Episode 14: A conversation with Khatmeh Osseiran-Hanna

Khatmeh Osseiran-Hanna, Vice President for University Advancement at Indiana University of Pennsylvania, shares the story behind securing the University’s largest ever philanthropic gift of $23 Million from Dr John and Char Kopchick.  It took a team effort, over many years, involving people from across the organisation to make this transformational blended-gift a reality.  A discussion about the Case for Support for a couple is covered, including getting “down into the weeds.”  Don’t miss Khatmeh share the importance of listening to a potential donor in order to develop the proposal that strikes a chord with them.  

My Line of Thought…Lessons from the 2018 USA Giving Report

The highly anticipated 2018 Giving USA Report for the 2017 year has just been released. It reports a record $410.02 billion in contributions, representing a 5.2% increase from last year (3% increase, adjusted for inflation). Giving USA: The Annual Report on Philanthropy, is the longest running and most comprehensive report on philanthropy in the USA. The report is presented by two organisations: the fundraising professionals at Giving USA Foundation, a public service initiative of The Giving Institute (AskRIGHT is a member of The Giving Institute); and the research team at The Indiana University Lilly Family Foundation of Philanthropy.

Some of the key questions:

  • Where did the money come from?
  • Who received the money?
  • Why is giving to religion up and giving to international affairs down?
  • Are people giving more?
  • What is the impact of the stock market rally?
  • What are the lessons from the rise in online giving?

WHERE DID THE MONEY COME FROM?

 

Overall, giving has risen: individual giving is up 5.2%, foundation giving by 6%, bequests giving by 2.3%, and corporation giving by 8%. The percentage breakdown from each source held steady from last year; however, a changing financial landscape may affect foundations and bequests as the transfer of wealth continues in the USA.

The increase in the number of foundations and donor advised funds is expected to continue (the Australian equivalent of the USA Donor Advised Funds are Private Ancillary Funds, which also continue to increase in quantity and assets). More donors, it seems, are committing to giving to those causes they are passionate about, but some do so by establishing criteria to be adhered to after their death.

The growth in foundation giving is attributed to the high performing USA stock market (S&P 500 experienced a 19.4% growth in 2017) and several mega-gifts ($300 million or more). A couple of outliers were Mark Zuckerberg and his partner, Priscilla Chan, who gave $1.9 billion to the Chan Zuckerberg Foundation, and Michael and Susan Dell, who put $1 billion in the Michael and Susan Dell Foundation.

Along with foundations, bequests are another area that will see an increase in the coming years. Currently, and at an increasingly rapid pace, more than $12 trillion in assets in the USA are being shifted from those born in the late 1920s, 1930s, and 1940s to their children and grandchildren (the latest USA census data reports 29 million people are over the age of 70). Over the next 30 to 40 years, an additional $30 trillion in assets will pass from the Boomers. It is projected that at the peak, between 2031 and 2045, 10% of the total wealth in the U.S. will be changing hands every five years.

With Millennials expected to be the recipients of this wealth transfer, it is worth noting the difference in giving behaviours of Millennials (born 1981-2000) and Baby Boomers (born 1946-1964). Millennials are either in the early stages of their career or still in school, while the Baby Boomers are retired or fast approaching retirement. In the most recent Fidelity Charitable report, The Future of Philanthropy, a survey of 3,200 donors revealed that 56% of Millennials report spontaneous giving (see section below on trends in online giving) and 72% of Baby Boomers say their giving is more planned. Further, Millennials’ worldview is distinct from Baby Boomers: the approach of Millennials to philanthropy is more global and social, and they express more optimism about philanthropy’s ability to impact the issues most important to them. The transfer of wealth that is projected in the Giving USA report will keep the bequest pipeline healthy.

It is worth noting the breakdown of the $35.7 billion in bequests in 2017:

  • $18.58 billion came from estates with assets $5 million or more
  • $6.92 billion came from estates with assets between $1 and $5 million
  • $10.19 billion came from estates with assets below $1 million.

Organisations should not underestimate the impact that non-mega bequests could have. Consider receiving just 1% to 3% of the total value of an estate from each of your many loyal constituents.

WHO RECEIVED THE MONEY?

Contributions to recipient organisations saw religion, receiving 31%, again outpacing all others. Education was second at 14% and human services third at 12%:

 

Most sectors experienced an increase in gifts:

 

 

 

 

 

 

WHAT ARE THE FUTURE BENEFITS OF TODAY’S GIFTS TO FOUNDATIONS?

The increase in giving to foundations — now 15.5%, up from 3.3% in 2015-2016 — should have a flow-on effect in future years for the other categories when these foundations make grants to support their respective causes. In the USA, most foundations are required by law to give a set percentage (5% is the general rule but the calculation can be complex).

