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Prospect research and major giving: How can research inform your major gift ask? Conor McCarthy Fundraising Research & Consulting

Prospect research and major giving with Conor McCarthy

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In a recent webinar Conor McCarthy, Managing Director at Fundraising Research & Consulting (FR&C) discussed how best to research individual donors to determine a major gift ask strategy. To view this webinar please visit: https://www.blackbaud.com.au/notforprofit-events/webinars/past

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Page 1: Prospect research and major giving with Conor McCarthy

Prospect research and major giving:

How can research inform your

major gift ask?

Conor McCarthy

Fundraising Research & Consulting

Page 2: Prospect research and major giving with Conor McCarthy

Agenda

• Australian wealth

• Major giving in Australia

• Key objectives in prospect research

• Tools for assessing wealth

• Tools for assessing previous giving

• Using research to inform your major gift ask

Page 3: Prospect research and major giving with Conor McCarthy

Australian wealth

Page 4: Prospect research and major giving with Conor McCarthy

Australian wealth

'The cold economic data shows Australians today are as close as they have been for more than a century to being the richest people on earth.' (AFR magazine, 25 May 2012)

Page 5: Prospect research and major giving with Conor McCarthy

Australian wealth

Credit Suisse's Global Wealth Report 2012 tells us that Australia's median wealth per adult is $US194,000 … the highest in the world.

Page 6: Prospect research and major giving with Conor McCarthy

Australian wealth

In 2011, Australia had the world’s sixth highest per capita income:

IMF 2011 via Wikipedia

# Country

1 Luxembourg

2 Qatar

3 Norway

4 Switzerland

5 United Arab Emirates

6 Australia

Page 7: Prospect research and major giving with Conor McCarthy

Australian wealth

The Australian Bureau of Statistics tell us that the wealthiest 20% of Australian households had average net worth of $2.2m in 2009-10.

Page 8: Prospect research and major giving with Conor McCarthy

Australian wealth

• As you would expect, much of the average Australian’s wealth is in housing.

• There’s a strong concentration in the top 10%

Page 9: Prospect research and major giving with Conor McCarthy

Australian wealth

There are several thousand people who have appeared on one or another of the various rich lists by now: • BRW (Rich 200, Executive Rich List, Young Rich List

etc) • Mayne Rich List • Forbes • Courier-Mail WA Rich List • Queensland Top 100 • Resources Rich List • AFR remuneration reports

Page 10: Prospect research and major giving with Conor McCarthy

Australian wealth

And of course the price of entry keeps going up …

10

210

0

50

100

150

200

250

BRW Rich List entry level in AU$ millions

Page 11: Prospect research and major giving with Conor McCarthy

Australian wealth

Australia has an estimated 3,000+ uHNWIs (worth US$30m+), many of whom have appeared on rich lists.

But it also has a much larger pool of upper-middle-class wealth.

Page 12: Prospect research and major giving with Conor McCarthy

Australian wealth

• Capgemini produce an annual World Wealth Report and a regular Asia Pacific Wealth Report

• Looks at High Net Worth Individuals (HNWIs) – worth US$1m (excludes consumables and primary residence) and Ultra High Net Worth Individuals – worth US$30m and more

• Gives a sense of global wealth distribution and trends

Page 13: Prospect research and major giving with Conor McCarthy

Australian wealth

There’s a large pool of upper-middle class wealth in Australia - around 179,000 millionaires (excluding housing, including super).

HNWIs in Australia, in thousands. Source CapGemini World Wealth Report

0

50

100

150

200

250

2004 2005 2006 2007 2008 2009 2010 2011

Number of HNWIs (thousands)

Number of HNWIs (m)

Page 14: Prospect research and major giving with Conor McCarthy

Australian wealth

That said, this is a period of global uncertainty, and people may not feel as rich as they really are …

“Falling house and equity prices have made many feel poorer despite strong income

growth. By RBA estimates, household worth fell by 6.5 per cent last year and is down 11.5 per cent from its 2007 peak.

