The State of HNW Giving

Thank you all for joining us. We are really excited to talk to you all today about the state of high net worth giving. Big things here today. Make sure that you open up that q and a function in your Zoom bar and ask us questions. Kyle and I will be reading those questions as we are going along, making sure that we have time at the end for q and a as well. But as you have questions, please let us know because we want to make sure that this is really targeted for you. My name is McCurdy Williams. I'm a senior customer success manager here at Windfall. I'm lucky enough to have been here for over four years working with nonprofits across the country, and I love talking about this because I fell in love with Windfall's data as a development professional before I joined the company. And I am joined by Kyle Curry, who's who's our nonprofit general manager. He's going to introduce himself. Hi, everyone. Pleasure to be here. As McCurdy mentioned, I'm the general manager of the nonprofit team. I've been consulting with nonprofits on their data and technology for about a decade, and I was a fundraiser myself for about a decade. So excited to chat with you. If you have any questions, let me know. And, also, please feel free to reach out and connect with me on LinkedIn. I always like to connect with people there and and chat nonprofit strategy. Everybody should do that because Kyle has the best ideas and has been on some amazing podcasts talking about nonprofit strategy. Quick overview today. We're so grateful for all of you spending an hour with us. We're gonna do a Windfall overview quickly, dig into US macro trends, specific wealth insights that Windfall has found, talk about nonprofit fundraising insights, and then how data and AI tactics can be used and created specifically for your organization to engage the right high net worth individuals across the country and do a demo of our SaaS and AI application. I wanna make sure that we all have a a understanding of what we're gonna walk through and what we're not gonna walk through today. But as Kyle said, please reach out. Find us on LinkedIn. Find us at our emails, and we are here to talk to you about all these things in a one on one capacity. What we are gonna cover today is Windfall's mission and high level product offerings, current macro trends in the economy and the impacts of consumer spending and how that connects with philanthropy, unique insights from Windfall's people graph and understanding the potential impact of the great wealth transfer for fundraising. And then we're gonna walk through developing a framework for a data driven approach to engaging these high net worth individuals in our current environment that is uncertain and ever changing. We're not gonna talk about a detailed explanation of how we build our data or our particular data points. We're not gonna dig into data science and the modeling of our solution or how this could impact your particular database, although we're gonna do that on a a general level. And we're not gonna do engagement strategy between Windfall and your particular org, but Kyle is here to support that. And we are happy to introduce you to the people across the organization if you have particular questions. Okay. Windfall is here to democratize access, workflows, and insights on people. We want you to know who you have in your database and create actionable workflows that allow you to talk to the right people at the right time. And that's one of the key things that we're gonna talk about today is knowing when the right time is. Let's talk about issues with with debt data and legacy data vendors and then how we have changed that. The first issue, which was true when Windfall started in twenty sixteen and is still true today, is that there's no good detailed net worth data outside of Windfall. We we wanna talk about net worth because we wanna talk about all assets that are available, liquid, nonliquid, that can become a gift through major gifts, through planned gifts, everything in between from these high net worth individuals. And outside of windfall, what you're getting is not assets minus liabilities net worth. What you were looking at from a lot of other vendors is proxies such as household income or home value, and they're bad. Right? They're not helpful. They're not intuitive, and they're leaving a lot of information on the table. Income is not helpful when we're thinking about high net worth individuals who are growing via other revenue streams as well as someone who might look like they're high net worth, owns, you know, say, an eight million dollar home, but they have a very large mortgage. And the kicker was that a lot of data before Windfall came onto the scene led to a lot of wasted time trying to decipher what's good data versus bad data and how do we fix who we're going to actually focus in on and and prioritize our constituents. We have the privilege now in almost ten years with partnering with over fifteen hundred organizations across the country, nonprofits of all shapes and sizes. Through our proprietary dataset, we have tracked more than a hundred mill trillion dollars in total wealth, deterministically matched data from hundreds and thousands of data sets to create more than one hundred million US households in our people graph, of which more than twenty million are affluent. And at windfall, affluent means someone has to have a net worth assets minus liabilities of over a million dollars. And that's the population we wanna talk about today. Because what are you gonna do with data on high net worth individuals? We see the majority of our customers using our data in three ways, different teams using them differently once you're in these nuanced ways of using it, but we see people using it for identification, stack ranking your database, understanding who's there and who needs to be spoken to and strategized and segmented, and then engaging people, finding the right target audience for the right personalized messages. We are a platform that is data driven, and we want to be there for your data driven development team. We have a number of offerings for nonprofit organizations. Our flagship solution is our wealth screening, wherein we're providing precise net worth figures and windfall triggers, which are data points, either by integrating with your database or by batch processing CSV Excel files. We have a secondary dataset that provides career and firmographic information on your constituents. That's in our wealth screening premier dataset. And we just recently added donor advised fund affiliation and cryptocurrency interest to this dataset. Incredibly helpful as we're thinking about how do we support nonprofits today was different than it was three years ago, five years ago, ten years ago. We offer