Wealthy Donors Overview

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Part
01

Luxury Consumer Sentiment

After an extensive search through industry-related websites and media publications, COVID-19 sentiments of luxury consumers who have assets of more than $1 million do not appear to be available in the public domain. However, the research team was able to gather valuable insights about highly affluent individuals.

Useful Findings

  • According to a study by Atliant, highly affluent individuals in the US are gradually accepting that the worst commercial effects of COVID-19 are behind them.
  • In the US, 14% of luxury consumers note that COVID-19 has had a significantly negative effect on their household finances. In addition, 34% claim that the pandemic had a negative impact while 37% have indicated that the effects were neutral. Also, 14% claim that the pandemic had a positive effect on their household finances.
  • More than 50% of individuals with a high net worth believe that the pandemic will take more than six months for things to return to normalcy.
  • A study by UBS, which interviewed 4,108 wealthy respondents revealed that 70% of the participants are optimistic about the long-term economic outlook. On the other hand, 46% showed optimism on the short-term outlook.
  • In addition, 40% of US investors have noted that COVID-19's worst impact will be over by end of June. On the other hand, 28% believe that things will return to normalcy by end of September.
  • Furthermore, highly affluent people in the US indicated that brands such as, Amazon, Chanel, Walmart, 3M and Target are doing a good job during the pandemic.
  • Before the pandemic, affluent customers had no plans to reduce their spending. As of mid-April 2020, these consumers remained resilient about their spending. However, in May and June, affluent consumers have noted that they plan to reduce their spending in categories, such as décor, automobiles, luxury goods, accessories, and handbags.
  • Affluent consumers in the US intend to continue spending on home appliances and consumer electronics, which is a reflection that they are spending more time at home.

Research Strategy

After extensive research we did not find COVID-19 sentiments of wealthy individuals in the US who have a net worth of $1 million in assets and above. We looked at media publications and industry sites, such as CNBC, Financial Times, and the Boston Consulting Group. However, these sites provided information affluent individuals but did not indicate their net worth. We then attempted to look at specific people who had a high net worth and find out their sentiments on COVID-19’s financial and economic impacts but to no avail. While we found these individuals, we did not find any useful findings on their social media pages or media publications. Therefore, we concluded that the information is not available in the public domain. For these reasons, we opted to provide information regarding highly affluent individuals who had an income of more than $150,000.
Part
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Part
02

Luxury Consumer Trends

Trends around luxury consumers in the US include new luxury consumers, specially affluent millennials and Gen Zers, and the changing expectations by these consumers, of luxury brands.

The New Luxury Consumer

  • Luxury consumers are reportedly changing and their expectations differ from the traditional understanding of what luxury items are.
  • The new luxury consumer in the US is millennials (23 to 36) who have an established career and are nearing their peak spending age. Albeit younger, Gen Zers (16 to 22) are also "appearing on the radar of the luxury market, the older cohorts of which are just entering the workforce." These generations are trendsetting cohorts who grew up in the digital era and are now at the forefront of fashion.
  • Millennials and Gen Zs are revolutionizing the value of goods and services as new forms of consumerism come into light. They are reimagining the brand-consumer relationship.
  • A recent study by Globalwebindex showed that 34% of millennials regularly purchase luxury items or services, while 33% of Gen Zers purchase luxury products or services as gifts for special occasions. The growing spending power - due to progression in their careers - among millennials has been credited for their significant share of the US luxury market.
  • Within the millennial cohort, men are big spenders as 67% of them buy luxury items and services.
  • Millennials have recently been displaying unconventional perspectives of what luxury means. This is evidenced by the fact that compared to past luxury buyers (who spent on handbags, clothing, and cosmetics), the luxury items or experiences this generation buys the most include travel, household or furniture items, and cars or automotive.
  • As social media sharing has "moved from personal statuses to elaborate videos and photos showcasing lifestyles and building personal brands, experiences have emerged as an important way of communicating this; whether that’s through travel, exuberant services or food. "
  • Experiences represent memorable and distinctive occasions for millennials. This is a reflection of their heavy engagement with platforms like Instagram, which focus on lifestyle. Essentially, this generation is purchasing fewer luxury items and buying more luxury experiences.

