How nonprofits are capturing the interest of ultra high net worth individuals

SAN FRANCISCO — Last fall, Keith Krach hosted an event called “An Evening of Opportunity” at his home in San Francisco, California. Guests gathered in a room overlooking the Golden Gate Bridge to the west and the skyscrapers to the east as they enjoyed small bites and drinks and heard from Krach, his son, and the chief executive officer of Opportunity International, Atul Tandon. Krach, who is the chairman and largest shareholder of DocuSign, the eSignature company that is set to go public this week, is one of a growing number of Silicon Valley billionaires. He is also a supporter of Opportunity International, an organization that provides microfinance loans, savings, and insurance to 4.7 million clients in 22 countries. Krach, who previously founded the enterprise cloud software company Ariba, which sold for $4.3 billion, spoke about Opportunity International with the excitement of someone trying to make a deal. By filling a room with his friends, Krach provided Opportunity International with a fast track to engage with potentially hard-to-reach Silicon Valley millionaires and billionaires. Scenes like this are leading NGOs to consider how they can target ultra high net worth individuals as part of their fundraising strategy. The Global Philanthropy Report, released Wednesday, outlines the giving trends from global high net worth individuals, as part of a broader study of institutional philanthropy. The wealth of that group has increased nearly fourfold in the last two decades, and now totals almost $60 trillion.There are 15 million millionaires and close to 2,000 billionaires globally, according to the report, which was published by Harvard University’s John F. Kennedy School of Government and funded by the financial services firm UBS. While these wealthy individuals are increasingly launching formal philanthropic structures to put their money to work for social outcomes, many of these endeavors look different from what many fundraisers in the international development sector are used to. Ahead of an upcoming webinar on engaging ultra high net worth individuals, Devex is outlining best practices to attract these donors. Their engagement can be transformational, particularly in an era of uncertainty regarding official development assistance, and with a funding gap standing in the way of achieving the Sustainable Development Goals. Thinking about time, talent, treasure Next week, Michelle Nunn, the CEO of CARE, will travel to Silicon Valley for the Global Philanthropy Forum. Her fundraising team is in the midst of setting up meetings with some of their ultra high net worth donors. But while they may do a lot of the work behind the scenes, many of these donors want to meet CEO to CEO, and these trips are a chance for Nunn to do so. When it comes to engaging ultra high net worth individuals, many of the tips from Fundraising 101 apply, but the stakes are higher, experts told Devex. Prospect research always helps fundraisers get a sense of giving capacity as well as values alignment. But as it can be difficult to get meetings with ultra high net worth individuals, this research and that first interaction are all the more critical. “If I’m trying to get someone to give to something they're not interested in giving to, we’re wasting our time, and I’m wasting my expense account on really nice lunches,” said David Harrison, director of advancement at Santa Clara University’s Miller Center for Social Entrepreneurship, named for a $25 million gift from Jeff and Karen Miller. “When you’re working with high net worth individuals, they are often surrounded by a lot of disingenuous people. So it all starts with authenticity.” --— David Harrison, director of advancement at the Miller Center for Social Entrepreneurship The way Miller structured the gift introduces a downscaling of funding as the years go on, with the idea that the team at Miller Center would find other funds to take the place of the annual contribution from the Millers, to support its work to accelerate global entrepreneurship in service to humanity. Harrison told Devex most major gifts officers are often forced into the position of making hasty decisions because they have to get donations in by a certain date, so they make the ask too quickly. But Harrison comes from the world of university fundraising, and what works for him is building on the foundation of values alignment, then taking the time to develop a relationship, which he said requires patience, tolerance for ambiguity, and flexibility to pivot. “When you’re working with high net worth individuals, they are often surrounded by a lot of disingenuous people,” he said. “So it all starts with authenticity.” Harrison suggested organizations build a donor database, develop an understanding of the giving patterns of these individuals, then develop a strategy to approach the list with more intentionality — for example, striking up a conversation when someone makes a career move. For him, the best fundraising conversations go something like this: “I have something that aligns with who you are and the person you want to be.” Rather than thinking of fundraising as asking for money, Harrison said he thinks about it as giving someone an opportunity