The Golden Age of Fundraising: Part II

There Are No ATMs in Heaven

The Fundraiser Blog • Steve Reed • December 14, 2023

Last week, Part I addressed why attitudes about philanthropy in healthcare and other sectors are shifting from “nice-to-have” at relatively insignificant levels to “must-have” at levels of two or three times as much—or more. That’s one of the two major factors driving the possibility of a Golden Age of Fundraising.

The other major factor is that heaven doesn’t have ATMs. There’s a Great Wealth Transfer coming from the 20 percent of today’s population that makes up the Baby Boomer generation.

According to the latest Forbes story on the subject (Oct-Nov 2023 print issue), the potential is $93 trillion dollars. That an upgrade from a Nov 11, 2019 online Forbes article that cited a MSNBC report that set it at $30 trillion and credited big-5 consulting firm Accenture as an earlier source. As a point of comparison, the 2021 gross domestic product (GDP) for the entire United States was “only” around $22 trillion.

The earliest Baby Boomers have passed the 75-year mark. They and their younger cohort compadres are thinking—or are starting to think—about legacy. They’re moving toward retirement or still have plenty of happy retirement to live, but many are realizing there’s going be a big pile of money left after they’re gone.

But please don’t think this is about planned gifts.

This is impacting current major giving strategies. People like to see the positive reverberations of their generosity as part of their daily lives.

More than 140,000 Americans have net worths of $50 million or more — nearly four times more than just a decade ago, according to Credit Suisse. Growth accelerated during the pandemic. According to Forbes, billionaires were minted at the rate of one every 17 hours in 2021.

But this isn’t about billionaires, either.

It is about what you might call “everyday megadonors.” These are the boomers whose wealth doesn’t qualify them for the lists of the richest people in the United States and Canada. Still, they have the wherewithal to make seven-, eight- and even nine-figure gifts. 

The reality is that aging Baby Boomers have three options for where their money will go: family, charitable (or political) causes, or the government.

Obviously, some of this unspent Baby Boomer surplus is going to go to heirs. Current tax rates will allow the majority of boomers to pass on their assets without tax issues. For instance, the U.S. estate tax exemption is set at over $12 million per person.

But after that, the tax bite is something that wealthy boomers want to avoid. One major donor put it this way to me in a conversation: “I don’t want the government deciding how to spend my money.”

And many feel that bequeathing all of it to family is not their best option. A comment I’ve heard expressed in various ways, “This much money could ruin their lives.”

The Great Wealth Transfer is beginning to fuel a corresponding trend: the spread of more sophisticated approaches to fundraising and ambitions for big gifts. Top-tier, high-profile institutions are still seeing individual donations of $10 million and more. But smaller, less well-known organizations are also reporting major gifts that are the largest in their history.

For example, McPherson College, a Kansas liberal-arts institution with about 830 students, recently made headlines with a $500 million pledge to its endowment—the most visible, but not only result of a successful fundraising program pivot. Michael Schneider, president of McPherson College, saw the traditional approach wasn’t what the college needed to meet goals. The college pivoted to focus on engaging capable donors with compelling reasons to invest major gifts now in the college’s future.

A healthcare organization focused on addictions and mental health recently achieved similar success. Newly hired Chief Development Officer Moira McGinley (since promoted to Chief Transformation Officer) completely retooled Hazelden Betty Ford Foundation’s fundraising program, for the first time bringing in major gifts in increments of as much as $10 million to elevate fundraising far above past levels.

Over the next two decades, the United States and Canada will experience an unprecedented shift of demographics and finances. Baby Boomers, the post WW-II surge generation of people born between 1946 and 1964, are beginning to focus on legacy. Now, after decades of prosperity and economic growth, this generation controls roughly 70% of all disposable income and trillions in assets.

The bottom line is that in the coming years a lot of money will transfer hands. The question isn’t, will the Great Wealth Transfer happen? We know it will. And that will require a different approach to fundraising.

The question is, are you and your organization ready for the imminent Golden Age of Fundraising?

--Steve

(If you missed Part I of the Golden Age of Fundraising, please click here.)

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About the author

Steve Reed offers 30 years’ experience fundraising, the last 20 of which include the application of Lean 6-Sigma principles for performance improvement in healthcare and healthcare fundraising. He is president of Engage Performance Advantage (USA) and a partner in Engage Performance Advantage Canada.

About Engage Performance Advantage

We are performance improvement change agents offering nonprofit organizations a way to radically redesign how they raise money, with more emphasis on personalized strategies and larger gifts. Our process-based critical path major gifts framework is paired with supporting technology to help leadership create a top-level fundraising organization. It’s a complete solution that can be rapidly deployed with dramatic gains.

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