Bentz Whaley Flessner

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Ultra-Wealthy-Giving

Understanding Your High- and Ultra-High-Net-Worth Donors

Last week, The Philanthropy Workshop released a study on the perspectives and philanthropic practices of high- and ultra-high-net-worth individuals. This study was based on 219 survey responses and 20 in-depth interviews with philanthropists and includes several interesting findings on the behaviors and motivations of wealthy donors.

High- and ultra-high-net-worth donors use multiple channels. The study indicates that 61% of respondents utilize two or more giving structures for philanthropic activities. The most common of these are the family foundation at 38%, checking account at 23%, and donor-advised funds at 12%.

Relationships are important to high- and ultra-high-net-worth donors. The study shows a clear preference for wealthy donors to look to their network and rely on relationship-based interactions when identifying and investigating philanthropic investment opportunities. 57% and 56% of survey respondents look to professional networks and personal networks respectively to identify opportunities. When conducting pre-investment due diligence, 88% of respondents meet with nonprofit staff and board members, and 72% conduct site visits. It should be noted that 71% of respondents also review annual reports at this time as well.

Wealthy donors have some tolerance for risk. When asked what types of projects they like to fund, 38% of respondents prefer ideas with some success and some uncertainty, 24% like unrestricted/core funding, and 19% prefer both promising but unproven ideas and proven ideas with evidence of success. Furthermore, when asked what kind of organization they prefer to fund, 17% of respondents like new organizations, 58% like growing organizations, and 25% prefer mature organizations with clear operating models.

What does this mean for your organization?

Three steps to take to make the most of the philanthropic practices of high and ultra-high net worth individuals.

Figure 1: Three steps to make the most of the philanthropic practices of high and ultra-high net worth individuals.

  1. Be prepared to appropriately process and steward gifts from a variety of giving vehicles. With over half of survey respondents utilizing more than one giving method, be prepared for your wealthy donors to possibly switch what vehicle they are using depending on the nature of the gift. For more information on donor-advised funds specifically, see our previous client advisories on maximizing DAF distributions and on processing these transactions.
  1. Invest in relationships. The survey indicates a clear preference of relationship-based interactions for identifying opportunities as well as investigating them. Utilize your existing donors as advocates in their network and equip those closest to you with the information they need to do this effectively. Additionally, make your staff and board available to prospects in the cultivation stage for activates like tours and site visits.
  1. Communicate impact clearly and succinctly. 78% of survey respondents have a clear understanding of how their philanthropy impacts social change, and 60% of respondents have no staff involved in their philanthropic initiatives. It is important to adequately steward donors while also being mindful of their limited time. Take some time to review your stewardship activities for major donors and look for new and creative ways to communicate impact.

To further discuss how to identify, communicate, and solicit HNW and UHNW prospects, contact us today. Together, we transform philanthropy.

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