Don’t make the real estate mistake
Everyone commiserated with one HBGer’s lament that some development offices don’t include primary residence – or even any real estate – in their capacity ratings.
And I’ve heard people say on multiple occasions, “Our prospective major donor is never going to give us their house (or sell their house and give us the money), therefore we shouldn’t include it in our ratings.”
Which is true. The donor is probably never going to give your nonprofit the deed to the house they’re currently living in. (<stage whisper>: I won’t mention “planned gift” at this point, okay?)
THE THING IS…
They are also never going to give you their salary (unless they’re Chris Long), sell their yacht, their plane share, or their horses to make a donation, either. They won’t liquidate their art collection, grandma’s diamonds, or that vintage Chanel worn to last week’s benefit. The privately-held company they own will remain unsold. Likewise the stock options that don’t convert for another 5 years.
If the argument is that they’re not going to sell their house, then we should disqualify those other assets, too, right? Because they are never going to give them to you, either.
You can’t pick and choose.
If you randomly take one non-liquid asset off the table, you should take all of them. And you’d never do that, right? It would be illogical.
Figuring out someone’s gift capacity is hard enough to begin with. Purposefully handicapping yourself makes absolutely no sense to me.
I UNDERSTAND
Real estate certainly isn’t the be-all-end-all, but like all of those other assets I mentioned, if nothing else, it’s an indicator of wealth. But I think there’s much more to real estate – even primary real estate – that should be considered.
To start with, it’s solid information. We’re already operating in a realm where anything concrete is in short enough supply. So why ignore a valuable, real, solid, asset?
Also:
Real estate is a green flag. When I’m trying to find new prospects in a sea of regular donors I may skip over someone who lives in a $850,000 home in San Francisco, but I’m definitely not going to ignore a donor who has a $850,000 condo in Aspen. I’m now going to search to find a separate primary residence.
Real estate is a red flag. I was once asked to research someone who had approached an organization out of the blue offering to make a multi-million-dollar gift. What I discovered – by just looking into the prospect’s primary residence – was the first red flag that probably saved the nonprofit from months of wasted time – or worse.
Further:
100% of the world’s high net worth individuals (HNWI) own real estate. And for the more privacy-aware among them, real estate is sometimes the only hard asset we can find for them. Knowing what kind of real estate they own gives you clues into the type of personality they are, how they may want to be cultivated, and what philanthropic investments may interest them. For example:
The billionaire who owns a 20-bedroom party house on Miami Beach is very different from the billionaire living in a three-bedroom ranch in Omaha. Their real estate choices can give you clues to their lifestyle and engagement preferences. One may be a better prospect for naming opportunities with big splashy events. The other may prefer funding boots-on-the-ground clinics for vaccine delivery and student scholarships.
In addition:
We can use real estate for estimates. According to the Capgemini World Wealth Report, real estate accounted for 17% on average of a HNWI’s total assets globally last year. (In the US, it’s 11% of total assets; in Europe it’s 18%). So if all you can find is someone’s real estate holdings, you can still come up with a decent guesstimate of their total assets using that one ratio if they’re in the HNW classification.
And finally:
Real estate is critical to planned giving. There, I’ve said it, and this is really important.
Let’s say you work at a small college and you’ve got childless husband-and-wife alumni couple with a ski resort condo, a vacation home at Los Sueños in Costa Rica and a primary residence in Boston’s Back Bay. They’re consistent donors and lifelong volunteers to the college. There’s no question that the planned giving officer needs to know about them.
And in this case, it’s not only the real estate that’s interesting, but also what it tells us about these special people. Here is an active, outdoorsy couple who possibly enjoy golf, tennis and skiing. A pair that enjoys regular seasonal travel, but whose lifestyle may require extra cultivation time because they are probably not in town very often. What decisions do you need to make about how to engage them?
Look at all the information that just knowing about real estate gives us!
ONE LAST THING
In case you’re wondering, here at HBG we do include primary residence in our total visible wealth calculations on profiles.