to live the life they want to live. He added that he thinks it is important for fundraisers to be philanthropically involved themselves. Catholic Relief Services has focused on high net worth individuals — people with the capacity to make six and seven figure gifts — for a long time, and that is now the group the NGO spends most of its time engaging. Sometimes these major gifts, or leadership giving, as CRS puts it, can even be up to eight figures, said Mark Melia, executive vice president of charitable giving. But increasingly, CRS is interested in engaging ultra high net worth individuals — which it defines as people who have a net worth of $30 million or more — based in part on feedback from its board that the growing concentration of wealth requires a new strategy that meets the needs of nonprofits and donors. “When it comes to ultra high net worth donors, we have to have more of a focus on impact, because they want to see a clear return on their philanthropic investment,” Melia said. “It’s about having metrics and tangible results but also a compelling narrative.” Experts told Devex one of the most common mistakes is assuming fundraisers who are good at applying for government grants can just pivot to engaging ultra high net worth individuals. But CRS recognizes the skills required to close deals with these philanthropists are quite different than those that work in grant applications, which is why it hired its vice president for leadership giving from a university, where a lot of emphasis is placed on major gifts. Dr. Geetha Murali recently transitioned from her role as chief development and communications officer to CEO of Room to Read, a San Francisco-based nonprofit organization focused on girls education and literacy. One of the things she works to do in her relationships with ultra high net worth individuals is to talk less about Room to Read and more about the motivations of the donor, in order to figure out how her organization might be a good partner to them. She and her team at Room to Read talk about how to offer donors constant touchpoints for the organization so it can be their channel of choice for social impact, ideally for the rest of their lives. “We as a development team are very flexible and adaptable to what our donors are interested in and what they want to see,” Laurie McMahon, chief development and communications officer at Room to Read, told Devex. “That’s not to say they can influence the direction of our programming, but when we hear they want to see more of this or less of that, or that the events need shaking up, we adapt the model. We're also good at retaining donors, because their feedback is heard, taken into account, and acted upon. That brings people back and makes them more comfortable to bring in other networks to us.” John Wood, the founder of Room to Read, determined the best way to fundraise from individuals would be to develop connections between these donors and the community where their dollars were going by packaging these gifts as opportunities, such as supporting a school or a library. Over time, the organization set up chapters across the United States to allow supporters to get more involved, leading it to become a case study in the recent book “Social Startup Success.” Now, these super engaged donors organize local events, develop clear asks so that guests leave the room knowing what they can do, and travel to San Francisco for an annual leadership conference where Room to Read helps them develop plans for their chapters. A term that often comes up in conversations about ultra high net worth philanthropy is time, talent, treasure. When Population Services International launched Maverick Collective, the ask for these women philanthropists was not just to commit $1 million over three years to fund solutions for women and girls in the developing world, but use their true net worth to achieve that change. Now, PSI is helping other NGOs think through their own new models of philanthropy. Kate Roberts, senior vice president for corporate partnerships and philanthropy and co-founder of Maverick Collective, told Devex her three pieces of advice are: Do not treat your partner like a checkbook, be completely transparent, and make it fun. She also acknowledged that this work is harder at large international NGOs like PSI, but said these are the very organizations that have to go beyond business as usual in order to achieve the SDGs. Ask what donors want A session at the Skoll World Forum in Oxford, England, earlier this month looked at big bets, typically described as gifts of $10 million or more. Social entrepreneurs and NGO leaders alike filled the room for a conversation on how organizations can become “big bettable.” One of the pieces of advice was for organizations not to focus on the problem they are trying to solve, but rather what enduring change they can create with this gift, if they cannot solve the whole problem. Meeting with Devex at the Skoll World Forum English Sall, a board member of the Sall Family Foundation who is interested in partnering with others on big bets, talked about some proven strategies and common mistakes for groups interested in meeting with her. Based in North Carolina, the Sall Family Foundation is backed by John and Ginger Sall. John Sall