Five ways to make use of donation data

There has been some interest online over the past few months in how prospect researchers can make the best use of ‘donation data’ – i.e. databases, reports and websites that list donations, showing who gave, how much, and to whom.

Recent blogs such as this one from iWave inspired us to carry out a survey amongst our subscribers to Factary Phi to find out for ourselves how and why they are using donation data. Some of their answers were unexpected – we found out that our subscribers are very imaginative when it comes to making use of data on donations in their research. Below we have outlined some of the ways our subscribers have told us they’re making use of the data.

If you use donation data in your research, we hope the innovative approaches of our subscribers prove inspirational to you!

The five ways our subscribers are using Phi data

  1. To understand philanthropic interests to help identify the best prospects

    Overall (and perhaps the least surprising in many ways) was that a whopping 90% of respondents to our survey mentioned that the two ways they mainly use the donation data in Phi were to:

    1. Research existing prospects, e.g.:
      • “Searching by name and checking which causes [prospects] are giving to, to determine philanthropic interests”
      • “Get a sense of causes these donors or prospects support”
      • “Research other charities supported by existing supporters and prospects”
    2. Find new prospects, e.g.:
      • “Identify people supporting competitor charities/similar causes through searching by [recipients] activity type”
      • “To identify new potential prospects giving to a similar cause”
      • “Check who is giving to similar causes [and] check who is giving to particular causes”

    As we know, using research on donation history to find prospects with an affinity to a particular cause has been long proven as an effective strategy for understanding which of your current prospects might prove to be the most likely to donate – and also for finding new potential likely donors. This is because many donors will have a specific interest in a particular cause and will more readily consider donating to organisations operating in a similar field in the future (Breeze & Lloyd, 2013). This type of approach to the research was said to be useful for researching all types of prospects on Phi, including individuals, trusts and companies.

  2. To help researchers shape fundraising strategy

    Interestingly, prospect researchers using Phi told us that researching donation data can be a way that they can help their organisations to plan fundraising strategy. Subscribers noted that the breadth of data on Phi allowed them, together with additional research, to benchmark types of donors to similar organisations or projects, thereby gaining an understanding of the current fundraising market. So, for example, the research might show if individual major donors would be more or less likely to support a particular type of project or campaign than trusts & foundations. Armed with this knowledge, researchers can then advise senior management on the likely avenues for support, thereby shaping the fundraising strategy around the type of donor most likely to give.

    The ability for researchers to ascertain potential levels of giving was another factor mentioned in helping to shape strategy – by using Phi to research donation levels, researchers are able to estimate the potential eventual Ask for current donors and existing / potential prospects. Knowing a prospect’s previous donation levels to different causes is a useful way to gauge their likely or potential future donation to your cause – and arguably more accurate than basing their estimated gift capacity on wealth data alone. This donation information enables researchers to contribute to discussions around fundraising targets for campaigns and projects, potentially putting them in a central role during decision-making around prospect allocation and fundraising strategy development.

    Also, some researchers stated that the data on Phi also helps them identify local recipient organisations (by searching for donations to a particular region or town) to see if there are common funders or funding networks prevalent in that local area, thereby contributing to an understanding of the potential local prospect pool or philanthropic networks to be cultivated. This approach was said to help both national charities with local offices and also regional organisations (such as hospices).

  3. To encourage stronger relationships between fundraisers and researchers

    We thought this was a particularly nice benefit to researching donation data!

    Some of our respondents reported that fundraisers were more willing to take on prospects that a prospect researcher had identified if they could provide information to the fundraiser on the prospects’ previous donations. When these prospects turned out to be decent (and ultimately donated to the cause), the fundraisers were then more open to working with the researcher’s suggestions in the future, thereby creating a better working relationship.

    Respondents also noted that even where information on specific gift amounts was omitted from the donation search, simply identifying that the prospect is philanthropic was sometimes enough to encourage fundraisers to act on their suggestions.

  4. To understand how donors give

    Turns out, knowing how donors give is almost as important to researchers as knowing how much they give.

    Subscribers reported that having donation data which covers a broad range of types of giving is incredibly useful. Being able to see prospects giving via their charitable trust, their company and as an individual gives a quick overview of the prospects’ philanthropic portfolio. Using this information, researchers can then advise on approach strategies – e.g. whether to approach a prospect as an individual major donor or via their charitable trust for a specific project.

    Breeze & Lloyd (2013) reported that whilst 73% of rich donors give via their charitable trust, 49% also give one off donations, 28% give via standing order/direct debit and 22% are planning to give via their will. This breadth of giving is reflected in Phi, with donations showing donors giving via multiple channels, making the data useful for trust fundraisers, corporate fundraisers and major donor or individual giving teams. Being able to contribute to so many areas of fundraising can make a prospect researcher an invaluable and valued part of the wider team.