WHY AN INCREASE IN GIVING TO RELIGION?

Some religions preach tithes — literally a tenth of earnings to be given to support their religion and the worthy causes: for example, feeding the poor may account for why religious organisations benefit more from other sources as well as the fact they ask more often, such as weekly. Many religious organisations have also adapted effectively to regular bank transfers of donations.

WHY A DECREASE IN GIVING TO INTERNATIONAL AFFAIRS?

The United States and its neighbours has recently experienced several major natural disasters — including Hurricane Harvey (inflicting $125 billion in damage), Hurricane Imma, and Hurricane Maria — which is attributed to the decline in giving for International Affairs. This follows historical trends in which international affairs experiences a decline in giving following an increased in natural disasters at home. However, the decrease in internal affairs might also be a reflection of the political climate in the US, with the sentiment of “American First” and “Make American Great Again.” This is something to watch.

WHY A DECREASE IN GIVING TO INDIVIDUALS?

This area is known to vary. The vast majority of giving to individuals comprises medicines for patients in need, made possible by patient assistance programs of pharmaceutical companies’ operating foundations. These programs continually change under the various schemes run by the companies.

ARE PEOPLE GIVING MORE?

Giving as a percentage of disposable income remains steady at 2%. To put this into perspective, according to the US Bureau of Labour Statistics Americans spend 5% of their disposable personal income on entertainment. The graph below illustrates the trend over the last forty years.

WHAT IS THE IMPACT OF THE STOCK MARKET RALLY?

2017 giving in the USA is charted against the stock market’s Standard and Poors 500 Index (S&P 500 is the market capitalisation weight index of the 500 largest publicly traded USA companies by market value). The performance of the stock market might affect giving — certainly there is a significant correlation, although there is a lag between the two. 2017 was a banner year for the stock market, indicating 2018 could be a good year for philanthropic giving.

 

Finally, the total giving as a percentage of the Gross Domestic Product has been hovering around 2% for the last few years.

WHAT ARE THE LESSONS FROM THE RISE IN ONLINE GIVING?

The report included statistics from the Blackbaud’s Index (Blackbaud has a fundraising software platform servicing the non-profit industry). The online giving data reported from 5,764 non-profits that charitable support secured online amounted to $3.2 billion in 2017:

  • Online giving to religious organisations grew in 2017 and outpaced growth in giving through traditional methods.
  • Online giving for higher education institutions, compared with charitable organisations of all types, saw a greater increase.
  • Human services, healthcare, public-society benefit, and arts all experienced growth in online giving.

Shopping habits of the consumer continue to evolve with the rise of internet shopping, as smartphones become easier to use, enabling consumers to quickly make bookings, purchases and appointments.

There are some lessons for non-profits. As the online experience for these commercial sectors continues to improve, charities must also move to create similar online experiences. Unfortunately, online giving is marked by impatience, especially for the first gift to an organisation, so an antiquated online experience may lead a potential donor to give up the attempt. Organisations would benefit from an evaluation of their online experience for current and future supporters.

WHAT IS “RAGE PHILANTHROPY” AND WHERE IS IT HEADED?

Rage philanthropy —  the recent trend of activism-motivated giving inspired by the election of President Donald Trump — is waning, but it was made conveniently possible through online giving (directly to an organisation or to crowdfunding sites) and lessons are to be learned. Such activism brought a number of first-time donors to organisations, which created the need to rethink stewardship and donor relations to retain these particular donors. Today’s active donors want more than a thank you letter. They need the opportunity to be involved with the organisation.

WHAT NEXT?

We can learn from the trends taking place in the USA to help our philanthropic efforts here in Australia. Of course, non-profits are at the mercy of the economy, like everyone else, but organisations can be proactive in developing online platforms that are modelled after successful private sector businesses and that target potential donors based on demographic trends—the treatment of the Millennials compared to the Baby Boomers, incorporating online giving in your major gift program, and understanding and executing a comprehensive bequest program to raise the awareness among donors on how they can make a difference in the future.

* All charts from 2018 USA Giving Report

Episode 13: A conversation with Paul Gollan

Paul Gollan, Senior Professor and Pro Vice Chancellor South East Asia at Wollongong University, shares insight on the global aspects of external engagement and developing partnerships. It is important to understand reciprocity in building relationship and that the partnership is filling a need in the market place.  Paul shares the importance of engaging with the private sector and finding out the needs of the senior executives by looking “outside the box.” The role of the engagement professional is discussed with respect to supporting existing relationships and keeping professionals motivated.  Listen to Paul share his thoughts about the custodians of partnerships and how to reflect at the end of the day of an international trip.