Donor Capacity & Inclination Study

Prepared for

Family Shelter Service

October 2014

Prepared by:

David Schreier, President

Jessica Bizub, Research Consultant

David Schreier Associates, LLC

6361 N. Broadway St.

Chicago, IL 60660

davidschreierassociates.com

TABLE OF CONTENTS

Letter to Executive Director...... 1

Project Overview...... 3

Findings Summary...... 5

Wealth Indicators Biographical Attributes...... 8

TAB A

Donor Profile Overview...... 9

Total Donations (Amounts) 2010–2014...... 9

Total Donations (Numbers) 2010–2014...... 10

Average Donations 2010–2014...... 10

Cumulative Donations by Level 2010-2014...... 11

Donor Loyalty...... 12

Head of Household Characteristics...... 13

Age...... 13

Ethnicity...... 14

Children Present...... 15

Internet Use...... 15

Political Preferences...... 16

Interests & Activities...... 16

WealthFinder Codes...... 17

Household Income...... 18

Household Income Distribution...... 19

Homeownership & Second Property...... 19

Home Values...... 20

Financial Assets...... 20

TAB B

Reports...... 22

Household Lifestyles...... 23

Top 108 Prospects...... 32

Hidden Wealth in Top 2% of Households...... 36

Capital Campaign Potential...... 37

Top 50 Household Income Prospects...... 38

Planned Giving Prospects...... 36

Age Breakdown...... 40

Wealth vs. Gifts...... 46

Strategic Uses of Findings...... 50

TAB C

Methodology...... 53

Database...... attached separately

October 10, 2014

Judie Caribeaux

Executive Director

Robbie MacRoy

Director of Resource Development

Family Shelter Service

605 E. Roosevelt Road

Wheaton, IL 60187

Dear Judie and Robbie,

David Schreier Associates is pleased to prepare this draft report of the Donor Capacity & Inclination Study conducted for Family Shelter Service.

Jessica Bizub and I appreciate the resource development challenges most nonprofits are facing today relative to their resource development programs.As recent research shows, individual giving makes up 79% of overall charitable giving in this country ($252 billion) and all indications are that individual giving will maintain this percentage of philanthropy in the years ahead.

That is why the following study is so potentially important for Family Shelter Service, in that it provides direction on how to develop more effective strategies to identify, cultivate, solicit and steward individual gifts, based on donor inclination and capacity.

At the end of the day, it will be the individual donor relationships that can provide the most significant and reliable source of funding to the organization.

The following study provides our findings and recommendations to assistFamily Shelter Service in prioritizing and targeting individuals from its database who have the greatest capacity and inclination to make charitable gifts, and approach them in the ways that best fit their financial ability and personal interests. It synthesizes biographical and lifestyle information, as well as actual giving history data of Family Shelter Service.This should help the resource development staff and volunteersstrengthen their ability to engage, involve and communicate with the organization’s friends, supporters and prospective partners.

It is always important to remember that simply knowing donor capacity and inclination will not necessarily indicate that gifts are forthcoming.Rather, they are tools and provide the opportunity to discern and analyze donor behavior, which can then enable the organization to select the most appropriate donor engagement strategies for prospects.

That said, the Family Shelter Servicestudy uncovered substantial gift potential with respect to the number and type of donors giving to the organization.

We look forward to reviewing and interpreting these findings with you and then arranging a subsequent date to do so for the Family Shelter Service board of directors.

Sincerely,

David Schreier

President

C: Jessica Bizub

Project Overview

David Schreier Associates conducted a study for the Family Shelter Service that involved analyzing its database of 2,714 recent individual donors to examine both their capacity and inclination to make charitablegifts to the organization. The analysis looked at undisclosed wealth holdings, biographical attributes and giving behavior established over the past five years.

The key objective of the Donor Capacity & Inclination Study project was to use key wealth indicator variables to uncover hidden donor capacity in combination with giving history patterns to illuminate donor inclination. This research is premised upon the hypothesis that an enhanced understanding of donor capacity and donor behavior will allowFamily Shelter Service to develop better informed strategies to guide donor cultivation efforts for current and potential donors.

Investigation

The Donor Capacity & Inclination Study project addresses(or raises) the following key research questions:

  • What is the estimated giving capacity of Family Shelter Service donors?
  • What is the estimated level of donor commitment to the organization?
  • What is the demographic profile of major gift prospects and how can that information be used to identify more effective ways of raising gifts from current donors. Additionally, how can that information be used to attract new donors?
  • What is the estimated propensity to give among selected donors?
  • Does the estimated gift capacity and commitment of selected donors correspond with the fundraising goals set by Family Shelter Service?
  • What can Family Shelter Service do to elicit stronger individual giving?
  • What are the most effective ways to prioritize and target individual donors with the greatest capacity and the greatest inclination to give?
  • How can the board and staff develop better-informed engagementstrategies for existing donors?
  • What are the most meaningful ways to guide donor cultivation efforts for new potential donors?

