Helen Brown Group

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Demystifying the Forbes 400 and the Bloomberg Billionaires Index

By: Chelsea Morin, Consultant

Chelsea Morin

Chelsea Morin

Have you ever wondered about the methodologies behind the net worth estimates that some major financial and business publications report? What information do they use to come to these numbers and how accurate can it possibly be? Are the details they use for their estimates publicly available, or are they sitting down with the billionaires they are reporting on to get inside information?

For this post, we will focus on the methodologies of the Forbes 400 and the Bloomberg Billionaires Index, take a look at their differences, and break down how these estimates can inform our work in prospect development.

Let’s start with Forbes

Over at Forbes, they publish a ranked list of the 400 wealthiest Americans, known as the Forbes 400, once a year. It reflects a snapshot of each individual’s wealth on one particular date but also reports real time net worth updates for the wealthiest people in the world.

The first step the Forbes team takes is meeting with billionaires being researched for inclusion on the list or speaking with them virtually or over the phone whenever possible. They will also interview associates including employees, asset managers, and attorneys. Sometimes, they even reach out to rivals and peers to collect more information!

Some billionaires will provide documentation to support their estimated ranking, but others won’t. In either case, documents from a variety of sources including the Securities and Exchange Commission (SEC), court and probate records, news articles, and more are researched to get a fuller view of an individual’s assets. All assets are considered including real estate, art and car collections, yachts and planes, and other unique holdings. Stakes in both public and private companies are considered. For public companies, SEC insider filings help to provide a clearer view of holdings.

What about private companies?

For private companies, Forbes compares estimates of the company’s revenue with price-to-sales, price-to-earnings, or other relevant ratios for similar public companies and then applies a 10% liquidity discount. The liquidity discount accounts for the difficulty an individual might face when trying to sell a private asset quickly for a fair price. In the case of companies backed by venture funding, several factors may affect the estimated value of the company including how shares are being traded on secondary markets, how institutional investors account for their shares in the company, and the overall health of the company’s sector.

So, what’s not included?

Forbes subtracts any known debts from net worth estimates and excludes any funds donated to charitable foundations or donor-advised funds. Family fortunes dispersed amongst many family members are generally not included either. In these cases, the wealth belonging to the living founder of a fortune and their immediate family will be listed with the addition of “& family.” Occasionally, wealth held by an immediate family member of an heir will be included if relevant.

How Bloomberg Differs

The Bloomberg Billionaires Index tracks the world’s 500 richest people and updates daily after New York markets close and public company stakes are valued using the latest closing price.

Private company valuations rely on peer comparisons based on industry and size, using price-to-earnings or EV/EBITDA (Enterprise Value divided by Earnings Before Interest, Taxes, Depreciation, and Amortization). If direct debt figures aren’t available, peer net debt-to-EBITDA ratios are used instead. Values adjust daily with peer or index movement. Most private firms get a 5% liquidity discount; a country risk discount is added when assets are concentrated in riskier markets, based on S&P sovereign ratings.

Hedge funds are valued using average market cap-to-AUM (assets under management) ratios of similar public funds. Personal capital mixed with outside money isn’t counted. AUM is pulled from SEC Form ADV filings, and returns are considered if reported. A 25% “key man” discount applies when performance depends on one person.

Realized dividends and proceeds from share sales are also included. Taxes are deducted at the highest rate for the person’s country unless evidence supports a lower one.

Although assets may often be transferred to a billionaire’s family members, it is the position of Bloomberg News that this does not change who controls the fortune. As a result, Bloomberg credits family fortunes to the founders or head family members who have the most direct control over the assets. In cases where the stakes of individual adult family members can be verified and those family members are actively involved in the family business, the value of the stake is credited to the individual.

All billionaires or their representatives can respond to questions about the net worth calculation, including the balance of their assets and liabilities.

What’s not included in the Bloomberg Billionaires Index calculations?

For one, the ownership of closely held assets is not included if it cannot be verified. Additionally, if a billionaire has pledged shares held in a public company as collateral, the value of those shares is not included in their estimated net worth. Fee income for hedge fund businesses is not included because it cannot be verified across the board. And finally, no assumptions are made about personal debt.

A confidence rating between one and five stars is also given to each profile. A one-star rating is used when an individual’s fortune is primarily made up of closely held assets and several assumptions are required to calculate metrics such as company ownership and personal assets. A five-star rating means that most of the individual’s fortune is composed of publicly traded assets or can otherwise be verified through reliable sources, including the billionaire themselves or their representatives.

How to calculate an estimated net worth without the help of a billionaire…

What do you do when you can’t reach out to a billionaire or their representatives to confirm assets? Or when you don’t have the staff to do as much thorough research as a major publication such as Forbes or Bloomberg? Here at the Helen Brown Group if a net worth from one of these reputable publications isn’t available, we generally rely on the total amount of visible assets an individual holds to determine what their giving capacity may be.