is the co-founder and executive vice president of SAS, the largest privately held software company in the world, and a signatory to the Giving Pledge. The couple has a net worth of $5 billion and their family foundation backs issues related to health and the environment. English Sall leads a Community Health Worker initiative within the foundation, as part of her passion for global health, is currently pursuing her doctorate at North Carolina State University, and is increasingly interested in collaborating with others on big bets. But because her father-in-law started SAS, many organizations who meet with her assume that means the family foundation is strictly interested in data-driven solutions, without having done research on their broader interests, or even more importantly without asking basic questions. “My biggest recommendation is: Don’t go into the relationship with any assumptions,” she said. “Say, ‘Here is what I know. What of this is right and what of this is wrong?’ Go into it with more questions than answers.” Understanding the personality of an individual is different than understanding the personality of an entity, Sall explained. “For me, legacy is about creating lasting change, and not necessarily ensuring that our name has to be on it, because sometimes the lasting change comes without a last name.” --— English Sall, board member of the Sall Family Foundation “USAID is not going to sit there and talk to you about their legacy, but English Sall might,” she said. “When we hear the word legacy, we zero in on how is somebody going to be remembered? And that is usually a visual, a name on a building, but I think we might need to zoom back out and redefine what legacy means. For me, legacy is about creating lasting change, and not necessarily ensuring that our name has to be on it, because sometimes the lasting change comes without a last name.” While the field of philanthropy has been built around how to give, the question of why donors give — based on their “most deeply held values and beliefs” — is a critical one. It is the focus of “The Giving Journey,” a report published earlier this year by the strategic advisory firm Open Impact with funding from the Philanthropic Partnerships Team at the Bill & Melinda Gates Foundation. It’s the result of six months of research “into the key motivations and barriers to giving” among ultra high net worth individuals, which Open Impact defines as donors whose giving ranges from $100,00 to more than $10 million per year. The report follows the path from reactive check writing to actualized philanthropy, which co-authors Heather McLeod Grant and Kate Wilkinson describe as giving that is “intentional, strategic, and psychologically rewarding for the donor.” “There is complex psychology involved with getting clear on who you are, and what are your deepest values, and what are you motivations for giving, and what feels rewarding when you give, and what’s the impact you ultimately want to have in the world?” Mcleod Grant told Devex. The interviews were primarily with emerging donors in the San Francisco Bay Area, who represent a number of philanthropic trends, like the growing influence of younger donors, the number of people giving while living, and the greater ambitions of this new wave of philanthropists. The report outlines how family, spirituality or faith, and core values, as well as volunteering and emotional moments or mobilizing events, shape why donors give. It builds on work the same co-authors did for a separate report called “The Giving Code,” which explores in part how individuals who make their money in tech bring those same approaches to their philanthropy. “You have to build relationships and cultivate trust over time. You have [to] realize this is a 10 year proposition. You don’t usually get these people out of the gate. Often they start with smaller gifts. And it’s all based on trust — giving scales at the speed of trust,” said Mcleod Grant. When donors reach their “wealth event” — suddenly acquiring massive wealth via an initial public offering, an exit, or a vesting of stock, to name a few possibilities — they face a number of questions about money and meaning, such as “How much money is enough?” Oftentimes, their contributions to philanthropy have less to do with altruism and more to do with the capital gains tax they would have to pay on their earnings, leading them to earmark their money for philanthropy in order to reduce their tax burden, the report explains. Wealth advisers have a major influence on their philanthropy, with the same firms that advise them on their investments, tax strategies, and wealth preservation serving as an important point of contact on these sensitive conversations about money. “Journey is a great way to describe it,” Brian Boland, vice president of publisher solutions at Facebook, told Devex of his path to philanthropy. He said Fidelity, the investment services group that holds his donor advised fund, has been a valuable source for advice on how to be more effective at philanthropy. One of the organizations he has gotten behind is Village Enterprise, a nonprofit organization with a San Francisco-based CEO, Dianne Calvi, and a stated mission of ending extreme poverty in rural Africa through entrepreneurship and innovation. His