propensity modeling. This is a bespoke propensity modeling solution that takes it one step past that net worth figure. It doesn't show, is this person wealthy, but rather shows, is this person likely contribute to us at a certain level? And that could be major gifts, planned gifts, leadership annual giving, direct mail appeal response. There are a lot of different options, and we'd love to talk to you about it more because it is very nuanced to your organization. Finally, we have Datalink. Datalink helps with data hygiene and deduplication. We know that many nonprofits are keeping multiple databases. They need to have those multiple databases because of ways that you interact with your constituents, and you need to know where there is overlap and how wealthy both dataset is. And Datalink is our ability to to do just that and enable you to well screen, have propensity modeling and data hygiene. Key for windfall is that our pricing is not based on the number of records. We are not giving you credits. We provide unlimited syncs and unlimited number of people that you're going to screen for all of our products. We don't want you to select and pick and choose and only think about previous donors or previous owners at a specific level. We want you to have the freshest data with our weekly refreshes for everyone in your dataset, whoever you need to focus on right now based on your particular initiatives. Winfull wants you to be able to contextualize affluence and influence together. Here, we're taking information from your database, first party nonprofit data, name, information you might have about engagement, their alma mater, and their giving habits and to just you. And then we are adding in Windfall's wealth information and career information to make a full picture for prospect research and frontline fundraisers. And we're gonna show you later on our AI generated dossiers, which take this to a whole another level. As I said, we want you to be screening everybody. We redefined the well screening industry in twenty sixteen because traditional well screening looked like this. You chose very carefully, very diligently a subset of donors, and you left a lot of people back in your database, unscreened, and missing their potential. You didn't know who how many hidden gems you had because you couldn't screen them. Windfall turned that on its head with our unlimited model. We don't want you to pick and choose. We want you to screen everybody. Shouldn't matter what their largest gift was, their most recent gift. Someone might be going through a liquidity event, a wealth change, wealth generational transfer. And if you can figure out the right way to message them, you can engage them. And we want you to do that and understand exactly who she you should be focusing on. Windfall overview done. Let's focus on US macro trends. Why are we talking about this, though? If you're like me and you've got seventeen different news sources coming into your email every morning and trying to keep up, what we know is there's a continued focus on the affluent portion of the US population being increasingly important for philanthropy and overall economic spending. And with the tax changes in play for twenty twenty six, which Kyle will cover, it's even more important than ever that nonprofits are focusing in on high net worth individuals in their communities and taking strategic action to engage with the right messaging. As we look at the landscape in early twenty twenty six, conditions are mixed, but they're not bad. We've got interest rates that remain restrictive. We've seen resilient GDP growth of four point five percent, steady stock market gains, and this environment has created a k shaped demand. High capacity households remain resilient and shielded from pain while broader sentiments remain subdued and maybe anxious. For you here today, we're looking to engage high net worth individuals. We've gotta focus on the contrast between macro uncertainty and that high net worth resilience. Because while the average consumer is feeling the squeeze, the anxiety of interest rates and inflation, high net worth individuals often benefit from these market conditions that challenge others. So I what I want you to think about is don't let headlines about high interest rates scare you away from those major gift asks. Because that k shaped recovery, while the average owner is tightening their belt, our high net worth prospects are seeing significant portfolio gain. And that is going to be able to help you pivot your focus to these high net worth individuals and your major gifts, principal gifts, and most likely plan giving. One of the the big things I want us to think about is this the the market and the steady gains in the market. For your donors, this means that for many of them, they have massive unrealized gains. And instead of asking for a check, it's perfect time to discuss gifts of appreciated stock or real estate. It's more tax efficient for them and allows for a much larger gift. And and overall, all of these things are showing us the donors are feeling a sense of cautious resilience, and they have the money. They need a stronger justification for why now. And your missions are why now. And you have the ability to take this and take your insights and your database and turn that into real gains. Here we have that k shaped economy that I was talking about. It's a reality of twenty twenty six. You've probably heard about it in the news. But for development professionals, it's not just a headline. It's it's the road map for the future. What we see here is a k shaped economy. The bottom arm of the k represents the mass market donor, those annual fund donors. They're feeling inflation. They're feeling interest rates in their daily lives. For them, discretionary income is shrinking, and so therefore their giving is naturally contracting. But that top arm of the k where windfall focuses, those above have a net worth above a above a million, high net worth, ultra high net worth, it's a different world. There are households benefiting from the S and P surge and home equity surging, and their assets aren't just stable. They're compounding. And what this does for you, especially thinking about the state of high net worth giving, is it provides clarity through subtraction. In in a booming economy, everyone looks like a prospect, which leads to wasted resources. I guess they're not wasted, but a depletion of targeted resources. And in a cave shaped economy, the data tells us exactly where the capacity remains and where we need to focus and how you can focus right now on that richer population. And by doubling down on high net worth prospecting, you're entering a less crowded field, and you know exactly who to focus on. And even more so with the new tax bill and tax floors, this