    One subscriber also mentioned that the inclusion of political donations on Phi was especially useful as, because they were new to prospect research when they first started using Phi, they wouldn’t have thought of political donations as a source for prospect information. Also, US research in 2015 by DonorSearch reported that individuals who gave >$2.5k in political donations were 15 times more likely to give to a charitable organisation than those who hadn’t (whether this is also true of political donors in the UK is unclear, however).

  5. To improve the perception of researchers in their own organisations

    Perhaps our favourite benefit of all!

    As stated above, relationships with fundraisers have been known to improve through using donation data as a research tool, but subscribers further noted ways in which making use of donation data in different ways can highlight the enormous contribution prospect research makes to a team. Some examples are:

    • Prospect researchers use the data to increase their knowledge of the prospect pool and to prioritise long lists of prospects by previous giving – this is invaluable information when discussing cultivation strategies and allocating prospects to fundraisers.
    • Data on giving history enables researchers to boost numbers of new prospects, which can bring research into a more central role when moving through a campaign, for example.
    • Research into philanthropic interests had highlighted where prospects had made large gifts to other organisations that had strong links to their own Trustees or Chairman. Noting these links and connections was hugely important in devising an approach strategy for the prospect and wouldn’t have happened about without the research into philanthropic affiliations and donation history.

One more thing…

Perhaps the best outcome of all, for everyone involved, is to know that some of our subscribers have stated that research into prospects’ donation history ultimately helps lead to new gifts for their organisations. Which is, after all, what it’s all about!

We hope this proves useful for you in your own research.

And, finally…thanks to all of the subscribers to Factary Phi who took part in our survey!


Foundations of Wealth Revisited: A Story of Growing Potential…

For three years Factary produced a ‘Foundations of Wealth’ report focused on the Ultra High Net Worth Individuals (UHNWIs) and High Net Worth Individuals (HNWIs) (minimum estimated wealth of £10m) that founded grant-making trusts and foundations, featured in Factary’s New Trust Update during 2012, 2013 and 2014. We have now revisited these trusts and foundations to see how they are performing financially and what this means for hopeful beneficiaries.

 

These three reports, all available for free to New Trust Update subscribers via the new online archive service, contain profiles of 104 philanthropists and their grant-making trusts and foundations, of which nearly half are not on Trustfunding.org. Top of the list in terms of estimated wealth is Mrs Usha Mittal (£9.2bn) with other billionaires including the Swire family, the Fleming family, Ian Livingstone and Spiro Latsis. Together they have a combined estimated wealth of £34.36bn – the question is, how much of their wealth are they giving to charitable causes?

 

Based on financial information from the last financial year 98 trusts and foundations (six are still yet to submit their first set of accounts to the Charity Commission) had a total expenditure of £26.17m. Only seven had a total expenditure of over £1m in the last financial year whilst over one in 10 had an expenditure of £0 despite some having been registered for three years now. This is somewhat disappointing, especially when compared to their estimated wealth which shows that the average expenditure as a percentage of estimated wealth is a meagre 0.08%! Only seven individuals gave over 1% of their estimated wealth to other organisations in the last financial year, with the most generous person giving just under 3% of their estimated wealth as grants. This is well under the ‘5% of total assets’ figure that is often used as the basis for estimating gift capacity for major donors…

 

The biggest giver in terms of charitable expenditure was Sir Peter Harrison – former Chairman and Chief Executive Officer of computer network company Chernikeeff. The Peter Harrison Heritage Foundation had a total expenditure of £4.5m in 2013/14 which included a grant of £2m to the Clarence House Restoration Project and £1.75m to the Imperial War Museum.

 

The most generous philanthropist, giving away the greatest percentage of his estimated wealth as charitable expenditure, was Sir Mick Davis – former Chief Executive Officer of the mining company Xstrata plc from 2001 until its merger with Glencore in 2013. The Davis Foundation had a total expenditure of £2.2m in 2014/15 which equates to 2.95% of his estimated wealth. Grant recipients were not disclosed.

 

Other significant grants awarded by these new philanthropists in the last couple of years include £6m from The Dorothy & Spiro Latsis Benevolent Trust to Great Ormond Street Children’s Hospital and £1m to Boston Children’s Hospital (both in 2013 and hence excluded from this analysis of activity in the last financial year), £2m to the UBS Optimus Foundation by The Holroyd Foundation, £1m to the Royal Shakespeare Company by Lady Sainsbury’s Backstage Trust and £770,125 to  Clinton Health Access Initiative by the Surgo Foundation UK.

