1. Motivations of High Net Worth Donors

2. 2 High Net Worth: Session Focus Motivations of High Net Worth Donors As more high net worth (HNW) donors sign the giving pledge and commit to dedicate the majority of their philanthropy, do you wonder how The Salvation Army can access some of that resource? Using the biennial Study of High Net Worth Philanthropy sponsored by U.S. Trust - Bank of America based on research conducted by the Indiana University Lilly Family School of Philanthropy, we’ll delve into the motivations, inclinations, and attitudes the those wealthiest donors. Session Plan Define High Net Worth Aim to understand the study and the findings Explore the implications for fundraising

3. 3 High Net Worth: Biennial Study What is the Study of High Net Worth (HNW) Philanthropy? A biannual examination of the giving patterns, priorities, and attitudes of America’s wealthiest households. Begun in 2006, fifth in a series written and researched by the Lilly School of Philanthropy at Indiana University in partnership with U.S. Trust, private banking division of Bank of America. Derived from 16-page survey sent to 20,000 HNW households; examined giving of 632 high net worth households which met income and wealth criteria for inclusion in this study.

4. 4 High Net Worth: How do you define High Net Worth? “High net worth” doesn’t mean billionaire In the survey, “high net worth” is measured as households with $1 million in investable assets (excluding house value) or an annual income of $200,000.

5. 5 High Net Worth: Findings Virtually all HNW Individuals gave Consistent trends in giving from previous years – 98% of households with incomes above $200,000 and/or a net worth of more than $1 million made charitable gifts in 2013.

6. 6 High Net Worth: Findings HNW versus General Population High rate of HNW compares with 65% of general population who donate.

7. 7 High Net Worth: Findings HNW gifts – size matters Most (89.8%) of HNW households’ total gifts amounted to $100,000 or less. Average of $68,580 to charitable causes, increase of 28% from 2011. Sharp divide exists in average giving by wealth level: Households with wealth level between $1 million and $4,999,999 gave on average, $24,955. Households with $5 million or more in assets gave on average, $166,000. Average giving continues to decline as a percentage of income, decreasing from 8.7% in 2011 to 7.8% in 2013.

8. 8 High Net Worth: Findings Where they give

9. 9 High Net Worth: Findings Top five causes in terms of donor participation: 85.2% gave to all education [73.1% to higher ed vs. 59.9% to K-12] 80.7% gave to “basic needs” 69.6% gave to the arts 67.0% gave to health-related causes 66.7% gave to religious causes Where they give

10. 10 High Net Worth: Findings Religious causes receive larger gifts Education was more popular with a greater number of donors – but religious causes tended to receive more of a household’s largest gift: 33.5% made their largest gift of the year to a religious cause. 26.8% of largest gifts went to education (18.8% to higher education; 7.9% to K-12). Giving for religious causes has rebounded from $4,773 in 2005 (pre- recession) to $3,855 in 2009 (recession) to $5,000 in 2013.

11. 11 High Net Worth: Findings Gift Size

12. 12 High Net Worth: Findings Majority of gifts were under $10,000 Five in every eight HNW donors indicated their largest single gift was less than $10,000. Only 17% of HNW donors made a single gift of $25,000 or more. HNW donors overwhelmingly use cash, checks or credit cards to make annual gifts. 80% use cash or checks. More than 90% use a credit card. Only 20% use stocks or mutual funds. No other charitable category was higher than 7.5% of a household’s largest gifts.

13. 13 High Net Worth: Findings Unrestricted gifts Four times as many HNW households reported placing no restrictions on their largest gifts in 2013 compared to those that did.

14. 14 High Net Worth: Findings What matters most Top Issues for HNW: Education - 56 % Poverty - 34.6% Healthcare - 33.8%

15. 15 High Net Worth: Findings Size and source of their income Average HNW household’s gross income was $741,000. Those who inherited wealth gave 4X as much as those who earned income. Those with no primary source gave half as much as those where income came from spouse’s or partner’s earned income or other source.

16. 16 High Net Worth: Findings How they give

17. 17 High Net Worth: Findings How they give Cash gifts are declining – fewer HNW households (78.8%) plan to give using cash in 2014-2016 compared to the proportion (87.8%) that used cash to donate in 2010-2013. Credit card use is stable – 53.6% HNW households used credit cards to donate in 2010-2013 as 47.5% planed to use credit cards to donate in 2014-2016. Online giving rose dramatically during the last decade – from 14.6% during 2004-2007 to 49.5% during 2010-2013.

