What Makes Wealthy Donors Tick?
As the story goes, the writers F. Scott Fitzgerald and Ernest Hemingway were talking. Fitzgerald said, “The rich are different from you and me.” Hemingway replied, “Yes, they have more money."
If they were alive today, Fitzgerald and Hemingway could have been development directors. Figuring out what makes rich people tick is an obsession with nonprofit fundraisers and for good reason. Studies show that donations by households earning $200,000 or more accounted for less than a quarter of the itemized donations to charity in 1993, but by 2019, they made up two-thirds of the donations. And donations of $450 million or more, so-called mega gifts, now amount for 5% of all donations from individuals.
As nonprofits become more dependent on larger donors, the more fundraisers know about them, the better. Fortunately, they’re not aliens. Donors with capacity are just like you and me — except for the “more money” part. The research shows they may have some traits that fundraising professionals should know about.
Author Tom Corley spent five years studying the habits of the world’s wealthiest people. He believes they fall into four categories, and some fit into more than one.
Dreamer-Entrepreneur. These are the people who took a shot at their dream and it paid off — whether that was to be a movie star or an entrepreneur. They tend to love what they do and are rewarded for it. More than a quarter of people Corley talked to fit this category. He discovered that they had twice the wealth and earned it in half the time as the other groups.
Saver-Investors. No matter how they made it, these people are very careful about how they invest or spend their money. They pride themselves on making smart investments. Less than a quarter of wealthy people fit in this category.
Company Climbers. They’ve fought their way up to the top rungs of the corporate ladder. They are very savvy about how organizations work and the importance of playing the political game. About 31% fall into this group.
Virtuosos. The best of the best in their field. Their knowledge and expertise command the big bucks. Only 19% fit here. It’s not easy to be a top heart surgeon or big-time lawyer.
How does this help you as a fundraiser when you meet with a well-heeled prospect? Knowing how they achieved success can help you understand how to approach them about your mission. If you’re meeting with a Dreamer-Entrepreneur, stress your nonprofit’s plan to change the world. Meeting with a Saver-Investor? You may want to ask for a smaller gift and the chance to show him how you put donor funds to work for your cause.
You shouldn’t be surprised with one of the biggest findings of the study: Rich people didn’t get rich by throwing their money around. Most of them are frugal in three ways:
- Awareness. They keep close track of how they spend their money. That’s why you need to make sure your finances are transparent and you can justify every penny.
- Focus on quality. They want to make sure they are getting quality products and services for their money. In nonprofit terms, that equals being able to show your impact.
- Bargain shopping. They tend to shop around for the lowest price. OK, it’s hard to imagine that the couple that just paid $25,000 for a table at your gala is pinching pennies, but this is why you don’t want to just say you are “effective.” You want to say you are “cost-effective.”
So, what else do we know about these donors? For one thing, they didn’t slow down after they made their first million; nine out of 10 put in 50-plus-hour weeks. They stay in touch, too. Some 80% network at least five hours a month, like to associate with “success-minded people” and return phone calls, whether they know the caller or not.
The biggest takeaway for nonprofits may be that people with wealth don’t just want to give money. Three-quarters of them volunteer at least five hours a month, and more than half serve on at least one board. The biggest mistake you can make is to treat someone with capacity like an ATM. They may fund you but they want to be engaged. They want to see that their involvement made a difference. But hopefully you didn’t need a study to tell you that.