America’s wealthiest philanthropists are more likely to cite joy and happiness, and a sense of gratitude for their good fortune, than tax advantages as a motivation for their giving, according to a new study by Lipman Hearne, a consulting company in Chicago.
The study also identified five key types of donors that offer insight into how they view their philanthropy, as well as how they make decisions about giving.
Researchers at the company, which specializes in marketing and communications for nonprofits, examined the 155 public statements made by the 169 signers of the Giving Pledge, the effort started by Bill and Melinda Gates and Warren Buffett, to persuade very wealthy individuals to commit at least half of their fortunes to philanthropy. Lipman Hearne’s researchers sifted through the statements — and additional data about the signers’ estimated net worth, birth year, and country of residence and of birth — for patterns.
The researchers discovered:
- More than half the pledgers expressed gratitude for the good fortune they’ve experienced.
- Twenty percent of the statements said the example set by their parents inspired them to also give to charity.
- One in three statements cited joy and happiness as a motivation for philanthropy. Only one statement out of all 155 mentioned tax incentives.
“Like everyone in our sector, we’ve been paying close attention to this growing population of high-net-worth individuals,” says Sara Stern, Lipman Hearne’s executive vice president for philanthropic marketing. “As we watched them evolving, watched them learning from each other, we wanted to understand how they’re making their decisions. And we felt that insights about them would inform our understanding about all donors.”
The researchers used the Giving Pledge statements for the study because it offered an unusual primary source for a group of donors who are hard to access otherwise, says Colleen O’Grady, a philanthropy strategist at the company. “It offered a straight line into the story they’re trying to tell about their philanthropy,” says O’Grady, who presented more from the research in a Chronicle webinar March 22.
Complex Motivations
From sifting through the Giving Pledge statements, the researchers identified five profiles that reflect the ways in which very wealthy donors approach their philanthropy. Understanding that there are styles of giving can help charities “have more empathy for the donor story,” O’Grady says.
Donors often embody more than one profile, and their motivations can be complex, she adds: “You start to see that there’s more to the story than a donor gives out of emotion, or the donor gives out of loyalty.”
The five donor profiles the researchers identified are:
Closers. This donor prides him- or herself on a capacity to see and appreciate opportunities, and to seize them. Closers see their wealth as evidence of their acumen and savvy and like to be recognized as strong partners who support cutting-edge ideas. J.B. Pritzker, the businessman, Illinois gubernatorial candidate, and Hyatt hotel heir, is an example. Although he has not signed the Giving Pledge, he has given substantial donations and has pushed for support of efforts to help young children learn.
Enthusiasts. This donor sees him- or herself as a civic leader, believes doing for others has inherent value, and sees philanthropy as a direct route to personal happiness and self-worth. Person-to-person relationships — with beneficiaries, with their foundation staff, with other donors — matter greatly to the Enthusiast. “The Enthusiast is probably more closely aligned with the demographic of the Greatest Generation, or the older boomers,” says Sara Stern, vice president of philanthropic marketing. The McDonalds heir Joan Kroc, benefactor of the Salvation Army and NPR who died in 2003, exemplifies the Enthusiast, Stern says.
Strategists. This donor is very hands-on and is very invested in the approach taken to solving social problems. Donors in this category focus on evidence and like to test their theories, to help develop successful ideas that can be spread broadly. They are interested in creating systemic change, not Band-Aid solutions. Bill and Melinda Gates’s approach to giving exemplifies this approach, O’Grady says, making them complementary philanthropic partners for Warren Buffett, an Enthusiast.
Explorers. This donor is aware of being new to philanthropy — perhaps through the sudden accumulation of wealth — and are in a learning phase. This type sees wealth as a responsibility and an opportunity, is cautious about making missteps, and usually prefers incremental projects and a low profile. Examples of Explorers include the co-founders of AirBnB — Nathan Blecharczyk, Brian Chesky, Joe Gebbia — and Sara Blakely, founder of Spanx.
World Builders. This donor, the report says, is “an architect of the human experience,” one who sees charities as only one way to bring about social change. World Builders use a variety of tools, including for-profit enterprises, technology, government policy, and more, to realize their philanthropic visions. Mark Zuckerberg, the Facebook co-founder, is an example of a World Builder, Stern says, though he started out as more of an Explorer. “He and his wife set up an LLC [limited liability corporation] to solve all childhood illnesses. He has the passion of a philanthropist, but he also uses other tools. He’s bringing data scientists into his LLC.”
Not every charity has a shot at winning support from a billionaire. “But they might be approaching someone who can give $1 million to their organization,” says Minesh Parikh, Lipman Hearne’s chief executive officer. Understanding the different profiles of the affluent, he says, might be useful as a sort of “proxy that’s reflective of donors at large.”
He adds: “This type of discipline can truly inform your communications strategy, and there’s plenty to be gained for nonprofits by that.”
