Where the Money Is? — and Why That Matters for Nonprofits

Back in the 1950s, when a reporter asked the notorious Willie Sutton why he robbed banks, he supposedly responded, “That’s where the money is.” Proponents of the business of philanthropy should heed this simple wisdom and cultivate relationships with the wealthiest prospects — those with the most capacity to give.

Americans are generous, but according to the Institute for Policy Studies, the percentage of those who give small gifts to charity has declined from 66% to 53%. While the total amount donated continues to rise every year, the authors contend, “Any increase in giving has been driven by donations by mega-donors and mega gifts over $300 million.” Whether they like this trend or not, many nonprofit organizations have responded by focusing on larger donations from the wealthiest donors — many with private foundations or donor advised funds.

Here are some guidelines for fundraising where the money is.

1. Billionaires Discuss Finance

If it seems to you that there are more billionaires each year, that’s because there are. At last count, New York City alone had 107 and San Francisco had 44. 

If you’re a nonprofit fundraiser, you may one day be sitting across the table from a billionaire — or at least a financially-savvy, aspiring billionaire. What will you talk about? Your organization’s mission and impact ought to be front and center, but, given that the wealthy devote a large percentage of their attention to making money, demonstrating some financial savvy should come high on the list of conversational topics. Now is as good a time as any to make all things financial a steady part of your news diet. CNBC, Bloomberg and The Wall Street Journal are among my favorite resources. Khan Academy’s courses on finance and capital markets might be helpful for beginners.

2. The Fed Is in Charge

This is a critical topic upon which to base your financial education. When it comes to inflation and other economic issues, a lot of people point fingers at the president, but the real epicenter of power is about a mile southwest of the White House — the Federal Reserve Bank. 

When the Fed sets the interest rate (or even discusses the matter) and when it buys government bonds (known as quantitative easing) or sells them, it prompts strong reactions in the financial markets. If the Fed appears in the news, the markets have already digested its pronouncements and actions. In 2022, Chairman Jerome H. Powell is working assiduously to tame inflation and prevent recession in the face of supply-chain challenges and a war in Ukraine. The markets have generally approved of his strategies, but the daily reactions have been severe.

3. Market Gains Have Been Robust

An investment made in the S&P 500 in 2000 has realized a 383% return on investment (or 189%, adjusted for inflation). This is an important piece of data to keep in mind in the event of a stock market correction. Naturally, there have been some ups and downs, and notably, a major drop in 2008, but aggregate gains mean that investors may be in a position to offset tax liability by donating long-term appreciated assets. Bitcoin and other cryptocurrencies have seen remarkable growth, and these, too, can be donated to charity. If your organization isn’t prepared to process these gifts, it may be leaving money on the table.

4. The Wealthy Think About Estate Planning 

Planned giving has grown in importance over the past decade as the dollars moving from this generation to the next is in the multiple trillions. My colleague Lauren Hancock pointed out that wealthy donors appreciate and respect organizations that are similarly oriented to the future. 

“When you bring up planned giving,” she said, “they recognize that you have long-term plans and vision.”

According to Giving USA, bequest giving accounted for 9% of the $427.1 billion contributed to charity in 2018. Nonprofit development teams should be equipped to facilitate and talk about bequests and other financially engineered opportunities taking advantage of trust mechanisms and life insurance strategies. If you are wondering why there are so many billion dollar plus campaigns these days, look no further than the impact of planned giving. 

5. Keep an Eye on MacKenzie Scott 

In 2010, Bill and Melinda Gates, along with Warren Buffett, launched the Giving Pledge, an attempt to set a new standard of generosity among billionaires. This gesture inspired more than 200 ultra-wealthy individuals in 28 countries to step up their giving. Twelve years later, MacKenzie Scott is similarly generating headlines and influencing the course of philanthropy. She has donated $12 billion over the past three years, including many large gifts to Historically Black Colleges and Universities, and numerous racial equity-focused programs, among others. 

In a series of Medium posts, she has outlined a theory of change that differs from that of other mega-donors. 

“When our giving team focuses on any system in which people are struggling,” she wrote in her most recent post, “we don’t assume that we, or any other single group, can know how to fix it. We don’t advocate for particular policies or reforms. Instead, we seek a portfolio of organizations that support the ability of all people to participate in solutions. This means a focus on the needs of those whose voices have been underrepresented. It also means including others within the system who want to help improve it, harnessing insights and engagement from every role.” 

Scott’s humble, inclusive style of giving is giving rise to similar approaches, notably Robin Hood’s no-strings-attached Fuel for 50 awards and the Abundance movement, which launched April 18.

By developing their capacity for engaging today’s and tomorrow’s wealth accumulators, nonprofit executives and fundraising professionals position themselves to advance the long-term growth of their organizations. Knowledge of the basic financial drivers in today’s unique economic and political environment will serve those leaders well in helping unlock these opportunities.