creates a high tax burden for those at the top, and philanthropy is one of the few remaining levers they have to manage their taxable income. And what that means for windfall is you need to be screening. And that what that means for you is you need to have a wealth vendor that's going to be able to give you updated information. Because if your database hasn't been screened in the last six months, you're likely still targeting people who have slid into the bottom arm of the k. And you're ignoring new prospects who have climbed into the top arm, and your data decay is your biggest enemy. We all learned a lot about savings rates during the pandemic, and we saw that rate increase dramatically. And then it started to level off, and we expect consumers to have that leveled off. Savings rate mean that they're going to be depleting savings accounts. And we're seeing that compression as something that you might previously have panicked about because we're thinking, oh my gosh. Donors don't have cash. They're not ready. They don't have resources to give us. But for high net worth individuals, this is actually a signal of confidence and of asset movement. Think donor advised funds. We don't want you worried about this for your major gift portfolios. There's there's a high opportunity cost for cash when the stock market is up. High net worth individuals don't want their money sitting in a savings account earning a fraction of of what they could. They're moving cash out of savings and into the market. They're more invested, not poorer. And what does that mean? Ask for appreciated stock. Also, something I want us to think about is a lower savings rate often indicates higher spending. So for the affluent, that this includes lifestyle and legacy spending, and philanthropy is a part of lifestyle. You're spending on travel, art, and real estate. You're also spending on impact. And if you position your mission as a must have investment in the future, you can compete for all of that lifestyle spending, and you have the ability to cash in. And I wanna go back to donor advised funds. We're gonna talk about it a lot. When saving's low and but net worth is high, donors are looking for a way to fund their philanthropic goals without touching their cash flow, and we have seen a historic rise in donor advised funds. And we have that donor advised fund affiliation trigger because we've heard nonprofits say we need to know who has a donor advised fund. They might have high high net worth individuals might have, you know, quote, unquote, low savings this month, but they've got five hundred thousand dollars sitting in a DAF, and they have to give it away. And we need to focus in on shifting mindset from cash to dynamic assets and from do we think this person can write a check to what does their portfolio look like, and and what do they need to give from? What can they give from? And how can we be their philanthropic partner? Especially for ultra high net worth individuals, how can we be their partner? How can we help them see their goals come to life? We know that the great transfer of wealth is incredibly important. And so what does that shifting dynamic of wealth across generations have to do with this economy, and what does that mean for your plan for the next eighteen months, two years? First, we gotta think about net worth. I said this before. At Windfall, we define net worth as assets minus liabilities. We're updating our proprietary dataset every week to ensure we're giving you the best information possible. Because as we see here, we need to think about someone's real estate and their retirement and their savings, but also all of their liabilities. How much mortgage do they have? How much debt are they accruing from student loan debt that just continues to increase? What does the other side look like? What does their income look like? But what what other things are they spending on in their lifestyle? Are they buying a a large boat yacht? Are they buying planes? Where is their inheritance? In what generation do they live, and where are they where are they going to see the biggest growth, and when are they going to see it? We need to know their liquidity events, and we need to know their net worth on a regular basis. So we know that the stock market can shift wealth, but who does that impact? The stock market is a leading indicator of economic condition, and it impacts household wealth differently based on exposure. But I want you to look at this chart. And while we often hear about economic uncertainty in the news, the reality for top tier prospects and donors is captured right here. The S and P five hundred didn't just grow. It surged. For your high net worth individuals, this isn't just a number on the screen. It represents a massive increase in their disposable philanthropic capital. So thinking about your own data, the increase in the market has led to a shift in how these donors are giving. And shifting how they're giving is incredibly important as we think about who we need to talk to and how we need to talk to this generation and the next generation of wealth holders. It's exactly why we we focus on that freshest wealth data. It's not a luxury anymore. It's survival for your major gift program. If you're relying on wealth screening that's antiquated, you're looking at completely different financial reality. And it's not just that wealth is fluid, it's a donor who has was a steady prospect before, they might now be sitting on significant gains and an inheritance, and they need to move for tax purposes. So with route real time data, you're walking into discovery calls blind. Looking at this, as a key takeaway, I want you to think about your top fifty prospects. Do you know how much their portfolio has shifted in the last twelve months? And if you are saying no, look at this circle. You're leaving growth opportunities on the table. You need to know who is moving and where. And particularly as we think about wealth transfer, we see here that there are a lot of really important assets outside of the stock market and income that make up the wealth dis the the overall asset allocation for our ultra high net worth population. And if we think about high net worth at somewhere between one and ten million, we see a huge increase in business interest. But if you're don't have updated career information, you can't catch promotions, job changes, retirements that then combined with understanding familial ties allow you to be the best prospect manager that you can be and the best prospect research team that is finding the best people to qualify. Let's get practical about that great wealth transfer. We've we've seen the hundred and twenty four trillion dollar headline, but this is where the rubber meets the road in for you. In the past, we've we've looked at