How can nonprofit organizations engage high net worth board members and donors? To get to the bottom of this million-dollar question, we asked these individuals themselves.
There’s a good amount of talk out there about how to attract wealthy donors and board members in the philanthropy world – and much of the prevailing wisdom focuses on staff cultivating relationships with these individuals and then making an “ask.” But what are high net worth individuals, in particular, really evaluating when they consider joining a board or making large donation?
IMPACTS, in partnership with a prominent, national nonprofit organization, recently conducted a study to learn more about the considerations that drive the philanthropic decisions of high net worth individuals.
The intent of the study was to better understand the considerations and motivations of Ultra High Net Worth Individuals (UHNWIs) in the United States as they relate to joining a nonprofit board or making a major gift (i.e. greater than US$1 million) to a nonprofit organization.
The study defined an UHNWI as a person with net assets greater than US$50 million. 38,000 such UHMWIs reside in the United States – the greatest number of UHNWI residents in the world. The study includes responses from 112 UHNWIs.
For the study, UHNWIs were asked open-ended questions to identify their most important considerations when contemplating if they should accept an invitation to join a nonprofit board or make a gift to a nonprofit organization. A lexical analysis process organized these responses by general consideration, and these same considerations were presented to the studied UHNWIs who were then asked to rank from 1-10 the considerations in terms of relative importance to their decision-making process. The Mean Value is the average ranking that the UHNWI respondents assigned to each consideration.
Take a look at the findings.
A few, critical thoughts and observations arise from this data that are worth pointing out:
1) WHO gives (and who does not give) matters most.
In a way, this is another take on the “with>what” concept. Look at several of the most important considerations: Who’s on the board? Who has given? The company that one keeps matters to this audience. Success begets success. Money follows money. An organization hoping to land an UHNWI as a board member or donor would be well advised to have secured the participation of other similarly statured individuals. And it is increasingly important to leverage the advocacy and support of those valuable few individuals who have already made commitments to an organization.
2) The financial commitment of the existing board tells a story.
UHNWI who are potential donors may consider the financial commitments of current board members to be an indicator of the credibility of the organization and its fundraising objectives. Note that that these potential donors rank the relative investment of the board of directors ahead of both the impact of their gift and the mission of the organization. A less committed and under-invested board is essentially a non-starter for a potential large-scale donor. …And that makes sense. If the people who presumably know the organization best – not to mention who are charged with ensuring the organization’s future success – choose not to prioritize investments in the organization, then why should anyone else? Board members, take note: The days of spending “other people’s money” to fund your aspirations are over (if they ever existed in the first place).
3) Peer actions are more important than staff member actions.
This may be a tough pill to swallow for CEOs and development professionals, but understanding and embracing this aspect of donor cultivation seems to be critical. Securing these types of donors is a peer-to-peer opportunity. Staff are relatively unimportant to donors – donors give money to peers. (It is important that they trust the staff to manage and actualize their investments, but they don’t consider staff as critical in their donor decision-making processes.) Consider that the “Quality of Executive Leadership” is the fifth most important factor when considering joining a board, but doesn’t show up at all when considering making a major gift. This information may significantly aid some organizations in understanding how to effectively engage these donors.
4) Mission impact matters.
It’s a good thing this one made it so high on the list for potential board member considerations (although it comes in behind peer giving considerations for potential donors). Mission matters…and so does demonstrating a history of success at delivering your mission. Wealthy folks seem to see through hot air. Remember: These same people are likely pitched daily by money managers, start-ups, entrepreneurs, and others with grand plans for their capital. They have a lot of experience separating grandiose visions from realistic opportunities. Having a hopeful story to tell is great. Having a “proof of concept” is better.
5) Time is more important than money.
Particularly when it comes to serving on a board. Please adjust engagement tactics, requests, and operations accordingly.
6) Impact on their own legacy matters less to these donors.
I was surprised by this finding and think there may be something interesting here. For UHNWIs, the mission of the organization exceeds even impacts on their own legacies as a factor when deciding to join a board or make a major gift. Perhaps this is because they feel that they’ve already secured their legacies in other ways or with previous gifts. It could be interesting to contrast this relative consideration to the motivation of less wealthy board members – how many of them join a board to leverage some degree of prestige in the hopes that the reputational equities of the organization will inure to their personal benefit? It is interesting to note that naming benefits and other legacy-related considerations may generally matter less to this group than board composition, board giving, mission, and impact. I wonder if UHNWIs may have a little more (to paraphrase JFK) “Ask not what the organization can do for you, ask what you can do for the organization” in them than do other board members who might prioritize legacy and reputational benefits.
The first step in engaging these wealthy philanthropists is to identify their biggest considerations and find out what matters most to them. While some of these findings may not surprise CEOs and development professionals, seeing these findings aggregated and prioritized may prove helpful when crafting effective engagement strategies for potential supporters.
The greatest opportunity uncovered by this data may be the imperative of prioritizing conversations with current board members about the importance of their own investments. Another opportunity may include considering the composition of your organization’s existing board, and working with the nominating committee to underscore the need to create the hardest-hitting group of supporters possible.
Let’s update our strategies so that 2016 may be the most impactful and social-good inspiring year of giving to date.