generation “affluent

Profile of the Affluent Household - Present Younger Entrepreneur

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

Just as likely to be Female Just as likely to be Minority

Emergent Philanthropists African Americans Hispanic/Latin Heritage Americans Asian Americans

Common Characteristics of Emergent Groups Giving is linked to family and kinship Religion very important Majority of giving is personal and informal Obligation to help others

African American Wealth Approximately 2.4 million African Americans living in

households with annual income of $75,000 or more Comprises 13 % of the total U.S. population• Affluent areas with an African

American majority include, Prince George's County, Maryland, DeKalb County, Georgia and Charles City County in Virginia

African American Wealth Traditional wealth comes from family businesses Recent wealth:

• Entrepreneurial businesses or self-employment• Real estate• Certified professions• Sports, media and entertainment

Facts about Giving Most generous philanthropic ethnic group in the U.S.

• 53% black households donate to charity• Giving is more predominate in the South

• Donate 25% more of their discretionary income than whites

Gifts of time are often more highly valued than gifts of money Women tend to control giving decisions

Philanthropic Motivations The Black church is the uniting force behind African

American philanthropic efforts Giving to and serving family, neighbors and needy

strangers are seen as general obligations Traditional recipient organizations include

• Religious, Educational, Social and Political In recent years, increasing donations to

• AIDS causes and genocide in Africa

Philanthropic Attitudes Few African Americans define their traditions of giving as

"philanthropy" • Believe that "philanthropy" is a term reserved for

multimillionaires• Would not describe their behavior as philanthropic and

are uncomfortable with the term Many see their donations of time and money as unremarkable

Giving Patterns of African Americans Patterns of giving and attitudes toward philanthropy are similar

to those of the general population• Except African Americans tend to be more private and

confidential Similar levels of giving at similar income levels Donor advised funds and endowment opportunities are popular

• As a greater number of African Americans become affluent, use of more sophisticated giving methods will increase

Hispanic American Wealth Hispanic households earning more than

$100,000 a year has grown by more than 126% in the past two decades

3.7 million affluent Hispanics in the U.S.• Hispanic wealth is growing faster than that of the general

community• Affluent Hispanic households concentrated in 5 geographic

areas: Los Angeles, New York City, Miami, Houston and Chicago

Hispanic American Wealth Traditional and Emerging Wealth:

• Family-owned businesses• Small businesses• Inherited wealth

Largest % of minority owned businesses• Ahead of Asian and African American

75% of Hispanics under the age of 40

Facts about Giving Hispanic givers are consistent and loyal over time• 63% of Hispanics donate to charity• Hispanic donors were more likely to say that they gave to help

the poor help themselves

Philanthropic Motivations Give to church – predominantly Catholic Education and job training

• Educational opportunities for the next generation are a priority

Victims of disaster After school and youth programs Support relatives abroad or other family members

before contributing to nonreligious institutions

Philanthropic Attitudes Giving is confidential and haphazard Personal connection to the organization is essential Recognition is not always wanted

Giving Patterns of Hispanic Americans Follow American mainstream investment strategies, but have not

yet established organized giving mechanisms• Highly conservative when it comes to business and finance

∙ Strong propensity towards saving∙ Giving priorities diversify as income increases

Charitable gifts are part of any leadership role• Give to organizations where they either hold a leadership

position or know the leaders

Asian American Wealth More than 12 million Asian Americans

• 4% of US population• 61% foreign born

∙ Largest source of immigrants in the past 20 years Higher rate of savings than average – is tradition Highly educated

• 45% have a Bachelor’s degree

Asian American Wealth Asian American household income is higher than that of all

major racial groups including Non-Hispanic Whites 2nd highest % of minority owned businesses Asian Indians richest immigrants in U.S. Recent wealth:

• Food and lodging• High-tech• Personal services firms and store-fronts

Facts about Giving Asian Americans give a larger % of income than whites Many send money “home” to help family members

• Participate in informal loan associations to help others start-up businesses

High % of political donations

Philanthropic Motivations Project specific, often with Asian or Asian-American theme Seek personal involvement with the project or organization Support direct services vs. service organizations, re-granting,

pass-through vehicles or endowment• Universities – alma mater, as parents, as family members• Museums and Cultural Centers• Nursing Homes• Religion (Filipino-Americans)

Philanthropic Attitudes Philanthropy is part of this culture

• “We help because we are asked.” Celebration and recognition are not common nor expected Give money, skill and time to build organizations that benefit

the community Expect high accountability, effective use of funds, greater

impact

Giving Patterns of Asian Americans Successive generations adopt American giving patterns

• 3rd generation shows wider range of philanthropy Donations are made as part of big life events Giving is person to person - informal Strong sense of reciprocity in giving Prefer recognition of gifts

• Gives them “face” in community and promotes others to give

Planned Gifts Studies indicate that fewer than 10% of bequests and 15% of

CRTs come from these emerging philanthropists • Bequests: 2% Black; 1% Hispanic; 6% Other (including Asian)• CRTs: 4% Black; 3% Hispanic; 6% Other (including Asian)

Evidence that retirement planning mimics legacy giving Work with financial leaders in your community to promote

options; “Leave a Legacy” program Consider promoting vehicles that build a legacy over time

Find Affluent Donor Groups in Your Database Use the profiles presented here as a guide to find affluent

prospects• Data appends: age, gender, ethnicity, income, specific

geographic areas, business connections, evidence of gifts to other charitable organizations

• Consider prospect modeling available through various vendors that append this information for you and indentify your best prospects

Talk with Affluent Donor Groups Seek out advice and suggestions from loyal donors from these

emergent groups• Focus groups• Surveys• One-on-one interviews• Create formal or information advisory committees

Talk with Affluent Donor Groups In both good and bad times, be transparent and ask for support

• Cultivation and stewardship should clearly relate to the prospect’s point of view

• Recognition is not desired the same way by everyone

Talk with Affluent Donor Groups Review your current communications and refresh them where

appropriate• People respond to people who look and think as they do

∙ Gather giving stories and quotes from representative donors

• Encourage giving techniques that relate to the donor’s objectives∙ i.e., Donor advised funds, cumulative giving options,

pooled giving vehicles

Summary and Questions People want to make a difference in their community Among other things, we all give because we are asked Understand which emergent groups are amongst your

organization's prospects These emergent philanthropic groups are generous Charitable priorities may change as income increases We give to people who are often like ourselves Make giving easy and comfortable

Target Analytics, a Blackbaud Company

Katherine Swank, J.D.2000 Daniel Island Drive

Charleston, SC 29492

800.443.9441 extension 3926katherine.swank@blackbaud.com | Twitter: @KatherineSwank

http://www.blackbaud.com/targetanalytics