Changing Expectations of Luxury Brands

  • As new definitions of luxury goods and services come into light, so do expectations of luxury brands.
  • Regular luxury goods and services buyers - millennials - expect luxury brands to have a strong narrative or story, a strong online presence, and immersive advertising.
  • Americans who mainly buy luxury goods and services for gifts and special occasions - Gen Zers - expect luxury brands to have access to content or services after the initial purchase, clear values they can relate to, and immersive advertising.
  • A great omnichannel experience is expected by both millennials and Gen Zers - the main luxury consumers. These cohorts want to be able to buy online or in physical stores and still get access to excellent customer service. They also want to communicate with luxury brands through a wide range of channels, including chat, messaging, and social media.
  • The "idea of sales associates circling a consumer in-store is quickly becoming out-dated" to these consumers as they expect to ask for help in unique ways like texting and in-store or out-of-store concierge services.
  • This is because they experience discomfort and would rather not talk to another person while solving problems. They also do not want to feel the pressure of a sales team.

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Part
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UHNWI / HNWI Donor Trends, Part 1

Around 54% of high net worth households gave to charities who are involved in providing for basic human needs. Around 34% of wealthy individuals mentioned that they always donate to aid the same cause or entities every year. Meanwhile, around 54% of wealthy families stated that they always give because of their confidence in the vision of the charitable entity.

Wealthy Donors' Donation Insights

  • In the U.S., around 20% to 30% of ultra-wealthy individuals comprise all the individuals who are donating to charitable causes.
  • In 2018, these individuals donated a total of $153 billion to various philanthropic initiatives. The figure is close to the total U.S. federal government expenses on healthcare, education, and energy in that period.
  • Close to 9 in every 10 high-net worth people focus their charitable endeavors on education-related causes. Given this, education is then the top reason why ultra-wealthy donors donate to philanthropic initiatives.
  • These donors have given away $50,000 or more in the last five years.
  • In the U.S., the top 50 donors gave away a total of $14.7 billion to philanthropic causes.
  • UHNW donors who are younger than 45 years old tend to follow a more targeted strategy when it comes to donating. They are more inclined to support one or two causes that they are engaged in, both on a financial and practical level.
  • The insights above came from "The New Normal: Trends in UHNW Giving 2019" report. The individuals surveyed have a net worth of more than $30 million and were proven to be committed to philanthropy.
  • Based on the "2018 U.S. Trust® Study of High Net Worth Philanthropy" report, philanthropic acts are being molded by a multifaceted donor space consisting of people from different generations, ethnicity, and gender orientation.
  • Only around 49% of UNHW charitable givers strategize their donation action.
  • Ninety percent of high net worth individuals donated to philanthropic causes. In contrast, the rest of the U.S. population only donated 56%.
  • The average amount given by high net worth individuals is around $29,269.
  • Women are leading the high-net-worth donor pack in terms of charitable engagement and influence. Around 93% of female respondents donated to philanthropic causes.
  • In terms of ethnicity, around 92% of African-American high net worth families give to charities.
  • High net worth givers donated to an average of seven different charitable organizations. These donations were given to various philanthropic causes with those involved in basic human needs receiving donations from the biggest proportion (54%) of high net worth families.
  • Based on this survey, the rest of the categories of charitable causes that were backed by high net worth givers are religion (49%), health care or medical research (36%), integrated charities (31%), and youth or family support groups (29%).
  • Around 36% of wealthy households donated to educational causes. These include the 22% donating to higher education-related causes and the 24% donating to K-12 education groups.
  • Forty percent of women tend to donate to health care and medical research endeavors.
  • Seventy-two percent of African-American wealthy families donated to charities catering to basic needs. This percentage is an outlier in this study. At 64%, they also tend to give to religious charities compared to the rest of the wealthy population.
  • High net worth donors are also generous with their time as 48% volunteered their time and expertise to philanthropic causes that they took interest in. This rate is almost double that of the rest of the U.S. population (25%).
  • Women tend to volunteer more than men, (56% versus 41%).
  • Meanwhile, 60% of Hispanic-Americans volunteered, higher than the report average.
  • Millennials tend to donate less compared to the older generations, However, they tend to put their money more in impact investing.
  • The primary reasons that prompted wealthy individuals to volunteer include meeting an organizational demand (65%), faith that the person can carve a difference (56%), the organization's values are in harmony with the donor (52%), emphatizing with the less fortunate people, and caring for a certain cause or group being aided (43% each).