wealth as a static snapshot. Who has money now? But to survive this transfer of wealth, you have to look at wealth as a moving target. And this is how I want you to think about this as you talk to your teams. There are three main things. Heir retention. Statistics show that up to ninety percent of heirs change their philanthropic priorities after receiving an inheritance. If you wait until the transfer happens to meet the next generation, to meet the kids, you've lost. We need to move from donor stewardship to family stewardship. You need to go from from legacy to leverage. Younger generations, Gen X and millennials, they don't wanna just fund an endowment. They wanna solve a problem. We know that. They view their inheritance as capital to be deployed. So your pitch needs to look at this, and and shouldn't just be about history. It should be about your road map. Because if you can start engaging them sooner and identifying these successors earlier as the third thing, then once the wealth is transferred, you're going to be able to to know that you're still in. Data is your best friend when we're looking at identifying successors. Using windfall and other resources, we don't want you to just look at who has wealth today. We're thinking about that potential. Your next major gift isn't coming from a stranger. It's coming from a person most likely already in your database or the family member of a person in your database. This is a current opportunity. It's not it's not a problem. It's a an opportunity for your team. And the organizations that that are, you know, quote, unquote, winning are the ones that are using data to see this transfer before it happens and allowing them to be at the table when that new generation decides where they want to support their philanthropic goals and where they wanna set their intentions to see the biggest impact. What is that impact? We are seeing an estimate of eighteen trillion dollars going to nonprofits, to charitable causes through this generational wealth transfer. And that means you need to be building multiple channels for major donor pipeline growth. Baby boomers and Gen Z, they give differently. We we know that. They care about different impact indicators. They wanna be a part of a solution. And if you want to capture this, you need to think about how are you differentiating your outreach and your donor relations to different generations and asking how do we keep the relationship? How how can we ensure we have the next generation in our database and we're including them in our communication? One of the key things that you can combine with having updated wealth information is understanding foundation association and foundation officers. That is critical, and it's something that Windfall tracks that I have seen so many organizations in the last six months really keying in on. The key for philanthropy professionals is knowing who's starting to learn the family foundation business and making sure they're connected to your organization, making sure that you have them on your list and that you can find these people who are about to see twenty five point six trillion dollars in millennials and fifteen trillion dollars in Gen Z or younger. It's going to help you inform your fundraising strategies if you understand generational wealth because as we go deeper, there are gen there are opportunities to drive strategy. Major donor strategy, making sure that we're talking to women and that you're you're growing that opportunity to see impact visibly. There needs to be a fundamental shift in philanthropic landscape to find that eighteen trillion dollars and and get some of it for you. The challenge is that the children and grandchildren inheriting wealth don't necessarily same share the same institutional loyalty as their parents and their grandparents. And if you rely on legacy donors without engaging their heirs, you're essentially watching the future endowment walk out the door. You need to think about the relationship transfer, the relationship transfer to widows and then to the next generation. And how do we think about that with next generation donors? We think about retention. Multigenerational engagement is critical for retention, long term major gift retention, but also retention at the lower level. If you can retain the younger generation as they learn more about your organization and then they get access to their parents' and their grandparents' wealth and they already believe in you, then you you know that they're here. You need to make sure that you're inviting people who you know have generational wealth to that gala, inviting the whole family when you have an entire family in your database, and create programming that appeals to the younger generation. Make sure that you are looking for that next generation donor donor that is believing in a solution and creating that programming that changes your pitch based on age and based on current wealth and and, you know, suggested future wealth from support the institution to solve climate change. And then donor advised funds and alternative vehicles are gonna be really important here. We think about the next generation. They don't know how they wanna give yet. They're not there yet. They're not at their prime earning. They're paying attention to their jobs. So they're making donor advised funds. They're putting money in their family foundations, and then they're parking it, but it has to be used. There has to be that five percent spend from a family foundation. You need to be able to identify DAC holders and foundation associations and move this multigenerational philanthropy to the next level. Really important here is to understand that you need fresh data regularly so that you know when the wealth has transferred so that you can then make the decisions in regular meetings to add more people to a portfolio, to add, you know, subgroups. My favorite example of this is we work with an organization that had all but given up on a five hundred thousand dollar previous donor, and they just couldn't get a response from the donor. And they came to Windfall for wealth screening and propensity modeling, and that donor was getting the highest score possible. And they said, okay. We have to double down. We have to find a new way to that donor. So they went to their board. They went to their volunteers, and they dug in. And they said, this person was an amazing donor, and we've lost touch, and we don't know what to do. Help us. And through that, they learned that the matriarch who they'd been trying to reach out to had passed all of the philanthropic decisions onto her son. They were able to receive an introduction to the son and speak to him about the impact of their original gift, and it they turned it into a million dollar donation. And now they know the