Yet establishing these kinds of connections can be challenging. As with any donor, high-net-worth individuals’ (HNWI) attitudes and behaviour tends to evolve along with the charitable landscape.
In CAF’s latest research report,
High Value Giving: How the UK's Wealthy Give, we set out to address the significant lack
of data available on this donor group, including identifying the size of the UK’s wealthy population and their philanthropic giving.
Based on our research, and long-standing work supporting HNWI with impactful giving, we have
identified three important recommendations to help your charity engage effectively with this audience.
1. Get to know who high-net-worth donors are
The term HNWI refers to someone who has at least £1 million in investable assets. Currently, in the UK that equates to just over 500,000 people (around 1% of the UK population), whose combined investable assets total £2 trillion.
Among this audience, some recognised trends persist. For example, over 80% of HNWI are men. Yet women are significantly overrepresented among the most generous of these donors – of the top 10%, three in ten are women.
These individuals also do not always act alone. Instead, they often consult with their family and loved ones when deciding which charities to support and how they want to give, or choose issues based on their personal experiences.
Further to this, our research shows a difference between the causes that the UK’s wealthiest individuals support and those championed by the public. For example, education is the most popular cause area among wealthy donors, supported
by six in ten donors, which compares with just 4% of the UK’s general population.
Increasingly too, these donors view their giving as a form of capital, considering it as part of a broader impact economy. This means they often innovate
in their approaches to social and environmental issues and take risks with their gifts that others cannot, for instance, by funding ground-breaking research or supporting pilot studies.
Taking all of this into account, these are some questions
to consider when reviewing your high-net-worth donor strategy:
- How could your programmes align with the key interests of these donors?
- Are there areas of your work where you could collaborate with an individual to drive innovation?
- Who else might be supporting these HNWI to make decisions on how to give? Could these be family, friends or advisers?
2. Keep track of giving trends
Once, you have established who might wish to give and why among this group, it is important to also look at how wealthy donors may want to give.
A lot of the time, we think about donations solely in terms of cash gifts. However, our research
shows that high-net-worth donors are increasingly focused on leveraging their wealth in new, more strategic ways. Giving is not just about donating a sizeable cheque, but exploring the full range of assets, networks and expertise that the donor may
be able to share.
Therefore, to attract these high value donors, it is worth getting comfortable with accepting non-cash donations. Many HNWIs are using non-cash assets – such as property, stocks and shares, and artwork – to further their charitable goals. While this approach can provide helpful tax relief benefits for donors, it also unlocks additional resources for charities.
Many charities
can be hesitant to accept non-cash donations due to the perceived challenges of realising their financial value. However, investing in appropriate processes to accept these donations can generate a significant return, both from the donation itself
and in strengthening your relationship with your donors.
So, working with industry experts, such as Donor-Advised Fund (DAF) providers, is something to consider. With their expertise in due diligence and complex gifting, they can deal with a lot of the administration involved before distributing the money onto your organisation. For example, last year, here at CAF,
we supported donors through our DAFs to release £45 million of share gifts to charitable causes, as well as wide range of other complex giving requests.
3. Understand how the giving solutions work for HNWI work
Every solution – whether it is a DAF, charitable foundation, or legacy gift, etc – has its own way of working and, by understanding what is involved, you can identify how your donors’ preferences align and help them to complete their
donation. Wherever possible, this includes personalising and tailoring their donor experience with your charity rather than offering a one-size-fits-all solution.
In addition, being clear on the financial and tax implications of each donation
method can help kickstart more meaningful conversations with your donors. This is an opportunity to discuss the implications of their gift for them, as well as the significant boost it will make towards your organisation achieving its mission.
An evolving giving landscape
For many within the charity sector, the fundamentals of dealing with high-net-worth donors has hardly changed. It is still largely based on the richness and depth of the relationships and sharing a long-term vision.
However, as HNWI become
more strategic in their giving, charities must ensure they are adapting and keeping track of the latest trends and practices. By understanding wealthy donors’ motivations and their style of giving, you can build the foundations for a lasting,
impactful relationship.
