The New Lexicon of Fundraising Part 6
Greek word: ‘philanthropos’ = Humanity loving
There has never been so much interest, focus or activity around what we have traditionally called ‘major donors’. The Sector has a new found confidence in this area and has realised that it can be approached flexibly and linked simply to the existing work and programmes of the charity without having to create a campaign or have something new for people to invest in. In addition to the mind shift, this area of fundraising is generally agreed as holding up financially and, in many areas, growing despite the continuing economic challenges. We all know that a small number of ‘major donors’ disproportionately shape overall philanthropic giving (investing) and the income of some individual organisations.
This is one of the longest-established groups of donors, yet it continues to grow through new wealth among entrepreneurs and younger generations. My experience is that it is getting even more strategic and certainly more demanding as these potential donors truly embrace philanthropy. The simplest way to divide major donors is by their wealth type, old and new, and to relate to the different ways that major philanthropy is developing; which generally is in a much more active, engaged and demanding style. We now have schools of philanthropy for potential ‘investors’ to explore and engage in: Venture Philanthropy, Impact Philanthropy, Social innovation, etc.
My biggest problem with our thinking around this whole donor group and programmes is the fact that we still call it ‘major donors’. When I started in fundraising I think it would be fair to say that ‘big gift fundraising’ was a more popular term, but frankly thinking back this was an even worse title for a programme and the thinking that surrounded it. My point is that we define people as part of a major donor programme before they have given or shown any intention of giving?!? Surely it is time to move to defining our approach as an inspiration and cultivation programme for High Net-Worth Individuals (HNWI) and to embrace the idea of them as ‘investors’ for social good.
Put simply, wealth is growing and the number of people with wealth is growing; in 2013 the wealth of HNWIs globally grew by 14% to a global pool estimated to be worth £52.6 trillion and this group of individuals increased by two million to 14 million individuals so we need much wider flexible programmes with more segments and ways of engaging/growing HNWIs’, the ultimate charity investors. In my view, a strong fundraising programme needs a distinct section of their ‘donor journey’ to appeal to different segments within the category HNWI, recognising the growth in wealth in society; there are more people with potential disposable money today than ever in the history of society.
HNWI is an umbrella term for a programme within a programme, it needs to be defined, segmented and tiered through a series of propositions and programmes that allows people of wealth to grow their interest, engagement and relationship with a charity and its cause; it is no longer a simple matter of having a very limited ‘major donor’ programme. A good start would be four possible tiers: Middle, High, Major and Transformational. This would enable an approach whereby a charity can test the top 3 or 4% of its donor file with a more personalised, tailored and exclusive direct marketing approach at the lower end of a HNWI programme while still researching and targeting appropriate external contacts (through networks) at the higher end with one-to-one techniques and thinking. Between these two levels there would be a range of techniques and propositions that would be used, including events, giving circles, programme visits and engagement, crowd-funding and other such thinking.
Every charity can, and should, build in a HNWI programme, as individuals in this category are invaluable to the overall growth, reach and influence of the organisation. Ultimately larger charities will evolve their HNWI programme into a ‘leadership giving’ approach, where they will integrate HNWIs strategy and resources with corporate and foundation giving, recognising that HNWIs are the key to accessing other sources beyond personal wealth; in fact a large percentage of HNWI giving is through their foundations for obvious reasons.
The future in our new lexicon is HNWI and then Leadership Giving and the beauty of this emerging thinking is that it requires brainpower, determination and creativity as opposed to budget power to grow the area.