rest of the family. Now they know that as the family's wealth gets passed on, they're in the mix. In just twenty twenty five, we saw six trillion dollars of wealth transfer, and the wealthy got wealthier. Wealth is centralizing at the top, and here's a chart of just windfall information plotted by the millionaire population from the pandemic to today. We've seen a total of a hundred and thirteen percent increase in affluent household wealth, and total wealth held by held high net worth households has increased by a hundred and sixty one percent in just six years. From last fall to now, we've seen an increase from seventy eight point one percent to seventy nine point eight percent of all wealth in the US being held by those that are worth more than a million dollars. As you look at the steepness of this curve, the wealth at the top isn't just growing. It's accelerating. If your fundraising strategy is a flat line while your donor's wealth is a vertical line, you're falling behind every day. Being nimble isn't a buzzword. It's the ability to see the donor move up that curve in real time and have the courage to change your ask to match their new reality. I want you to think about where people are as well and how does that affect your strategy. Because the majority of the US has seen an increase in high net worth households, and we're seeing a major concentration on the coasts and major metro areas. People are moving their wealth to lower tax areas, more urban cities, and and the coasts except maybe the Bay Area, which is already incredibly expensive. How does this correspond with your event calendar, your travel calendar? Who's going to these areas, and who should be added to those lists? Can you adjust your schedules to better meet the ultra high net worth individuals where they are and start building relationships? And what about the ultra, ultra, ultra high net worth? We just yesterday did a presentation about what it means to be in the top one percent of your state, And we've seen that major metro areas are gaining billionaires quickly. New York leads by a wide margin, then Miami and LA, and and there's there's a shift towards finance and those tax friendly hubs. They've got the pull of tech and innovation in Boston, New York, San Francisco. And you need to know where these people are, and you need to go there. The wealth is getting more concentrated. They are wealthier and wealthier. The US wealth landscape is tilting, and it we're reshaping the way what it means to be wealthy. And if there's one side that justifies your entire data budget, it's this one. We know the hundred and twenty four million trillion dollar transfer. We know the eighteen trillion dollars for charity. That's not future money. It's here. The wealth is being transferred, the rich are getting richer. You need to know who's moving and when and how, and you need to know when to have it unlocked immediately because last year's data is a liability. We need to think about a couple of things. The window of influence is shrinking. Wealth is being transferred. You need to know where it is, and you need to know where it's going. So if you're relying on data that's twelve months old, you're out of the picture. It's invisible to you. And then when wealth is transferred and people are making those decisions, they're making it primarily in the first ninety days. They're readjusting their impact. We need to identify that next generation and go from guesswork to to inventory to really understanding who is in the pipeline. Having updated data makes your pipeline stronger. This wealth transfer is a once in a civilization event for the US, and and you can be a spectator, or you can move with it. You need to think about what are we doing, and make sure that your mission is the one that benefits from this transfer, not just the one that hears about it in the news. Kyle is going to talk about particular nonprofit trends now. Great. Thank you so much, McCurdy. Yeah. Let's shift and talk about trends specific to nonprofit fundraising. So one thing that's really staring fundraisers in the face this year is that the donors' recession fears have reached a five year high. They're they're really, really amplified at the moment. Sixty one percent of charitable donors, believe a recession is likely within the next twelve months, and, that's a nine point increase from q two of twenty twenty four and the highest level since the pandemic peak, which was fifty nine percent in q one of twenty twenty one. So this sentiment disconnect from economists, who reduced recession forecast from sixty percent to forty percent reveals donors are experiencing day to day economic pressures more acutely than aggregate data suggests. Affluent donors, remain committed despite declining participation, however. So while the share of affluent households giving declined from ninety one percent in twenty twenty five to eighty one percent in twenty twenty four, those who gave are really contributing more. The average gift increased from twenty nine thousand one hundred to thirty three thousand two hundred and nineteen, which is more than ten times the general pop population giving level. So this dollars up donors downtrend means fewer but more generous high net worth donors, now account for growing share of nonprofit revenue, making major gift cultivation a really critical part of your your fundraising process. Inflation's impact on, giving appears to be easing easing in recent data. So the percentage of donors giving less to, due to inflation dropped from fifty eight percent to forty seven percent year over year, which was an eleven percent point, percentage point improvement. High income households naturally less impacted by inflation are sustaining major gifts and representing a growing share of total revenue. So total charitable giving reached a record five hundred and ninety two point five billion in twenty twenty four, up six point three percent in current dollars, three point three percent inflation adjusted dollars, with individuals, being three hundred and ninety two point four five billion, foundations being a hundred and nine point eight one billion, bequests being fifty four point one three billion, and corporations being thirty six point eleven billion. All of that is contributing to this growth. But, obviously, the landscape is changing every day due to these quickly shifting world events. So we're all in a bit of a a wait and see if the the data continues to support this and trend in this direction. But regardless of that, here are some strategic recommendations for donor engagement now. Leveraging donor advised funds to maintain consistent grant making during market volatility, focusing on major donor cultivation as high net worth households increasingly drive philanthropic growth, emphasizing