When surveyed last year by The Boston Consulting Group (BCG), nearly half the participating Australians planned to cut back discretionary spending over the year ahead, more than all other developed countries except Greece (53 per cent) and the UK (50 per cent).” (AFR magazine, 25 May 2012)

Page 15: Prospect research and major giving with Conor McCarthy

Australian giving

Page 16: Prospect research and major giving with Conor McCarthy

Australian giving

What percentage of Australian taxpayers give?

35% Source: Myles McGregor-Lowndes and Emma Pelling, An examination of tax deductible donations made by individual Australian taxpayers in 2009 – 10 (QUT, 2012), (p. 4). 4.4 million taxpayers (35.55%) claimed a deduction for a donation in 2009-10. 4.65m taxpayers (37.83%) claimed a deduction for a donation in 2008-09.

Page 17: Prospect research and major giving with Conor McCarthy

Australian giving

Page 18: Prospect research and major giving with Conor McCarthy

Australian giving

Page 19: Prospect research and major giving with Conor McCarthy

Australian major giving

A 2011 report from QUT says major gifts are still an underdeveloped area of Australian philanthropy

In the US, a Bank of America Merrill Lynch study in 2010 showed that major gifts from individuals account for around half of all charitable giving

Page 20: Prospect research and major giving with Conor McCarthy

Australian major giving

"Many wealthy Australians are perceived by their peers to not be giving, or to be giving significantly less than they might readily be able to give."

Wendy Scaife, Katie McDonald & Susan Smyllie, A Transformational Role : Donor and charity perspectives on major giving in Australia (QUT, 2011).

Page 21: Prospect research and major giving with Conor McCarthy

Australian major giving

Australian major giving is growing.

See FR&C’s list of the Top 200 Australian philanthropists with giving of $1m to $500m.

Page 22: Prospect research and major giving with Conor McCarthy

Australian major giving

This is the Top 10 …

Page 23: Prospect research and major giving with Conor McCarthy

Australian major giving

1. Chuck Feeney – c. $500m in Australian giving via Atlantic Philanthropies

2. John Kinghorn – Established Kinghorn Foundation in 2005 with $300 million, $25m to Garvan Institute (2009)

3. Talbot Family – Bequest from Ken Talbot to Talbot Family Foundation of c. $300m (2010)

Page 24: Prospect research and major giving with Conor McCarthy

Australian major giving

4. Myer Family - $16m in 2009-10, $156m in total giving, via the Myer Foundation

5. Estate of Sir Ian Potter – $14.2m in 2009-10 and over $150m in total giving since 1964, including $8m from Lady Potter to the Australian Ballet (2010)

Page 25: Prospect research and major giving with Conor McCarthy

Australian major giving

6. Andrew Forrest – c. $80m to Australian Children’s Trust (2007), $2m to the launch of the Australian Employment Covenant/Generation One initiative on indigenous employment, and a further $50m in shares to various charities in 2011 plus a further $5m in shares to Murdoch University and four WA performing arts organisations, and a $3m cash donation to complete the Art Gallery of WA's $25m campaign. Joined giving pledge in 2013 pledging to give away half his wealth.

Page 26: Prospect research and major giving with Conor McCarthy

Australian major giving

7. Fairfax family – over $97m in total giving via Vincent Fairfax Family Foundation since 1962; Tim Fairfax gives over $3m per annum through Tim Fairfax Family Foundation including $1m+ to National Portrait Gallery

8. Clive Palmer - $100m for medical research and remote WA communities (2008), $6m to Duke of Edinburgh Awards Program (2010)

Page 27: Prospect research and major giving with Conor McCarthy

Australian major giving

9. Estate of William Buckland – the William Buckland Foundation distributes around $5m per annum, with total giving to 2010 reaching $74m

10. Greg Poche - $40m to melanoma research (2005) and $20m to indigenous health (2008, 2010)

Page 28: Prospect research and major giving with Conor McCarthy

Australian major giving

• You’ll notice how many of those really big gifts are recent

• A majority of those donors in our estimated Top 200 had made one or more very substantial gifts in the past five years

• Not nearly where the US is yet, but growing nonetheless

Page 29: Prospect research and major giving with Conor McCarthy

Australian major giving

In 2009-10, 3,760 taxpayers made gifts of over $25k.

