Here’s what people with net assets over $50 million in the United States consider before joining the board of a cultural organization.
IMPACTS Experience recently published the top considerations of ultra-wealthy Americans before making a gift over one million dollars to a cultural organization.
Compared to 2016, we’ve seen an increased emphasis on personal connections and legacy over pure mission motivations when it comes to donor support. But this finding doesn’t necessarily mean that potential donors now care less about an organization’s mission. Instead, it may mirror trends we’re seeing in personal relevance and connection mattering even more as we continue to emerge from the pandemic. Just as we are seeing increased competition even for cultural organization visits, there may be elevated calls to increase 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? In today’s super-connected world, it seems to be individual connection.
This is certainly helpful to know when it comes to cultivating philanthropic gifts from the ultra-wealthy. Let’s go a step further: what are the ultra-wealthy’s top considerations when contemplating board service for a cultural organization?
As in our previous article, an “Ultra High Net Worth Individual” is defined as someone with net assets greater than $50 million. 141,000 such individuals reside in the US, the greatest concentration in the world. 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 remains a topic for a different conversation, but it is also one organizations may wish to contemplate as they 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 joining the board of directors of a nonprofit 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 ranked order of their answers, and the column on the right (“mean”) shows the average value of each item in terms of where they were ranked by respondents. This can help us understand how close some of the answers are to one another.
The composition of the board remains the most important consideration.
This top consideration has remained the same since 2016. Not only is the composition of the board the most important factor for an ultra-wealthy donor considering joining it, but it’s also a top consideration in making gifts of over one million dollars. Who is on a cultural organization’s board of directors matters for cultivating a giving board on the whole. And it matters a lot.
The financial condition of the organization is new to the list – and it ties for the second most important consideration.
In 2016, this answer did not make it to the top ten in our open-ended queries. Now, the financial condition of the organization is tied as the second most important factor alongside the prestige of the board and the organization.
We are still observing general concern about the economy, and many cultural organizations struggled during the pandemic (to say the least). These factors may contribute to the prioritization of this consideration. Donors may be more likely to support organizations for which their investments may be strategically and financially leveraged to elevate the organization, rather than investing in nonprofits that are not able to weather the ongoing “unprecedented times” in which we’ve been existing. And it may be as simple as the nuance that donors may not want to invest in a nonprofit organization so that it may merely continue to exist; instead, they may value investments that help an organization thrive.
The financial condition of an organization may also be an important indicator of the organization’s leadership, strategy, and long-term viability.
An organization’s reputation is a more important consideration than before the pandemic.
Speaking of the prestige of an organization (ranked #6 in 2016 and now at #2), an organization’s reputation has emerged as a critical consideration. Like financial condition, the organization’s reputation may also reflect its leadership, strategy, and long-term viability – particularly during uncertain times.
The good news? Museums are more trusted than before the pandemic and we’ve seen a general increase in the overall reputations of cultural organizations across the nation.
Expected financial commitment is a more important priority.
In 2016, “expected financial commitment” was #10 with a mean ranking of 7.2. “Expected time commitment” came in above it at #8 with a mean value of 4.8. Neither remains the case. Financial commitment considerations are now ranked #8 with a mean value of 5.9, and they are more important overall to these wealthy donors than the expected time commitment (although time is clearly still very important)!
The reasoning for this may be general economic concerns, increased competition for philanthropic giving, and/or the want to ensure contributions are used wisely. (On a related note, the financial structure of gift options is a new priority among ultra-wealthy individuals considering a gift greater than one million dollars.)
The pandemic has presented both challenges and opportunities to the cultural visitor-serving sector. Members and subscribers have elevated in importance as organizations continue to recover, and philanthropic giving is an important consideration in any financial forecast. Given the importance of the composition of the board and the identities of other major donors in securing large donations, it’s important to also consider how to continue to evolve the board so its composition consists of other donors respected by potential philanthropists.
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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