mission, impact and transparency to combat donor uncertainty, and planning for positive giving momentum in twenty twenty five and twenty twenty six based on the strong twenty twenty four market performance and the lag giving response that usually happens from that. When we look at the last thirty years of giving trends, we see a story of concentration. In the nineteen nineties and early two thousands, philanthropy was broader with more households participating at lower levels. But over the last decade, we've seen a hollowing out of the donor middle class. While total dollar dollars given are currently at record highs, those dollars are coming from fewer wealthier hands. There are three specific reasons why your team must think about these long term trends right now. First, there's a fundamental shift from participation to capacity. Thirty years ago, a nonprofit could survive on a high volume of small checks. Today, the data shows that mass market giving is in a steady decline. This means your organization's growth is now tied directly to your ability to identify and engage high net worth individuals, instead. So you can no longer afford to treat well screening as an optional luxury and nice to have. It really has become a, primary survival mechanism for organizations. Second, we're we're witnessing the rise of the sophisticated donor. Over three decades, donors have moved from trust based giving to impact based giving. They now view their donations as investments. When you look at these trends, it becomes clear that your competition isn't just the nonprofit next door. It's the donor's own investment portfolio. They wanna know that their dollar is working just as hard in your hands as it is in the S and P five hundred. Third, we have to address the institutional memory gap. Many of your current board members and senior leaders grew up in a fundraising era that just simply no longer exists anymore. They might be pressuring you, for direct mail results that haven't been viable since twenty ten. You should use this type of data to educate your leadership and show them that the market really has shifted. The return on investment has moved toward major gifts and high precision data. However, these trends create a massive competitive advantage for those who adapt. There's a niche opportunity here. As giving becomes more concentrated at the top, the generalist nonprofit tends to lose. So action oriented teams should use this historical data to find their specific niche within the high net worth segment. Well, we also have to realize that the donor life cycle is longer. Thirty years ago, a donor might stay with you for five years, But with the great wealth transfer that, McCurdy just went over, a donor relationship might span forty years, across multiple generations even. Finally, there's a tech imperative. You can't navigate today's wealth trends with tools from the nineties. You just can't. If the giving trends have evolved, your data stack must evolve with them. So if you look at the trends over the last thirty years, you'll see the average, donor is disappearing, but the wealthy donor is more engaged than ever. So this is just a look at the past. It is a warning about the future or, you know, a heads up or a strategic, data point. If you don't have the data to find the top one percent of your prospects, you're competing for a shrinking pool of donors. Let's use the lessons of of the last three decades to ensure your organization is on the right side of the wealth gap here coming up. Oops. Sorry about that. We can also look at this in terms of how to increase donations from individuals. When we examine the breakdown of nearly five hundred billion given to charity annually, the data tells the same story year after year. Individuals are the powerhouse of American philanthropy. In fact, when you combine direct individual giving with bequests and family foundations, over eighty five percent of all giving is driven by individual wealth. And so there's a reason we're obsessed with this specific break down. First, we have to recognize the personification of foundations. Many teams spend months chasing corporate or institutional grants, but majority of private foundations, the decision maker is actually an individual donor or a family board member. So by screening the people behind the foundation of your database, you can turn a cold grant application into a warm major gift conversation. Second, the bequest pipeline is fundamentally an individual pipeline. Because bequest represent about nine percent of all giving, and they don't happen by accident. There is decades of individual stewardship. And if you wait until a donor is eighty years old to start a bequest conversation, you've already missed your chance. You need to identify high net worth individuals in their forties and fifties now so you can build the loyalty that eventually leads to that slice of the pie. To make this data actionable, you need to focus on three things. You must take a holistic wealth view. Donors don't just give from their checkbooks. They give from their foundations, their donor advised funds, and their estates. And when you have data that captures the full human balance sheet, you aren't just seeing what they gave to you. You're seeing the total capacity that fuels every category of giving. Next, focus on the efficiency effort. Individual giving is not only the largest slice of the pie, but it's also the most scalable. A ten percent increase in your individual giving yield is worth more than doubling your corporate giving. You have to use data to prioritize the individual category where the ROI is the highest. Finally, you have to track the wealth event trigger. High net worth, individuals don't typically give at a steady state. They give when they have a liquidity event. So this timing, is driven by the market. If you aren't tracking an individual's wealth changes on a weekly basis, you're gonna miss out on the exact moment when they decide to move money into their foundation or make a major bequest. And you can see, a lot of the breakdown here, in in this graph. So wealthy donors in twenty twenty six aren't just looking for a place to park their money. They're looking for stability and efficiency in a really unstable world. We need to understand how to frame this sentiment to help our fundraisers get more yeses. We know these donors have the, ability to give and the, you know, quote, unquote, capacity to give. The capacity without sentiment doesn't result in a gift. In the current economic climate, high net worth sentiment is defined by three specific shifts. If your development officers aren't speaking this language, your ass is really gonna feel out of touch amongst the givers. So the first shift is the flight to stability. When the micro macroeconomy feels