They gave $481m - almost 25% of all individual giving that year.

Source: Myles McGregor-Lowndes and Emma Pelling, An examination of tax deductible donations made by individual Australian taxpayers in 2009 – 10 (QUT, 2012)

Page 30: Prospect research and major giving with Conor McCarthy

Australian major giving

• PAFs - Private Ancillary Funds

• Trusts that receive tax-deductible donations and distribute a defined percentage to DGRs.

• Originally set up as PPFs in 2001; PAFs since 2009.

Page 31: Prospect research and major giving with Conor McCarthy

Australian major giving

There are now 1,050 Private Ancillary Funds (PAFs) in Australia – vehicles for charitable giving managing over $2bn in funds. Some are corporate, but many are vehicles for individual and family giving.

Page 32: Prospect research and major giving with Conor McCarthy

Australian major giving

PAF distributions to 2010

Source: ATO, JBWere Australian Giving Trends 2012

Page 33: Prospect research and major giving with Conor McCarthy

Australian major giving

In addition to distributions already made, $2bn in PAF funds under management means a large pipeline for future giving.

Page 34: Prospect research and major giving with Conor McCarthy

Key objectives in prospect research

Page 35: Prospect research and major giving with Conor McCarthy

Key objectives in prospect research

It takes more than just wealth …

Linkage

Interest

Ability

Propensity to give

Page 36: Prospect research and major giving with Conor McCarthy

Key objectives in prospect research

Prospect research tries to answer three questions:

• How much can someone give?

• How likely are they to give?

• How connected are they with our organisation?

Page 37: Prospect research and major giving with Conor McCarthy

Key objectives in prospect research

Or to put it another way:

• What can we learn about the income and assets of a potential donor?

• What is their philanthropic history with us and with other organisations?

• What is the full extent of their relationships with our organisation?

Page 38: Prospect research and major giving with Conor McCarthy

Rating

0 1 2 3 4 5

Ability to give Unable to rate Cannot give a

major gift

Could give at

major gift level

Could give

$100k+

Could give

$500k+

Could give

$1m+

Inclination to

give

Unable to rate No known

giving

Gives

elsewhere

Low level

donor to us

Lapsed major

donor to us

Current major

donor to us

Relationship

to your

organisation

Unable to rate No current

relationship

Family

connection

One of:

alumnus /

member /

patient /

donor

Two of:

alumnus /

member /

patient /

donor

Current

committee or

staff member

Page 39: Prospect research and major giving with Conor McCarthy

The major gift cycle

Cultivation and

Engagement

Solicitation of Gifts

Identificat

ion

Stewardship and

Recognition

Identification Cultivation

and Engagement

Stewardship Solicitation

and Recognition of Gifts

Page 40: Prospect research and major giving with Conor McCarthy

Researching wealth

Page 41: Prospect research and major giving with Conor McCarthy

Estimating wealth

• We’re usually asked – how much is someone worth? $5m? $10m? $20m?

• It’s a fair question ...

• But we may not have an absolute answer!

• What we most often give are wealth indicators ...

• And remember that income rather than assets is often more important for major giving

Page 42: Prospect research and major giving with Conor McCarthy

Estimating wealth

This from a profile we wrote for a client: “Total wealth unknown.

Publicly available data on remuneration and shareholdings follows – remuneration currently at around $330k in 2010 from director’s fees, but has been much higher in previous years – salary plus options in 2002 alone were over $2.5m.

Identified public shareholdings, if still held, would be worth $3.7m, but this is an indicator rather than an estimate. On these indicators, total wealth should be considerably higher.”

