The Feeding Frenzy for Wealthy Donors

When a group of sharks senses blood in the water, no matter if it's the blood from one animal and there are hundreds of sharks, a feeding frenzy will ensue. Every shark wants its share of the meal. Relatively few will get it. All the while there are thousands upon thousands of other fish and mammals that would be easier pickings swimming in close proximity around the voracious school.

And so it is with many nonprofits, and in particular the smaller nonprofit that lacks the resources to manage several donor groups at one time. It is easy for the inexperienced Executive Director and Board member to direct its small fundraising shop to devote most of its time to targeting wealthy people for gifts and grants. After all, "one gift from them, and our troubles would be over!" Right?

This is not entirely the nonprofit's fault, however. Many fundraising consultants and highly-regarded nonprofit studies do more to encourage nonprofits to devote and unhealthy amount of time to chasing after the heavy hitters in wealth and philanthropy, than they do to promote long-term growth and sustainability.

The recently released "2018 U.S. Trust Study of High-Net-Worth Philanthropy" is no exception to this, making the claim that "GENEROSITY IS THE NORM AMONG HIGH-NET-WORTH AMERICANS." This simply isn't true!

The study compares the "generosity" of those in less than the top 5% adults in the U.S. (annual income of $350K or more) as giving 8.3% of their income to charity, while the bottom 95% gives 4.5% of their income to charity. As you should do with all studies like this, do not accept them as gospel, but do your own research to verify the findings. You have to do a bit more math here than the study fails to do in order to reach my conclusions.

A report by UBS states that there are 560 billionaires living in the United States. Many in this group are worth several billion dollars. To keep it simple, let's say that the lowest of the billionaires (having only $1 billion) gives 8.3% of their wealth to charity. That's $83,300,000. The billionaire still has over $900 million to his/her self. The bottom 95% in the U.S. Trust study (those making less than $350K per year -- and including those below the poverty level) gives a mere average of 4.5% of their wealth to charity. So if I make the fairly average salary of $60,000 a year, I would be giving $2,700 to charity. I have had donors at this income level make annual gifts of $10,000.

It is important to keep in mind that most if not all in the top 5% have far more discretionary income than the bottom 95%. I dare say that the bottom 95% has little or no discretionary income, especially if supporting a family. The measure for who is most generous should be who gives more sacrificially, not who can give more because they have more. Imagine what could be done if the top 5% gave sacrificially, and not just to their own foundations! The U.S. Trust study reports that those who are in less than the top 5% of income in this study support on average eight different charities. Communicating with my donors, most of whom are in the bottom 95%, supporting one or two nonprofits seems to be the norm.

Who are the more generous donors?

There are 1.5 million registered nonprofits in the United States. Most of them small. Now consider these charities devoting considerable time to pursuing gifts from less than 5% of Americans. What do you suppose their chances are for receiving a gift, let alone having a conversation with these people? It's a long, long shot at best.

Now imagine the collective power of the more generous 95% of Americans giving more sacrificially to charity. This is where the focus of nonprofit fundraising should be! There are far more generous donors out there, who while not wealthy, sacrificially give a much higher percentage of their income, considering that they have little or no discretionary income. Those are the partners I seek. They will care more deeply, watch more closely, and give more faithfully. These are the donors who will lead to the long-term sustainability for your nonprofit.