 

Notable names that have been less than generous with their charitable giving via their foundations to date include Michael Lemos (son of Greek shipping tycoon Constantinos Lemos) whose CML Family Foundation donated £3,406 which is 0.001% of his estimated wealth of £605m and Richard Higham (Group Chief Executive of Acteon Group Ltd) whose Higham Family Trust had an expenditure of just over £6,000 in 2014/15, which represents 0.004% of his estimated £150m wealth. Some of those whose trusts and foundations have shown no financial activity include former CEO of wealth management company Towry Andrew Fisher, Conservative Party donor and Domino’s Pizza franchise owner Moonpal Singh Grewal and Abhisheck Lodha, Managing Director of global real estate developer Lodha Group.

 

Of course there will be a number of possible reasons why these figures are so low – not all their charitable giving is directed through their foundation; this is not their primary foundation; the nature of their wealth means they do not have high levels of liquid assets; or they are still in the process of building up reserves.

 

It is this last point that is perhaps of most interest when we look at the figures. Whilst the total expenditure was only £26.17m in the last financial year, the total assets of the 79 trusts and foundations for which data was available was over five times this amount at £148.7m. 25 of these have assets in excess of £1m and 10 have assets in excess of £5m. This equates to an average of 0.62% of the philanthropists’ estimated wealth, with 15 building up assets of over 5% of their estimated wealth.

 

The foundation showing the largest asset amount is The Christie Foundation founded by Iain Abrahams, the former Executive Vice Chairman of Barclays Capital. The foundation has assets of over £21m for 2014/15 which represents over 40% of his estimated wealth, making him the also most generous benefactor. So far the only identified donation made by his foundation is of £150,000 to the Elton John Aids Foundation, of which he is also a Trustee.

 

What this shows is the considerable potential these trusts and foundations have for the sector. Whilst they may not yet be giving at a level in keeping with their vast wealth, these UHNWIs and HNWIs are ear-marking significant amounts of their wealth to be given away to charitable causes over the course of their lifetime and beyond, sustaining the charitable sector for years to come.

 

The financial data for these 104 trusts and foundations, along with the three Foundations of Wealth reports and all the past issues of New Trust Update dating back to 2005, is available online to NTU subscribers. If you want further information about New Trust Update and our searchable archive please contact Nicola Williams.


Measuring the Immeasurable

We prospect researchers say it all the time. But I’m not sure that our fundraising colleagues really get it.

 

It’s immeasurable. No, we cannot give you a precise figure.

 

An individual’s wealth is a private affair. Just how private is being made clear by the Panama Papers. Here we can see how people from footballers to political leaders hide their wealth and their income from public view. These are just the types of people that we prospect researchers are asked to analyse and measure; what is her wealth, and what is her gift capacity?

 

Bear in mind that Mossack Fonseca is described as Panama’s fourth largest firm in this offshore business. The Legal 500 lists five more leading firms operating in this sector in Panama. There are hundreds more in Panama, and more in the British Virgin Islands, Cayman, Gibraltar and any number of other fiscal watering holes. We are seeing, even with the 2.9 terabytes of information from Panama, only a tiny slice of the full picture.

 

The OECD reports that 27 of the 34 OECD members “store or require insufficient beneficial ownership information for legal persons, and no country is fully compliant with the beneficial ownership recommendations for legal arrangements.” In other words, as campaigners such as Andy Wightman have shown in his books on land ownership in Scotland, we cannot know who owns companies or who controls trusts.

 

The UK is rolling out regulations that will expose some of this – although information on the control of trusts (not the charitable sort, these are legal trusts) will only be available to ‘competent authorities.’ A grey phrase that, we can assume, excludes the, er, incompetent public. Business shareholdings of 25% or more will mean a declaration of beneficial ownership. It is worth noting that many of the schemes outlined in the Panama Papers involve small but valuable shareholdings. As Jake Hayman has already noted in Forbes, this is relevant to philanthropy.

 

The Panama Papers have many implications for prospect researchers. They are another mine of information – you will have to decide for yourself whether this is good practice, or not – on wealth. They remind us that we must be cautious with our estimates of wealth and gift capacity. And they demonstrate that our due diligence is less than comprehensive; if we cannot know who controls a business that wants to donate to us, or we cannot say  which companies Samantha Supporter controls, then how can we measure whether she meets our due diligence requirement?

 

I suggest sticking this version of The Panama Papers on the door of the Prospect Research office in your organisation:

1. No, we can’t tell you how wealthy she is
2. No, we can’t tell you who owns that property
3. Don’t expect due diligence to be really diligent. We’ll do our best, but don’t ask us to hack any more Panama lawyers.