We believe it’s a real asset. I think you should, too.
Broadening your alert horizon
But if you think about it, that moment is really the starting line. What happens after that?
Well, an opportunity for us to have a conversation with the front line fundraiser assigned to that prospective donor, to begin with.
- Did the profile answer all of your questions?
- Is there any further work to be done?
- What questions remain unanswered in the work that the fundraiser can discover on their next visit?
And most importantly, this signals the beginning – or deepening – of the relationship between your organization and the donor. The gift. Stewardship. Continuing engagement. [Read more…]
Behind the Scenes of the Form 990
Knowing behind-the-scenes information about the sources we use can help us use them much more efficiently (and/or figure out workarounds). This week I’m delighted to welcome HBG Senior Researcher Heather Willis who shares her knowledge about the tools we use to research nonprofits and foundations. ~Helen
A lot of us research tax-exempt organizations and their 990s on a weekly, if not daily, basis. Lately I’ve been wondering about some of the resources we use for this process and why you can’t always find the information that you’re looking for.
My guess is that maybe you were also wondering, so I decided to look into them more deeply and get some answers. Let’s start with some basics about the Form 990. [Read more…]
Google Search, just for you
According to many tech writers, the future of search is looking very much like a verbal interaction between searcher and search engine. Alphabet wants you to have the same relationship with Google that over 8 million people already have with Amazon Echo’s “Alexa” every day.
ComScore estimates that by 2020 (which is only two and a half years away, my friend) over 50% of all searches will be screenless. Which is very Star Trek and cool and cutting edge and all that.
Smart people in the marketing world are already thinking about what happens for them when Google search (as we know it) goes away.
We professional researchers need to be thinking the same way. [Read more…]
FOMO Cheat Sheet
No Budget For Paid Research Resources? This is for you!
This week we welcome HBG Senior Researcher Heather Hoke to share her knowledge on the blog. Every year, nearly a third of attendees at our professional association conference are brand new to our field. The Apra conference in July is one of the best places for new researchers to find in-depth training and unparalleled opportunities to network, test-drive critical resources, and learn from experienced colleagues. If you don’t have the budget this year but still need information to get you started, Heather’s article will help launch you with lots of advice and resources.
I have been a development researcher for more than 15 years and have had the opportunity to meet many new researchers starting out in our profession who need to learn the basics. It’s an exciting time for them, but our field can be a bit overwhelming.
I have met folks just starting out in a non-profit or educational institution with no prior experience or training on how to do prospect research to advance fundraising. And sometimes, to make things more difficult, there may be no researcher on staff to guide them. [Read more…]
Fear Of Missing infO
At some point in every new researcher’s life, they will get to experience the double-edged sword that is Researcher’s Guilt.
It’s that moment when you realize that you have spent (1) way too much time to (2) find a piece of information that you firmly believe must be out there – hiding. Behind some paywall. And now your report is sitting there. Unfinished.
It’s Prospect Research FOMO. Fear of Missing infO*.
It’s frustrating, disheartening, and maddening to have wasted time and feel that, at the end of the day, you just couldn’t make the Boolean logic deliver.
Especially when everything is online, right?
(Well, it’s really not, but that’s a different blog post). [Read more…]
501(c)(what?)
Unstructured and very valuable
This week we welcome my colleague, Tara McMullen, to the blog-stage to talk about a type of data that’s particularly tough to wrangle, but totally worth the effort. Here’s Tara on the rewards to be found in digging through unstructured data (and some great places to find it).
In my work, I find myself constantly perusing social pages, local and regional news publications, and text-heavy lists and articles about wealthy and powerful people to try to pull out valuable “soft” information from these sources of unstructured data.
The information found in these sources is often invaluable in providing insight into a prospect’s relationships and connections, non-profit and civic affiliations, family members, neighbors, community groups, hobbies and activities (like golf or boating), and – of particular interest to those of us in the prospect development field – potential philanthropic interests. [Read more…]
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