Applications

Furthermore, in conducting the Donor Capacity & Inclination Study,Family Shelter Service is now able to accomplish the following:

  • Board and committee members and Family Shelter Service staff can gain valuable insight in developing cultivation strategies for individuals during prospect rating and assessment meetings
  • A more effective relationship mapping process for top prospects and volunteer leaders can be shaped
  • Fundraising and friend-raising events can be targeted by age, geography, and area(s) of funding interest and affinity
  • Financial forecasting and goal-setting can be enhanced with stronger knowledge of donor capabilities and inclination (often donors are “under-asked”)
  • Data generated in-house can be integrated with data acquired through the Study to develop a more accurate understanding of donors and their respective profiles
  • Donors who profile as likely and able to make a planned gift can be accurately identified and planned giving announcements and mailings can be targeted to age-appropriate individuals
  • The executive director and fundraising staff can be supplied with information to target constituents with specific communication and messages
  • Donor trends can be better analyzed to establish base level gift amounts necessary to increase the annual request amount for renewal gifts and to convert special event attendees

The donor contact information and accompanying giving histories that were provided by the Family Shelter Service were analyzed in combination with externally derived financial and biographical information.David Schreier Associates used donor wealth information and giving history patterns to build predictive models, which estimate gift capacity and propensity to give.

Ultimately, by knowing both the gift capacity and propensity of an individual donor the organization’s staff and volunteers are able to:

1)Set more realistic gift targets;

2)Develop appropriate cultivation strategies;

3)More precisely fulfill the process of goal-setting for its fundraising campaigns

Findings summary

Key Finding

Most of FSS’ top wealth donors have had a moderate level of loyalty and have generally madesmaller gifts, relative to their capacity[JMB1]. Thus, it is likely that FSS has likely been under-asking some donors for gifts. Overall, top donor prospects warrant stronger focus on individual cultivation activities.

Core Findings

Donor Wealth - FSS donor households have a significantly high proportion of wealth (relative to 250,000,000 other Americans sampled).

  • 35.3% (950) of FSS donor households fall into the top 2% of consumer households
  • 61.5% (1,650) of FSS donor households fall into the top 3–6%
  • Only 3.2% of FSS donor households are in lower tiers

Thus, FSS has current or recent donors whose wealth indicates the capacity to make “transformative” gifts.

Hidden Wealth - One aspect of this Study is determining how much “hidden wealth” exists among donors, meaning, how much theoretical increased gift potential is present. Just among the top 15 categories for FSS, there is an estimated $4,000,000 + in gift potential[JMB2].

Capital Campaign Potential - At some point, FSS may undertake a capital campaign, and will not only need to know the capacity of donors to donate, but also, at what level should campaign goals be set. The Study shows that there is just over $9,000,000 in estimated campaign potential among FSS donors (using a moderately conservative formula to estimate.)

Income - The average (mean) household income is just over $136,000, based primarily on salary.

Property - The vast majority of FSS donors are homeowners, as opposed to be renters, and about 14% own a second property (typically, a vacation home. The vast majority of donors own homes worth $200,000 or more, with about 23% owning homes with values greater than $500,000.100 FSS donors own homes worth $1 million or more.

Household Lifestyle - The category with the largest number of FSS donors (353) is Golden Years, which represents active and elderly seniors, who are mostly married. They are high-ticket mail order multi-buyers, donate to health-related and politically conservative causes. This cluster invests in pension funds and state and municipal bonds. Certainly, the group represents planned giving targets.

In the Country Clubs segment are 37 donors who represent the most affluent retired population segment. They have accumulated assets in CDs, annuities, tax-exempt funds and expensive homes. These donors also are planned giving prospects but have the capacity (do they have the inclination?) to make major gifts, as well.

Nearly 350 FSS donors are in the top two categories of wealth (in the nation)—Châteaux and Van Goghs and CEO & Lexus to Go. 787 donors (approximately 30%) of FSS donors are in the top six wealth categories, out of a total of 46 categories. With respect to their potential to make large gifts, these donors should be assessed for loyalty to FSS, in terms of developing a list of cultivation priorities. Finding top donors who are already loyal to FSS creates an opportunity to identify “champions” who might model their philanthropic support – e.g., by giving testimonials, speaking at events, hosting their own events.

Planned Giving Prospects - Based upon a number of factors including age 60+ and high home values, we have created a list (see below) of top planned giving prospects. With respect to targeted mailings, cultivation events and donor engagement strategies, this information can help orient board and staff leadership toward likely top donors. The table goes further down the wealth chain because we know that older adults may be property rich but cash poor, e.g, they may be better positioned for future gifts than current. For these planned giving prospects, home value estimates were $500,000 or greater.