Page 43: Prospect research and major giving with Conor McCarthy

Rich Lists

• BRW (Rich 200, Executive Rich List, Young Rich List etc)

• Mayne Rich List

• Forbes (multiple countries)

• Queensland Top 100

• Resources Rich List

• Hurun Report (China)

• Asiamoney

• AFR remuneration reports

Page 44: Prospect research and major giving with Conor McCarthy

Annual reports

• Public company annual reports – directors’ report gives remuneration and shareholdings for directors and senior executives

• Report will also contain details of major shareholders

Page 45: Prospect research and major giving with Conor McCarthy

Annual reports

Qantas Chief Executive Officer Alan Joyce’s remuneration for 2012 was $2.28m (of which $2.109m was base pay). In 2011 it was $4.071m (of which $2.045m was base pay). He held 2,531,188 Qantas shares in 2012. (Qantas also provide a set of statutory remuneration figures which are higher than this).

Page 46: Prospect research and major giving with Conor McCarthy

Connect4

• Good for executive / director remuneration and broad searches of annual reports

Page 47: Prospect research and major giving with Conor McCarthy

Morningstar DatAnalysis

Holds an archive of 45,000 annual reports for ASX 2000 companies.

Page 48: Prospect research and major giving with Conor McCarthy

Businessweek

• Comprehensive background on major public companies

• Also covers executive remuneration

• http://investing.businessweek.com

Page 49: Prospect research and major giving with Conor McCarthy

Directors’ transactions

• http://www.directorstransactions.com.au/

• Or via Factiva

Page 50: Prospect research and major giving with Conor McCarthy

Salary surveys

• Media reports may be helpful for professional salaries (e.g. AFR’s annual review of legal salaries)

Page 51: Prospect research and major giving with Conor McCarthy

Salary surveys

• If you know someone’s position, a salary guide can help you estimate income

Page 52: Prospect research and major giving with Conor McCarthy

Property

• State Land registry

Page 53: Prospect research and major giving with Conor McCarthy

Property

• Property prices – Domain, CBA property app, or media search

Page 54: Prospect research and major giving with Conor McCarthy

Property

• Onthehouse.com.au lists last sale price for properties …

Page 55: Prospect research and major giving with Conor McCarthy

Directorships and shareholdings

• ASIC data

• Multiple brokers available

• Can search on persons or companies

Page 56: Prospect research and major giving with Conor McCarthy

Media / web search

• Tools used for more general research may be of use for wealth information

• An historical media search (via Factiva) might reveal family wealth, sale of business, sale of property

• LinkedIn can reveal career path

Page 57: Prospect research and major giving with Conor McCarthy

Australian Bureau of Statistics

• Statistics (including wealth information) by suburb

Page 58: Prospect research and major giving with Conor McCarthy

Foundations

• Many Foundation websites have details of budget and priorities

Page 59: Prospect research and major giving with Conor McCarthy

Foundation lists

Philanthropy Australia database www.philanthropy.org.au

Page 60: Prospect research and major giving with Conor McCarthy

Foundation lists

• Strategic Grants offer a giving calendar product listing deadlines for foundations who give to your sector

Page 61: Prospect research and major giving with Conor McCarthy

PAFs

Global Philanthropic’s Guide to PAFs

http://www.pafguide.com.au/

Page 62: Prospect research and major giving with Conor McCarthy

62

Private and publicly unlisted companies

Type

Small Pty Large Pty Public

unlisted

Public ASX

listed

Approx

number 1.59m 20,000 20,000 2,500

Shareholders Max 50

Can’t

approach

public for

money

Max 50

Can’t

approach

public for

money

50+ 50+

Lodge

financials

No Yes Yes Yes

Page 63: Prospect research and major giving with Conor McCarthy

D&B Company 360. Covers 50,000 Australian public and private companies

Private and publicly unlisted companies

Page 64: Prospect research and major giving with Conor McCarthy

Researching giving

Page 65: Prospect research and major giving with Conor McCarthy

How much do people give?