18. 18 High Net Worth: Findings Source of gifts

19. 19 Four out of every 5 of donors (78.2%) indicated their largest gift went to an unrestricted purpose. While unrestricted funds can be appealing, these donors also are driven by the impact of their gifts. Most HNW households (73.5%) give with the belief that their gift can make a difference or gives them personal satisfaction (73.1%). Nearly three quarters of HWN households (72.9%) report their charitable activity results in personal fulfillment. Other top motivators: they support the same causes annually (66%); they give back to the community (62.7%); or serve on the organization’s board (61.8%). High Net Worth: Findings Motivations - Unrestricted – but impact matters

20. 20 High Net Worth: Findings Motivations

21. 21 HNW donors who volunteer give more. High Net Worth: Findings Importance of Volunteering

22. 22 High Net Worth: Findings How they volunteer

23. 23 High Net Worth: Findings Why did you volunteer?

24. 24 High Net Worth: Findings Focus their giving Almost all donors are somewhat (46.8%) or highly (46.3%) focused on a defined set of issues, organizations, and/or geographic areas. Only 6.8% reported no focus. Engaged donors – happier and more generous Slightly more HNW households (53.4%) monitor or evaluate the impact of their charitable giving than do not (46.6%). Those that monitor, most do so by direct engagement (79.7%). Almost as many use nonprofit reports such as Charity Navigator (45.5%) as public reports (43.7%). Only 3.1% use a private consultant to monitor their charitable impact.

25. 25 High Net Worth: Findings Involve family in decision making Highest proportion of all married/partnered wealthy households made charitable decisions jointly, involving both partners.

26. 26 High Net Worth: Findings Why HNW Households Stopped Giving Beware the frequency or appropriateness of the ask

27. 27 Tax incentives are not a significant driver in whether to give, but more in how to give and when to give. High Net Worth: Findings Giving and Taxes

28. 28 HNW households have the most confidence in nonprofit organizations - 91.6% - to solve domestic or global problems. High Net Worth: Findings Confidence in nonprofits

29. 29 So what… What are the implications from the study for fundraising? What can we do to secure a gift from HNW household? High Net Worth: Fundraising Implications

30. 30 Wealthy donors are ready to give more. Wealthy donors have a renewed sense of optimism. Average amount given increased 28% in 2013 compared with 2011. 85% of wealthy donors expect to continue giving as much or more to charity in the next 3-5 years. It’s not always one extremely large gift. One in 10 wealthy donors gave a largest gift of $50,000, while almost two-thirds gave a largest gift that was less than $10,000. It’s not just about donating. Wealthy donors are valuable for more than their money. They are active volunteers. Those who volunteered gave more –donors who volunteered in 2013 gave 73% more than those who did not volunteer ($76,572 vs. $44,137). High Net Worth: Fundraising Implications

31. 31 Online giving is increasingly important. While online giving continues to grow it may be surprising to learn that HNW donors are also turning online to give. Between 2004-2007, only 15% of HNW donors gave online. Between 2010-2013, that number jumped to 50%. Those who monitor, contribute more. HNW donors want to know that their donations are being used effectively. HNW donors are also more likely to keep a watchful eye – more than half monitor or evaluate their charitable giving impact. Those who monitor their giving donated a lot more in 2013 — $104,265 compared to $28,543 from those who did not monitor. High Net Worth: Fundraising Implications

32. 32 Managing Expectations Study reveals HNW donors give more, are more impactful, and personally fulfilled when they are intentional and engaged in their giving. In order to effectively manage donor expectations – you must address their specific needs, wants and expectations – which can vary greatly based on things like donation amounts and demographics. When you better understand what HNW donors are looking for, you can build stronger partnerships and open the door to more opportunities. High Net Worth Donors: Fundraising Implications

33. 33 High Net Worth: Fundraising Implications What can you do to secure gifts from HNW? Enhance your cultivation with specifics - HNW donors want to see impact and most consider themselves knowledgeable about charitable giving. Involve both spouses/partners in the process. Four out of every five married/partnered households make joint charitable decisions – or at least confer about those decisions. Invite donors to volunteer in a specific manner. More than 80% of HNW donors volunteer with between 1-3 organizations. When asked why they volunteered, they responded: because they asked. Engage donors and prospects and allow them to see first-hand the impact of charitable giving. Nearly 4 in 5 high net worth donors prefer direct engagement as their primary source of evaluation.

34. 34 High Net Worth: Final Thoughts Number one motivation for HNW donors to give is to make a difference. Are you communicating how gifts are making a difference? HNW donors are willing to make unrestricted gifts. Are you soliciting major gift commitments for your operational or annual needs? Majority of HNW donors who volunteered gave more. Are you offering your donors a meaningful way to volunteer?

35. 35 Questions? Comments? Suggestions? High Net Worth Donors

36. 36 Resources: US Trust High Net Worth Study http://www.ustrust.com/ust/pages/Institutional-Philanthropy.aspx Million Dollar Donors http://www.milliondollarlist.org/ Lilly Family School of Philanthropy, Indiana University https://philanthropy.iupui.edu/ High Net Worth Donors B. Susan Davis National Development Director 703-647-4790