mixed, donors look for sure bets. They wanna give to organizations that demonstrate fiscal health and long term viability. They aren't just funding your programs. They're investing in your intuition's inability to survive for the next decade. When you speak with them, don't just talk about your mission. Talk about your operational resilience. Second, we see a move toward impact over intent. Sentiment has shifted away from giving simply because it's the right thing to do or and toward giving to move the needle. So modern high net worth donors are highly analytical, and they're looking for proof of impact metrics that rival the quarterly reports that they get from their wealth managers. Use your data to show them the return on investment of their gift. If they give a hundred thousand dollars, they wanna know exactly what the output will be in twelve months. Third, there's a growing desire for control, which we see in the rise of direct giving. There's a sentiment among wealthy that they wanna see a seat at the table. This is why we see so much growth in donor advised funds and private foundations. They wanna be active participants, not passive check writers. To take action here, you must frame your gift opportunities as partnerships. Move your language away from support us and toward solve this with us. When you're act actually in the room meeting with these donors, you can take strategic action by addressing their quiet anxiety. Even with an eighteen percent gain in the SMP, many individuals are worried about, things like the tax change here and the point five percent AGI tax floor that are impacting, donations, and we'll talk about that in just a moment. You should be open and honest about this. Share how your organization is thinking about tax regulations and thinking about market volatile volatility, and explain how you're designed to protect their investment while making a true impact. This is also the time to pull the legacy lever. In times of change, people think about what lasts. While the economy is in a k shaped shift, the need for your mission remains constant. This is the moment to secure a legacy and ensure that this work continues regardless of the interest rate environment. So, ultimately, donor sentiment isn't something you can guess. It's really something that you have to track. By understanding that high net worth individuals are currently prioritizing impact, stability, and partnership, you can stop asking for money and start offering opportunities to your donors. In twenty twenty six, the most valuable thing you can offer a donor isn't a plaque on the wall or a brick. It's the certainty that their wealth is changing the world. So this slide highlights a critical truth for fundraising teams. Effective personalization and education are the keys to unlocking major gifts. When we look at the data on annual giving by affluent donors based on their self reported expertise, we see that more informed donors give significantly more. In fact, they represent your fastest growing growth opportunity. Giving scales dramatically with donor expertise. And as you can see in this chart, self identified experts give about twenty eight thousand three hundred and fifty eight dollars annually, which is more than six times the amount given by novice donors who averaged about four thousand four hundred and sixty six dollars. Even those who consider themselves knowledgeable give nearly twelve thousand seventy dollars, roughly three times more than novices. This tells us that the more a donor understands the landscape and the impact of their gift, the more they are willing to invest. The opportunity here is not just in identification, finding those who are already experts, but also in development. The most effective organizations don't just wait for sophisticated donors to show up. They actively grow donor sophistication through education. Personalization is the engine that drives this. By tailoring your communication and providing deep, insightful information about your cause, you accelerate both the donors' trust and the giving progression. If you want to move the needle on your fundraising totals, you must move your donors from novice to expert. When you invest in educating your donors, you aren't just teaching them about your mission. You're directly increasing your organization's revenue potential. The rapid growth of donor advised funds or DAFs is fundamentally disrupting traditional donor scoring systems. If you're still relying on legacy capacity ratings, you're likely missing the full picture. As we see here, major DAF sponsors are experiencing double and even triple digit growth in contributions. For example, Vanguard Charitable saw a staggering a hundred and forty three percent increase in just one year. This matters because grants from desk often lag significantly behind the available balances sitting in those accounts. This means that a donor's past giving history may dramatically understate their true capacity. Among the top fifty largest philanthropists, three billion, so nine nearly nineteen percent of their total gift dollars was moved into DAFs rather than directly to nonprofits. Additionally, noncash donations are becoming increasingly common, further complicating the traditional view of a donor's liquid wealth. To navigate this, we have to look beyond observed giving patterns. Wealth data can reveal net worth. It can reveal liquidity that traditional scoring misses, and especially as more high net worth households, choose to open DAFs, that's increasingly important. If you aren't looking at the underlying wealth data, you're only seeing the tip of the iceberg. And to truly understand the donor's potential in this new environment, you need to account for the billions of dollars currently being parked in these funds waiting for the right opportunity to be deployed. And fundraisers aren't the only ones using, this new technology. Donors are as well. The philanthropic landscape is really undergoing a rapid digital transformation, and this slide illustrates the rising importance of digital and AI assisted giving tools. Affluent donors are no longer simply writing checks. They're increasingly leveraging technology for research and demanding seamless modern payment experiences. The data shows that sixty nine percent of affluent households now rate AI tools as important to shaping their individual giving decisions. Furthermore, fifty four percent of these donors prefer to make their contributions directly through a nonprofit's website, while seventeen percent are already using, utilizing mobile payment apps like Venmo or Zelle for charitable gifts. This tells us that if your digital interface isn't frictionless, you're creating an unnecessary barrier between high net worth individuals and your mission. So to stay competitive, top