Source: Myles McGregor-Lowndes and Emma Pelling, An examination of tax deductible donations made by individual Australian taxpayers in 2009 – 10 (QUT, 2012)

Page 66: Prospect research and major giving with Conor McCarthy

How much do people give?

Source: Myles McGregor-Lowndes and Emma Pelling, An examination of tax deductible donations made by individual Australian taxpayers in 2009 – 10 (QUT, 2012)

Page 67: Prospect research and major giving with Conor McCarthy

How much do people give?

Source: Myles McGregor-Lowndes and Emma Pelling, An examination of tax deductible donations made by individual Australian taxpayers in 2009 – 10 (QUT, 2012)

Page 68: Prospect research and major giving with Conor McCarthy

Giving elsewhere

• Google search for donor name + relevant keyword

• Example search terms:

donor, donation, philanthropy, benefactor, non-profit, foundation

• Note that not all donor

rolls are online

Page 69: Prospect research and major giving with Conor McCarthy

Giving elsewhere

FR&C’s GiftSearch database lists donations to Australian charities:

Page 70: Prospect research and major giving with Conor McCarthy

Giving elsewhere

• Governor General’s website www.gg.gov.au

• Posts detailed

biographies of honorees,

often including

philanthropy

• Search via Google

Advanced Search

Page 71: Prospect research and major giving with Conor McCarthy

Research and the major gift ask

Page 72: Prospect research and major giving with Conor McCarthy

Research and the major gift ask

Research can help to advise on:

• Interest

• Timing

• Who should ask

• The ask amount

Page 73: Prospect research and major giving with Conor McCarthy

Interest

• Have they given to this area before, either here or elsewhere?

• Are they a graduate in this area?

• Do they have family connections to this area, e.g. children?

• Does the project relate to something that affects them, or someone close to them, personally?

Page 74: Prospect research and major giving with Conor McCarthy

Timing

• Has their financial position changed recently?

• Have they made a major commitment elsewhere?

• Are there other circumstances making an ask appropriate / inappropriate at this time?

Page 75: Prospect research and major giving with Conor McCarthy

Who should ask?

• Principle is ‘peer to peer’ fundraising for major gifts

• Research can help to establish networks

Page 76: Prospect research and major giving with Conor McCarthy

How much to ask for?

• For major gifts, the gift will normally be from income rather than assets

• If there’s a foundation or PAF, of course, that’s different, and seek to estimate the foundation’s assets as well as previous gifts

• For bequests, assets are more relevant

Page 77: Prospect research and major giving with Conor McCarthy

How much to ask for?

It depends on the individual …

Page 78: Prospect research and major giving with Conor McCarthy

How much to ask for?

As a guide amount

1-5% of gross household income

Page 79: Prospect research and major giving with Conor McCarthy

How much to ask for?

• Take account of wealth information

• Take account of previous giving

(to us and elsewhere) and known commitments

• Have things changed since those previous gifts?

• Can you accept a pledge over multiple years?

• How much is needed for the project?

• Better to ask for too much than too little!

Page 80: Prospect research and major giving with Conor McCarthy

More information

Resources list on our website: http://www.fundraisingresearch.com.au/ also: http://www.fundraisingresearch.info/ http://www.aprahome.org/ http://www.supportingadvancement.com/ Blackbaud’s prospect research blog at: http://www.npengage.com/ Training via: http://www.artfultraining.com/

Page 81: Prospect research and major giving with Conor McCarthy

Regional resources

• Guides to prospect research resources in China and India from Beth Bandy (International Fundraising Intelligence): http://www.ifintelligence.com/

• Asian prospect research services from Gnosis: http://gnosis.com.sg/

• Global wealth lists from Helen Brown Group: http://www.helenbrowngroup.com/services/wealth-lists/

• Regional wealth and philanthropy lists from the Hurun report: http://www.hurun.net/usen/

• Regional wealth report from Capgemini: http://www.capgemini.com/resources/asiapacific-wealth-report-2012--english-version

Page 82: Prospect research and major giving with Conor McCarthy

Questions?