High Net Worth Donors' Motivations and Expectations

  • High net worth givers donate because of personal and benevolent purposes.
  • Based on the survey, 54% of high net worth families stated that they always donate because of their confidence in the vision of the charitable group.
  • Around 42% always donate due to their expectation that what they give can carve a difference.
  • For the 34%, they mentioned that they always donate to aid the same cause or entities every year.
  • Meanwhile, 32% mentioned that they always donate to feel the joy and fulfillment of giving.
  • In general, getting tax breaks is not a main expectation when donating. Only 17% of high net worth donors said they were always driven to donate due to tax breaks.
  • High net worth givers mentioned that it is crucial that the groups they support exhibit good business and operational practices (91% of those surveyed), allocate only a reasonable portion on general administrative and fundraising spend (90%), recognize donations by submitting receipts for tax filing (86%), upheld their preference for anonymity and for how their donations will be distributed (85% and 81%, respectively), and not provide their names to other groups (83%).
  • Around 57% mentioned that prefer to be sent a thank-you note.

Reasons for Stopping Their Donations

  • Around 28% of high net worth givers ceased donating to at least one group last year due to the following concerns: getting requests for solicitations often from nonprofit entities (41%), feeling that the entity was not performing or did not sufficiently present its effectiveness (16%), and being requested by a charitable organization for donations that the giver considered as inappropriate (9%).
  • Meanwhile, a survey from Barclays Private Bank revealed that the "lack of faith" between high net worth donors and charities is a major obstacle to giving.
Part
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Part
04

UHNWI / HNWI Donor Trends, Part 2

According to a study by Open+Impact on the philanthropy journey, one significant finding was that ultra-high net worth donors first consult with their financial advisors (Morgan Stanley, JP Morgan, Merrill Lynch, Charles Schwab) before making any donations.

HNWI and UHNWI Donors Seek More Transparency on the Impact of Their Donations

  • Wealthy and ultra-wealthy donors are, now more than before, concerned about what impact their donations are making. The donors today want more transparency to understand where their donations go and how they are used.
  • The trend is fueled by the donors' skepticism on how funds are used and their passion for understanding what happens after they donate the money.
  • According to Wealth-X, this trend is prevalent, especially when the donations are high. In the past, high net worth donors would give the money and leave the nitty-gritty to the fundraiser, but recently, donors are getting more involved, and they are actively involved in leading their donations to achieve the desired impact.
  • As per Kurt Worrell, Senior Vice President, Donor Engagement Team at Truesense, high net-worth individuals are now demanding direct access to the development team to see the impact of their donations.
  • HNWI/UHNWI individuals think that charitable giving and volunteering have the greatest potential to achieve the greatest impact among the seven types of philanthropic activities most donors engage in.
  • While more and more donors are concerned about the impact of their donations, over half of all high net worth donors don't know if their giving is achieving any impact, thus exposing a transparency gap for the organizations receiving the donors' gifts.

Ultra-Wealthy Donors Extensively Rely on Wealth Advisors

  • According to a study by Open+Impact on the philanthropy journey, one significant finding was that ultra-high net worth donors first consult with their financial advisors (Morgan Stanley, JP Morgan, Merrill Lynch, Charles Schwab) before making any donations.
  • In the past, these financial advisors had money conversations with their clients on investments, wealth preservation, and how the ultra-wealthy individuals can get the most out of their money.
  • Recently, these conversations are shifting to include how giving can help individuals find meaning and express their values. The wealth advisors are capitalizing on this trend, and they include philanthropy and investor values in their financial conversations with their clients.

UHNWI/HNMI Are Donating More Than Just Their Money

  • According to the Going Beyond Giving survey by The Philanthropy Workshop (TPW) on 219 HNWI/UHNWI individuals, in addition to giving money, the donors also donate work (time) and wisdom.
  • The donors volunteer to serve on boards, attend and speak at philanthropy conferences, belong to philanthropy networks, and engage in philanthropy education.
  • 48% of high-net-worth individuals are volunteering their time and talents with charitable organizations. The demographic profile is as follows:
    • Women: 56%
    • Men: 41%
    • Millennials: 43%
    • Older than millennials: 41%
    • African-Americans: 45%
    • Asian-Americans: 39%
    • Hispanic: 60%
    • White: 48%
    • LGBTQ: 38%
    • Non-LGBTQ: 49%

Most HNWI Donors Prefer Funding Growing Organizations with Scaling Programs

Research Strategy

Since the initial research focused on providing trends on how much HNWI and UHNWI donate and where they donate, we focused on their perceptions and attitudes towards donating in this request.
Part
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Part
05

Best Practices for Connecting with Donors, Part 1

Peer-to-peer (P2P) campaigns and use of social media ambassadors are some best practices for connecting with donors.

