Here’s what Americans with individual net worth greater than $50 million consider before making a major gift to a cultural organization.
Spoiler alert: An organization’s board composition and board giving matters – especially to ultra-wealthy non-board members.
We’ve been tracking the top considerations for major gifts among the ultra-wealthy in the United States since 2015. We published our original findings in 2016 and we even made a video. With all the changes that we’ve observed during the pandemic, we decided that it was high time for a data update. After all, what organization couldn’t benefit by better understanding the factors that inform and motivate a major gift (for the purpose of these analyses, defined as at least $1 million) to a cultural organization?
So, what does matter most to high net worth donors? To get to the bottom of this million-dollar question, we’ve been asking these individuals themselves. While we haven’t seen a dramatic change in priorities compared to 2016, the outcomes are worth a revisit and updated analysis as new factors have come up in the research.
We define an “Ultra High Net Worth Individual” as someone with net assets greater than $50 million. 141,000 such individuals reside in the US, the greatest concentration of these folks in the world by substantial measure. The same was true in 2016, when approximately 38,000 such individuals made their primary residence in the United States. (The observed growth of the ultra-wealthy cohort is a topic for a different conversation, but perhaps one that organizations should contemplate as they develop and update their strategic philanthropy plans.)
The most recent update of the study collected responses from 102 Ultra High Net Worth Individuals. IMPACTS Experience asked these respondents open-ended questions to identify their most important considerations with regard to making a gift greater than $1 million to a cultural organization. They were then asked to rank the importance of these considerations from 1-10. The column on the left (“rank”) shows the overall ranking of the answers, and the column on the right (“mean”) shows the average value of the responses in terms of where they were ranked on the whole. This can help us understand how close some of the answers are to one another.
Here are some notable findings and changes since 2016:
1) Identity of other donors, the relative investment of these donors, the composition of the board, and board giving are still the top giving considerations.
While this finding has not changed, it may surprise some non-fundraisers who are less familiar with the reality that when it comes to giving, money often follows money. These data demonstrate the importance of having a connected board willing to put its money where its mouth is. After all, if the people on an organization’s board don’t care enough about its mission to support it in a meaningful way, then why should someone else?
2) Personal relationships to donors, board members, and executive leaders are new to the list as their own responses.
Back in 2016, factors related to an organization’s mission came next on the list (ranked fourth and fifth, respectively), including the impact of the gift, the organization’s mission, and its commitment to achieving desired outcomes. That’s no longer the case. Two new factors were specifically cited and distinguished from the top four in response to open-ended queries: personal relationships to board members and donors and personal relationships to executive leaders. While these factors may have always been important, today they are being explicitly cited as key motivators informing the giving decision.
Social connections play a big role in securing major gifts from donors. But what’s interesting is that simply being good at your mission often isn’t enough. Being competent is a baseline expectation. When it comes to attracting the types of people with the connections to engage wealthy donors, being extraordinary is a more accurate barometer. Organizations often need to have demonstrated that their mission is not only worthy of significant investment among high-impact individuals, but also that they are singular in their ability to deliver mission-related outcomes.
This need to be extraordinary may also inform the “breadth v. depth” conversation that reliably repeats within organizations. Being encyclopedically competent in an expansive array of mission-related topics is perhaps not as valued in the eyes of major donors as demonstrating unique exceptionalism in a more focused area.
3) The financial structure of gift options is also new to the list.
The “financial structure of gift options” relates to the relative sophistication with which an organization can contemplate complex financial transactions in terms of a donor conveying potentially mixed asset classes (e.g., cash, equities, real estate, etc.) with various terms and conditions. For example, it is common for major gifts to be paid over a period of time, and often with certain performance-related conditions attached to future gifts.
The days of the “no strings attached” gift may not be over, but research suggests that they may be increasingly less common.
4) In general, there’s increased emphasis on personal connections and legacy over pure mission motivations – but this might make sense given current trends.
While “mission and purpose” of the organization ranked 4th in primary ultra-wealthy donor considerations in 2016, it’s now ranked 9th. Does this mean that ultra-wealthy donors do not care about an organization’s mission, or that they care about it less now than in 2016? No, not necessarily.
Consider that cultural organizations have dramatically elevated in their trust perceptions since before the pandemic. We know that an organization’s mission matters. Mission-based members are more likely to renew their support and find greater value in their memberships. Heck, we even know that an organization’s mission plays an important role in motivating gift shop purchases! What gives?
It may not be that an organization’s mission generally matters less, but that personal relevance and connection to potential donors now matter more as we emerge from the pandemic. It may be understood that an organization’s mission matters and – just as we are seeing increased competition even for cultural organization visits – there may be increased competition for philanthropic giving as well. And what can help rise above the noise on a planet with myriad pressing social and environmental needs for individual donors? It seems to be individual connection in today’s super-connected world.
We now live in a hyper-targeted and personalized era. This may be an expectation among our wealthiest donors as well.
5) Much like in 2016, this research remains a call to action for board members.
The identity of donors and board members and their giving fuel major gift decisions. Staff may play a role in facilitating and supporting connections between board members and potential donors, but what matters most to donors are the philanthropic commitments of their peers. If board members don’t step up, it is difficult for organizations to overcome this internal giving deficiency.
We’re still the most target-rich country for ultra-wealthy individual giving in the world – and by a large measure. Development staff can do great things, but they need board support when it comes to engaging the most potentially impactful donors.
So when your organization does get a big donation from a key player, shine lights on it (as may be appropriate). Celebrate it. Leverage it. Knowing what motivates giving for ultra-wealthy individuals can only help us better reach our goals.
Connections still matter most – connections to our organizations, to other donors, to board members, and to our missions to educate and inspire.
IMPACTS Experience provides data and expert analysis to many of the world’s leading organizations through its workshops, keynote presentations, webinars, and data services such as pricing studies, market potential analyses, concept testing, and Awareness, Attitude, and Usage studies. Learn more.
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