performing firms are now using three or more data sources to fuel their strategies. They aren't just guessing where their wealth is. They're managing their growth through highly sophisticated data driven strategies. As the twenty twenty five study of philanthropy notes, these donors are using AI to inform their choices, which means your organization needs to be visible and correctly represented within those digital ecosystems. The key takeaway here is that you cannot manage twenty twenty six growth with a nineteen nineties mindset. Meeting donors where they are now means providing the digital ease they expect and using advanced data to ensure your outreach is precise. By embracing these digital tools, you aren't just modernizing your office. You're aligning your fundraising strategy with the actual behavior of today's most powerful donors. Let's take just a couple of minutes on the new tax law and what that's gonna mean for your organization. So the one big beautiful bill act, had provisions, that impacts tax incentives for charitable giving. The bill essentially reduces the tax break for the wealthiest donors and introducing it as a new small tax break for everyday donors. These changes already started on January first twenty twenty six. Your major donors are those people who list out their deductions, mortgage interest, property taxes, and charitable giving rather than taking just the standard deduction. This is where your biggest challenge lies for twenty twenty six. Before twenty twenty six, wealthy donors who'd itemize their deductions could begin in deducting charitable contributions from the first dollar. In twenty twenty six, the new point five percent floor on charitable deductions weakens the tax incentive for the first few thousand dollars of giving for many wealthy donors. As an example, if a donor earns five hundred thousand dollars, the first twenty five hundred they give to all charities is now tax deductible. I'm sorry, is now not tax deductible, excuse me, because of that giving floor. For your wealthiest donors in the top tax bracket starting in twenty twenty six, the value of their deduction is reduced from thirty seven cents to thirty five cents on the dollar. In other words, the tax break for a hundred thousand gift, dollar gift drops from thirty seven thousand to thirty five thousand. I think everyone's holding their breath to see how this impacts major donors. While the twenty twenty five study on affluent philanthropy noted that eighty one percent of affluent households, so those with over a million in net worth or an annual income over two hundred thousand, gave that average of thirty three thousand two hundred nineteen in twenty twenty four. It was a stat that we I named a couple of slides back. Trends also show this overall participation by members of the affluent group dropping year over year since twenty seventeen. So is it gonna continue to drop with these incentives reduced? And finally, another big change, starting in twenty twenty six is the new corporate giving floor, which means that corporations can only deduct charitable gifts that are above the one percent of their taxable income. And this eliminates the tax benefits for most small to midsize corporate charitable donations since the first one percent of the gift is no longer deductible. For example, a smaller company giving ten thousand dollars as a charitable donation might not even, receive a tax benefit any longer at all. The bunching strategy is one of the most, important concepts of the new, tax reality for fundraisers. Excuse me. In simple terms, bunching means concentrating several years worth of charitable giving, into a single year to ensure that the donor qualifies for a tax break in that year. Most donors are bunching multiple years of giving into one year to make their total deductions, their charitable plus mortgage plus salt, higher than the standard deduction, which means that it's worth them itemizing on their taxes. If they don't clear that bar, none of their charitable giving is going to be deductible if they itemize. So if a couple typically gives five thousand annually, they'll still stay well below the standard deduction every year, and there's no reason to itemize. They don't get a additional tax break for it. But if they bunch four years and they give twenty thousand in one year, that twenty thousand plus their other deductions might finally clear the standard deduction threshold, giving them a big tax break in that year. Many major donors used this strategy in twenty twenty five, which had the added benefit of getting gifts in before the five percent point five percent deduction floor was put in place and before the top, bracket cap of thirty five cents on the dollar went into effect. Starting this year, bunching is still gonna help donors clear the high standard deduction threshold. But, also, if they bunch multiple years of gifts into one year, they only get hit by that point five percent of AGI floor once versus if they donate annually, getting hit by that, every single year. So, the main strategy here is to bunch those donations into one year and, get as close to the, AGI ceiling, which is sixty percent of AGI for cash gifts or thirty percent for appreciated stocks and crypto donations. The ceiling is, is there, just so you, understand, so that the wealthiest people can't just do a hundred percent and wipe out their entire tax bill for the year. But by calculating a multiyear gift to stay just under the AGI limit, the donor maximizes their immediate tax savings and simplifies their planning. Then the donor takes a couple of years off where they just take the standard deduction. Dafs play a really big role because donors can contribute the two to three years to their DAF for the immediate tax benefit and still disperse those funds annually to make sure the nonprofits they support will receive a steady flow of the annual of annual gifts. Now if they go over that, that that limit, that threshold, they can still roll over the excess to future years. They don't lose that. And finally, a donor may decide to liquidate a large block, of highly appreciated stock or crypto held over a year, to contribute the entire proceeds to the DAF. They get the immediate benefit of the tax write off, but they also avoid the capital gains tax. So that's why so many people are donating highly appreciated stock and crypto into their DAF. In twenty twenty four, sixty seven percent of contributions to a major DAF sponsor were in the form of non noncash assets like appreciated stock, real estate, or crypto. It's one of the reasons that organizations, are so excited about Windfall's new DAF and crypto identifying triggers. So that takes us to our end of the time, and I will leave it there for today. Thank you all so much, for joining us.