DAF, the Delta Fund, is also the lead investor of the Development Impact Bond for poverty alleviation in Uganda and Kenya, and he and his wife have had the chance to see some of that work up close, further solidifying their commitment, he said. “As we became more successful, it became the kind of thing where we had been given a lot. So I started to ask ‘how can I take the job I do every day, and the money I get paid, and turn that around to make a big impact on the world?’” he said. Consider wealth advisers CRS is inviting individuals from groups like UBS to attend its third annual impact investing conference at the Vatican this summer. An NGO leader who is new to fundraising from ultra high net worth individuals might picture success looking something like lunch with a billionaire who will get excited about the mission and pull out his or her checkbook. But NGOs developing these strategies know to look for ways to engage with the ecosystem of advisers who work with ultra high net worth individuals. Increasingly, those individuals are wanting to be part of the conversation around everything from how to align impact investments, to the Sustainable Development Goals, to innovative financing mechanisms like Development Impact Bonds, and NGOs want to get on their radar. Anna-Marie Harling, head of the Global Ultra High Net Worth Philanthropy Centre at UBS, was in high demand at the Skoll World Forum earlier this month, with requests for meetings from NGO leaders who understood the influence she has in the giving of her clients. “Many of these ultra high net worth individuals don’t attend these events. They tend to be in smaller, safe space discussions. And it is our role to kind of translate a lot of what we hear to ensure those discussions inform their decisions,” she told Devex. Harling explained that most of the 30 philanthropy experts at UBS have backgrounds in the nonprofit space, and she said that in order to serve as trusted advisers and help their clients achieve their philanthropic aspirations, they need to be involved in conversations on the SDGs and social impact more broadly. Misti Sangani, chief donor experience and engagement offer at the Silicon Valley Community Foundation, talked about the rise of giving circles as a way philanthropists are learning from another, including a donor circle at SVCF on Africa. She also mentioned donor advised funds, now the fastest growing vehicle for giving in the charitable sector, which allow wealthy individuals to set aside money, which provides them with tax benefits, but could also open up an opportunity for NGOs because it separates the decision of whether they give from where they give. Sometimes, a donor will come to Sangani or others on her team to discuss a U.S.-based 501c3 they are excited about, and the SVCF team does due diligence on the organization. In many cases, foundations are simply a bank account from which individuals are drawing, said Jacob Harold, president and CEO of GuideStar, which he joined from the William & Flora Hewlett Foundation in Silicon Valley. There are more than 80,000 foundations in the U.S., for example, but when foundations come up in international development conversations, the focus is typically on the subset of 5,000 foundations with staff. Now, more and more wealthy individuals are routing their giving through different vehicles, Harold said, mentioning DAFs and limited liability corporations, or LLCs, as two examples. Whether it’s an ultra high net worth individual or an individual representing an institution, many of the same dynamics are at play, he said. “Does this donation feel aligned with that person’s goals? Is there a personal connection between that person and the representative of the nonprofit organization? Does this match that person’s intuition of what it actually takes to achieve change in the world, and does it match what they're looking for in terms of risk profile and time horizon, and does that person feel like their dollars will matter?” Harold said. When Opportunity International’s Tandon first got involved in nonprofits, he saw himself as an activist, but over time his thinking changed, and he began to think of nonprofits as a medium of exchange to enable two sides. “The people we call philanthropists or donors really are the activists who want to affect a change,” he said. “So we are a medium of exchange for the activists who want to change the living condition of people who live a the very bottom of the pyramid.” When he sits down with donors like Krach, he talks about Opportunity International as a medium of exchange, a bridge, an enabling vehicle to carry out what they are dreaming about. “That’s on the one side. On the other side, we are also the enablers for the very poor to be able to change their lives,” he said. He contrasts this approach with what he sees as the more traditional nonprofit approach, “thinking of donors not as people with dreams but as people with bank accounts,” and said it is working in getting philanthropists to the table, keeping them there, and even encouraging them to bring other philanthropists on board. Join Devex’s webinar, Engaging Ultra High Net Worth Individuals, this Friday for additional insights on how to get these billion dollar donors to the table and keep them there.