Peer-to-peer (P2P)

  • P2P is a "multi-tiered approach to crowdfunding" that allows individuals to create their own fundraising pages to raise money for a common cause.
  • Almabase reports that P2P fundraising is a "powerful social giving tool that many educational institutions have employed to increase their donations while expanding their donor audience." Basically, P2P fundraising empowers suppoters to raise money on behalf of the institution.
  • P2P is a great option for recent graduates who are still paying off college debts and might not have the ability to donate, says Donorbox. It allows students and alumni to champion the insttitution's cause to their peers even if they are not in a position to contribute much themselves.
  • P2P makes it possible for a fundraising campaign to build momentum from its current/small donor network and to expand its supporter base by allowing connecting with the supporters' networks. This increases donations and also expands the campaign's network of advocates and donors.
  • According to GivingCampus (an online fundraising platform for colleges), P2P is critical because "people still give to people." In 2018, over 16% of online donors "gave in direct response to an ask sent to them by a friend or peer through social media, email, or text message."

Social Media Ambassadors

  • According to a 2017 Hannover Research, social media can be a powerful tool for universities to connect with donors, especially with the dwindling alumni donations. It allows for effective, fast, and inexpensive outreach to alumni.
  • According to Donor Box, institutions should recruit student and student social media ambassadors to make their campaigns top-notch.
  • Developing a network of social media ambassadors is an effective tool for reaching prospective donors and promoting long-term alumni giving. It is a best strategy because over 25% of higher education institutions reported using social media ambassadors.
  • The University of California, Santa Barbara (UCSB), for example, was successful in getting volunteers to "proactively push its annual Give Day message through their own social media channels." The campaign reached millions of social media users, including UCSB's supporters and alumni.
  • More recently, the University of Minnesota recruited about 40,000 social ambassadors for its "Give to the Max Day" fundraiser. The institution managed to reach 174,119 social media users

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Part
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Best Practices for Connecting with Donors, Part 2

Higher education institutions should connect with donors by creating an early connection with recent alumni/graduates and nurturing a long term relationship. They should also leverage the potential of Giving Day. Below is an overview of the findings.

Create Early Connection

  • Institutions should begin embedding a "culture of giving" even with recent graduates who may not have much to give. GiveCampus recommends that schools should forge relations and create connections by asking for smaller, affordable donations because recent graduates are the large donors of 10 to 50 years later.
  • sgEngage, a resource for best practices, calls this approach the "lifetime value model." It encourages higher-ed fundraisers to develop relationships "early with key segments who haven’t traditionally been targeted while simultaneously raising funds for current initiatives."
  • Classy, a fundraisng-focused software company, recommends that universities should focus on cultivating a relationship with young millennial graduates because they may give more when their financial situations improve. However, institutions are urged to only make reasonable requests and to stay in touch with alumni even if they are not in a position to donate. Young or potential donors should be able to see an institution as a partner rather than an institution that only calls for cash.
  • According to GiveCampus statistics, about 50% of college donors in 2018 graduated before 1999 and the other 50% graduated in the years after 2000. This proves that younger donors are as important to universities' fundraising campaigns as older ones. It also shows that a lifetime value model will ensure that alumni would still donate over two decades after graduation.
  • This is considered a best practice because it is recommended by several reputable resources such as GiveCampus, Classy, and sgEngage. It also has proven results based on the provided statistics.

