The very, very rich got even richer

Wealth-X and UBS have just released their 2014 research into the world's billionaires. 

The numbers have increased, which will surprise nobody who subscribes to Thomas Picketty's argument that you and I will never catch up to the wealth of people who are already rich.

There are now 2,325 people with a net worth of at least $1 billion this year – 155 more, or a 7% increase, from 2013. They collectively control $7.3 trillion dollars in total wealth. Jacob Davidson, in Money put is, "that means a group of people about the size of a typical suburban high school student population could fund the entire United States defense budget for 14 years." 

The report provides some interesting tidbits for those who are interested in the lives of the rich and famous. For example it offers a month by month billionaires' social calendar, noting the events they are most likely to attend. The US Masters and PGA Championship feature prominently . But also, at least 23% of the world’s billionaires are likely to attend at least one, if not more, of the many elite art shows held annually around the world.

However, more comforting is the discovery that more than 70% are active in the philanthropic sphere. Excluding future pledges, the report says "billionaires, on average, donate just over US$100  million cumulatively over their lifetimes. This is equivalent to 3% of their net worth – more than the average  billionaire’s real estate holdings".

Topping the list are Chicago's billionaires. 100% of these billionaires are active philanthropists. New York and Los Angeles follow at 96%. Riyadh, Saudi Arabia at 95% beats Singapore's 94% of philanthropically inclined billionaires. Only 85% in London show interest in philanthropy.

Education, and Higher Education are top two on their list of preferred causes. The Arts come fourth after Health. Religion, unlike for the population more generally (most studies show) falls bottom with only about 4.5% supporting church, temple or mosque.

Chicago's billionaires give especially towards improving living conditions and the developmentof their city. Those from Tokyo, in contrast, show interest in disaster relief and the environment.

Also just published is a new book by Brookings Institute academic Darrell M West 'Billionaires: Reflections on the Uppercrust.' One of this book's cautions is that we need to be aware of new models of billionaire gift giving. Cultivating wealthy individuals requires considerable tact, persistence, personal contacts, and know-how, he rightly notes. Being results oriented, many billionaires focus on concrete objectives, and they want demonstrable impact for their money.

West cites Matthew Bishop Michael Green, the authors of Philanthrocapitalism . They describe how the very wealthy bring skills and tools from the business world to their philanthropy. They push nonprofits to focus "in some cases for the very first time" on specific outcomes for their work and performance metrics.

He could also have cited Paul G Schervish, who coined the term hyperagency for the behaviour of the very wealthy. As he describes it:

"Hyperagency  is the ability to exercise effective control over the conditions and circumstances of life rather than merely living within them. Hyperagency, in contrast to agency, means that the wealthy are able to construct a world that suits their interests". Schervish, PG & Herman, A 1988, 'Empowerment and Beneficence'.

In a later work, Schervish - who has studied the philanthropy of the very wealthy in United States in greater depth that anyone - has also identified 13 strategies followed by philanthropists in what he likes to call the New Golden Age of Philanthropy. (Schervish, PG 2000, 'The modern Medici')

Theresa Lloyd and Beth Breeze have recently published a study of why rich people in the UK give to charitable causes.Lloyd, T & Breeze, B 2013, 'Richer Lives: Why Rich People Give' 

For Australians, a work worth reading on what motivates major donors (though not billionaires per se) has been written by  Wendy Scaife, Katie McDonald and Sue Smyllie (2011 'A Transformational Role).

Data protection spells disaster for fundraising

I was struck by the headline of an item in Third Sector. "EU data protection plans 'potentially disastrous' for charity fundraising" it proclaims.

The article went on to quote from a report from a fundraising agency "Fundraising depends on big numbers and economies of scale; by generating enough new donors, the cost of finding and keeping each one gets small enough to make donor recruitment profitable." My question is, "Does it?" 

Without wanting to denigrate the commitment of those of you fundraisers who specialize in mass appeals, my understanding of successful fundraising leads me to quite the opposite conclusion. Could it not be that instead of disaster, perhaps restrictions on the use of lists, telephone campaigns and direct mail would be a victory for effective fundraising?

Effective fundraising, it is generally reckoned even by those who practice more mass-market approaches to fundraising, requires building a relationship. So what if suddenly we switched our effort from list-buying, mailing and calling segments, postcodes and sociodemographic profiles? Instead, what if we spent our time identifying and researching people who  really are connected and close to us? Who are part of our real social constituency not just the product of data analysis. Our existing donors, our volunteers and their families and friends? And, those that have been touched by and share in our causes? What if we actually took time to talk personally and directly to these people? What if we got to know them on a one to one basis? What if we asked them to become part of a network of personal connections? What if our contact with them was social, face-to-face and responded to their interest and passion for what we do uniquely, valuing them as a person instead of as a data point?

That, of course is the basis of major gift fundraising. It is also the way to successfully approach business partnerships and to get support from trusts and foundations.

However, if we step back in time it was also the way that philanthropy originally was born. Mass-market fundraising only really started in the early part of the last century. Street fundraising originated with the YMCA and wasn't popularised until the 1980s by Greenpeace. Direct mail fundraising is really only a post World War II phenomenen. Its precursor direct mail marketing began the 1900s. Telephone fundraising, as I'm sure many of you know came much, much later.

Prior to these, fundraising for social causes including the arts and education was achieved by personal connection between social activists, volunteers and donors. The main fundraising tools were events of various sorts including balls, concerts and lectures. Fundraising letters were written personally -think of Mrs Jellaby in Dickens' Bleak House. Other forms of  eighteenth and nineteenth century fundraising also included financial tools and instruments curiously similar to those that we describe as "new philanthropy". The significance of any of these older forms of fundraising is that they involved networks of individuals interacting viscerally, personally and socially.

So, if suddenly, governments introduced regulations that limit our ability to buy lists, to mail and telephone people whom we don't know, will that really be such a disaster?