Wealth vs. Gifts - Highest wealth and highest income does not necessarily equal highest average gift. For example, there are several categories that are further down the wealth scale but whose donors make relatively larger annual gifts (Tweeded Professionals, From Old Countries, High Ideals). This suggests that more should be explored as to why the three categories just cited have donors making comparatively larger gifts. What cultivation and engagement traits might they share? Additionally, there is a noticeable drop off in average gift size from the top wealth category to the second, before gift levels begin to rise again. Based upon who the donors in the second category are, and the lifestyle traits associated with them, what can FSS discern about why the drop off?

Investment Savvy - Generally, close to two-thirds of FSS donors are likely to own financial investments, including annuities, securities, stocks, and life insurance. This level of comfort and familiarity with investment and retirement-related vehicles indicates an informed and open constituency with respect to planned giving opportunities. Both in terms of planned giving messaging, the particular types of gift vehicles made available, and regarding personal/family decisions on the right type of gift, this is a savvy and generally better-informed donor group

Loyalty[JMB3]– Donor loyalty drops off significantly after initial gifts in year one. There is a much lesser drop off after two more years of giving. Therefore, it is worth focusing donor cultivation efforts on individuals who make their first gift. What ways can FSS reach out to and engage these donors to strengthen the initial connection that led to gift?

Age–The vast majority of donors are over age 40, generally, with the mean age of 59. What can FSS do to orient the resource development program so that it aligns most readily with these age demographics? How should it shape messages, events, and activities to mesh most effectively with the lifestyles and needs of its constituents?

Tech Savvy – FFS’ donor base appears comfortable using technology for business and pleasure. Continuing trends in philanthropy suggest greater and greater reliance on technology for nonprofits reaching donors and for donors engaging with organizations. With respect to communication methods, donation opportunities and volunteer engagement, FSS can increasingly test electronic involving techniques with constituents.

Political Leanings - Often clearly divergent political leanings among donors signals an opportunity to hone and craft messages about organization goals and services that “strike the right chord.” While we can see that over half of FSS’ donor base is likely “liberal,” we cannot extrapolate information as clearly about the other half. That said, finding its “liberal” voice with current and prospective donors seems a sound approach to take.

Leisure - degree wealthier donors might engage in activities generally associated with a lifestyle that allows leisure. Large enough percentages of the FSS donors participate in key activities that could influence fundraising and cultivation [JMB4]events.

wealth indicators biographical attributes

In order to address the research questions, and to assist Family Shelter Service in planning and executing future solicitations, and in shaping events and communications, this Study utilized a range of key wealth indicator variables and biographical attributes and integrated them with the Family Shelter Service donor database.A particular orientation taken, in choosing attributes and indicators, was toward major donor prospect development (e.g., individuals likely to have interests in sailing, gourmet food, are well educated and display experience with stocks and annuities).

The following indicators and attributes were used in the Study:

  • Age Indicator of Children – indicates presence of children in the household
  • Age of Household Member–head of household actual age
  • Boating – General interest in boating/sailing via holding license
  • Consumer Cluster Spectrum – categorizes households based on similar attitudes, buying patterns and behaviors across 50+ groupings
  • Date of Birth – head of household
  • Ethnic Coding–up to 158 different ethnicities
  • Household Income[JMB5]– monthly household income
  • Gender code – for head of household
  • Gourmet Food & Wine Interest – based on buying behavior
  • Heavy Internet User – looks at online use for banking, purchases, email, social networking, investing
  • Home Owner / Renter – indicates whether owning or renting
  • Home Value Code – market value
  • Income - household income
  • Marital Status – head of household
  • Occupation Code – for male and female in household
  • Second Property Indicator–vacation homes
  • Annuities–values at $10K or greater
  • Conservative – likelihood that household is conservative
  • High Value Security Investor – valued at $150K or greater
  • High Value Stock Investor – valued at $100K or greater
  • Higher Education – bachelor degree or higher
  • Liberal – likelihood that household is liberal
  • Life Insurance – presence of life insurance policy
  • Mobile Internet – mobile internet usage
  • Online Bill Payment–pays bills online
  • Opinion Leaders – household has written/spoken opinion leader
  • Vacation Expense – annual vacation expenses
  • WealthFinder – ranking of household wealth by 20 categories

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David Schreier Associates, LLCFamily Shelter Service

TAB A

David Schreier Associates, LLCFamily Shelter Service

Donor Profile Overview

The following summarizes information about individuals and households that have donated to Family Shelter Service (FSS) in fiscal years 2010–2014. The purpose of this report is to provide Family Shelter Service with an understanding of recent giving trends and characteristics of donor segments.

Donation Trends

A total of 2,714 individuals and households were included in the data set from FSS. The following charts summarize donation trends over the most recent 5 years based on individual gifts.

Chart 1: Total Donations(Amounts) 2010–2014

Chart 2: Total Donors(Numbers) 2010–2014

The total number of donors increased between 2010 and 2014. Although donations steadily increased from 2010 to 2013, they dropped in 2014, when the total number of donors was at its peak. The following table displays the average (mean) donation per year, showing that average donations were at their highest in 2013, mirroring the total donations peak, and lowest in 2010, mirroring the total donations trough.