Giving Tuesday

  • Giving Tuesday (#GivingTuesday) is an annual global event dedicated to fundraising/charity. The movement has been held on the "Tuesday after Thanksgiving" since 2012.
  • According to Causevox, a fundraising software company, #GivingTuesday provides a perfect opportunity for universities or colleges to rally their supporters and to recruit new ones. This is because alumni already know about #GivingTuesday, and most are willing to participate. About $116.7 million was raised for schools, charities, and nonprofits in 2018 on #GivingTuesday.
  • sgEngage describes #GivingTuesday as a grassroots movement where "education institutions can decide what they’re volunteering for or what they’re raising money or advocating for."
  • Based on university fundraising experts and leading marketing specialists, universities should start by setting clear objectives that should include the tactics and expected success metrics. They should also determine their communication strategy and ensure that they share their campaign with the appropriate audience.
  • Institutions should further "capitalize on trending topics" such as news or sports events, or any other topics that would be of interest to their target audience. They must also conduct a social media awareness campaigns using ambassadors, send regular targeted emails before the event, and share real-time reports during the day. Additionally, they should make an effort to set their #GivingTuesday campaign apart from any other fundraising campaigns.
  • GiveCampus reports that #GivingTuesday strategies are shifting with more institutions choosing to use the day to mark the beginning of their giving season rather than a "24-hour day of giving in 2018." Others chose to launch small-scale, targeted campaigns, and a few decided to forego solicitation on that day and instead focused on sending donor stewardship messages.
  • #GivingTuesday accounted for over 4% of all the money raised online by education institutions in 2018, and this number is expected to grow. Furthermore, education institutions that leveraged #GivingTuesday in 2017 and 2018 recorded a "17.3% increase in the number of donors and a 14.4% increase in dollars raised from one year to the next."
  • This is considered a best practice because it is recommended by several reputable resources such GiveCampus, Causevox, and sgEngage. . It also has proven results based on the provided statistics.
Part
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Part
07

Best in Class Loyalty Programs

JetBlue Airways TrueBlue Loyalty Program and Food Lion’s Shop & Earn Loyalty Program are the two examples of best in class award-winning loyalty programs. We have provided below a detailed overview of these programs.

Best in Class Loyalty Programs

JetBlue Airways TrueBlue Loyalty Program

  • TrueBlue members are the travelers who are part of JetBlue’s frequent flyer program, and the company's TrueBlue loyalty program has been designed for them.
  • The company has a two-tier membership structure for its TrueBlue loyalty program. This includes basic membership and TrueBlue Mosaic status. Apart from earning and using points, TrueBlue Mosaic members enjoy free checked-in luggage facility, priority boarding/seating, and expedited security.
  • The basic membership of the program is free and can be availed by enrolling on JetBlue's website. On the other hand, TrueBlue Mosaic status can be availed by either "flying 30 JetBlue flight segments and earning at least 12,000 base flight points within a calendar year, or by earning 15,000 base flight points in a single year".
  • The loyalty program members can earn no expiry points for every dollar spent on JetBlue-operated flights or JetBlue vacation packages, which include JetBlue flights and hotel stays. They can earn three points per dollar spent on any JetBlue flight booking done through third-party websites, or up to eight points per dollar on the flights booked directly on JetBlue's website.
  • The loyalty program members can also earn points by making purchases with a JetBlue Plus Card, JetBlue Card, or a JetBlue Business Card from MasterCard. In addition, they can collect points by flying on JetBlue partner airlines, including Emirates and South African Airways, and for hotel stays with partnering hotel programs, including Marriott Bonvoy and IHG Rewards Club.
  • One unique feature of the company's loyalty program is its points pooling system that allows TrueBlue members to collect and combine points with friends and family (two to seven members, with a Pool Leader who manages and delegates the pool’s account) in order to achieve awards faster.
  • The members can redeem the points to cover the base fare of any JetBlue flight. They can also use the points to cover the cost of flights on Hawaiian Airlines or a combination of points and cash to pay for JetBlue Vacations packages.
  • Additionally, members can redeem their accumulated reward points for "magazine and newspaper subscriptions, including The Wall Street Journal and Vanity Fair, as well as charitable donations to organizations, such as Make-A-Wish America and Americares".
  • We have chosen the TrueBlue loyalty program as an example of best in class loyalty programs because it was ranked highest in overall member satisfaction for three years in a row in J.D. Power 2019 Airline Loyalty Program Satisfaction Study. In the latest study, the program's member satisfaction score beat the industry average by 33 points with a score of 821. In addition, the loyalty program features in the lists of best/top loyalty programs from US News and Wallet Hub.
  • Also, in 2019, the program led to a 24% YoY increase in the company's revenue. This was more than the revenue contribution of the loyalty programs from peers, such as Delta Airlines (19%) and Alaska Airlines (5.7%).

Food Lion’s Shop & Earn MVP Customer Rewards Loyalty Program

  • In 2018, the company launched its Shop & Earn loyalty program as an enhancement of the existing MVP customer rewards frequent shopper program.
  • The loyalty program provides preloaded personalized offers to the customers at the beginning of each month based on their shopping history and allows them to redeem the same as per their preference. These offers under the loyalty program are in addition to the normal coupons and savings that customers get with the MVP card.
  • The customers can enroll for free in the program by visiting the company website or mobile app and creating a new MVP account.
  • Post the enrollment, they can activate their preloaded personalized offers on products and categories that they shop the most. The activated offers in various categories are then automatically loaded to their MVP card.
  • Each offer has a threshold purchase amount (for example, earn $4 on $30 spend on meat and seafood during the month). As the customers reach the threshold purchase amount, the offer money is automatically deposited in their MVP My Wallet. The unutilized offers expire at the end of the month.
  • The customers can redeem the earned rewards during their next shopping trip at the neighborhood store or when they shop using the Food Lion To Go app. The rewards are valid through the following month in which they were earned, thereby giving customers a maximum of 60 days to redeem the same.
  • The earned rewards can also be redeemed to feed local children, families, and seniors who are struggling with hunger. The company has partnered with Feeding America for the same.
  • We have included the Food Lion’s Shop & Earn loyalty program as an example because the company was recognized as having the best in class customer loyalty program at the national Loyalty360 Expo in 2019 fall.
  • In addition, in the spring of 2019, the company received a Silver award from Loyalty360 for Shop & Earn and received top honors for the best loyalty program of the year. Further, the loyal program is one of the best as it has helped customers save more than $58 million within two years of its launch.
Part
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Part
08

Best in Class Loyalty Programs Targeting HNWI / UHNWI

Two examples of best in class loyalty programs targeting UHNWI / HNWI are Citigold and Stratus Rewards Visa. Both programs offer a wide range of benefits for their users including access to exclusive events, travel perks, and other privileges. The complete information regarding these loyalty programs is provided below.

Citigold

  • Citigold is a wealth-management service for banking, investing, and lifestyle. Members have different benefits including Citigold Concierge services to book reservations, tickets, and vacations, exclusive access to over 100 lounges worldwide, no ATM foreign exchange fees when traveling, home delivery of foreign currencies, toll-free access to users' local Citigold service center from select countries, and emergency cash.
  • Other benefits include free behind the scenes and cultural experiences, educational and sporting events, one-year Citi Bike membership, and the Citi Prestige Card. Customers also earn ThankYou Points for direct deposits, which can be redeemed for travel discounts, gift cards, and cash.
  • To be a Citigold member or own an account, and therefore receive all the benefits, new users must deposit $200,000 or more in funds between the checking and savings accounts within the first 30 days after opening an account and maintain a minimum balance of $200,000 between the checking and savings accounts for 60 consecutive days.
  • This is a "best in class" loyalty program because Citibank has been recognized by Kiplinger’s as the Best Bank for High-Net-Worth Families for the third consecutive year thanks to the Citigold program. Citigold has also been recognized by Investopedia as one of the best rewards programs for high-net-worth individuals.

Stratus Rewards Visa

  • The Stratus Rewards Visa is an invite-only, ultra-premium credit card for people who spend a minimum of $100,000 per year on a credit card. It requires a $1,500 annual fee. It is powered the Visa White card aimed only for UHNW clients through "pre-approved private banking relationships."
  • Members can obtain unique access, opportunities to acquire distinctive products, and experience adventures from the world’s finest luxury goods houses and private travel brands, as well as personalized concierge and privileges at private clubs.
  • Users can redeem their points for "travel on private jets and charter flights." They can also redeem points "for a personal consultation with a famed lifestyle expert." It is unknown how users make their points as the program is very exclusive and does not have an official website.
  • This loyalty program is considered "best in class" because it has been recognized by Next Level Agents as one of the best premium cards in the world, and one of the most exclusive cards in the world by Finder and Investopedia.


Sources
Sources