What is the difference between estimated net worth and total visible assets? Simply put, an individual’s net worth is the value of all their assets minus all their liabilities. A helpful tool we sometimes use to determine an estimated net worth for high-net-worth individuals is a calculation from the Capgemini/Merrill Lynch World Wealth Report which provides evidence that real estate comprises approximately 19% of their total assets. Forbes or Bloomberg may get close to estimating an accurate net worth for some of the wealthiest individuals in the world, but it’s not very practical, or really even possible, to do this in our daily work. Often, it is not feasible to know exactly what an individual’s private assets, debts, or other liabilities might be.

Instead, let’s just consider total visible assets when calculating a giving capacity. In other words, what is the total of an individual’s assets that we can determine based on public records and searches? This will include real estate holdings and the stockholdings and compensation of public company insiders. When looking at assets for the purpose of charitable giving, it can also include assets held by a foundation if it is solely controlled by the individual. If you’d like, you can try to estimate someone’s compensation based on what information is available about compensation for similar roles or in similar industries. You can also attempt to estimate what an individual’s privately held company might be worth by comparing it to similar public companies or past sales of private companies. Sometimes, you may even get lucky and find information about someone’s private art collection, boats, or planes that they own!

Once you have gathered all the public asset information available, a common calculation to determine giving capacity is to use 5% of visible assets. Always remember though, that this capacity can be adjusted based on factors such as previous giving history.

It was insightful to learn more about what factors are (and aren’t) included in Forbes’ and Bloomberg’s calculations and compare them to my own work. I hope this information is useful for you and your organization as well!

Sources:

https://www.forbes.com/sites/chasewithorn/2024/10/01/2024-forbes-400-methodology-how-we-crunch-the-numbers/

https://www.bloomberg.com/billionaires/methodology/

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Meet the parents

Although the holiday season is a little way off (wait, no, Thanksgiving is only three weeks away!!) it’s never too early for those of you in academic institutions to start thinking about Early Decision/Early Admission students and the parents that come with them. In April, parent research kicks off in earnest in every academic prospect research department, and having a plan (and a budget) now will be something your future self will thank you for. This week’s article by my colleague, Mandi Matz, captures lots to think about – and prepare for – in your parent research.  ~Helen

Mandi Matz

     Mandi Matz

With the holidays on the horizon and many of us thinking about our families near and far, I thought it might be a nice time to talk about parents. Specifically ideas for researching them if you work at a school, college or university or other organization where parents are or could be donors.

I’ve spent several years of my career working at and with educational institutions where parents are a key, and often untapped – or certainly untapped to their full potential – constituency.  Although researching parents can be overwhelming and time consuming, it also can be one of the most valuable projects you complete for your institution.

Here are some tips and tricks for researching parents that I’ve learned along the way. Obviously, many of them apply to prospect research in general.  But if you’re responsible for researching parents at your organization, I hope they will be helpful to you specifically.

Wealth screening

The way you conduct your parent research will depend on the time and resources you have available. If you’re a solo researcher in a small shop, a wealth screening from an outside vendor may be the perfect solution as it can give you a quick way to determine the parents at the top of your pool. There is no lack of vendors to choose from – Kindsight, Donorspace, Donorsearch and ResearchPoint to name a few.  While I’m not advocating for any of these products in particular, you may already have access to at least one of them, so use what’s at your disposal.

As a corollary, do your best to understand the screening product you’re using so that you can verify the results most effectively and efficiently, which is especially critical if you have limited time. Recently, we at HBG met with a representative from one of the products we use to have a refresher course on some of its features. Although I’ve used this product nearly every day of my professional life for years, it was eye opening to me how much I learned from the session. It was a good reminder that resources have features you may not be using, and they are always coming out with enhancements. If you don’t have time for a meeting with a product representative, many resources have online tutorials and trainings about their latest and greatest features. Fully understanding your screening tool can also help you understand the results and interpret them for your gift officers.

If you use an outside vendor to screen your parents and you don’t have a lot of – or any – time to verify the results, don’t worry. You’re giving your gift officers new prospects, which likely makes them happy, and anything you can provide is better than nothing. Your colleagues can always ask for more research later if they need it. In many cases, you just need to give them enough to get them started. Most vendors will provide a summary of the screening that may be fine to start with if you’re short on time. Sometimes good enough is good enough.

Before I worked with the Helen Brown Group, I managed the research department at a small liberal arts college. Our main project every year was to screen the parents of the incoming class, which we began in earnest in May and finished in July.  I had one researcher dedicated to this project full time, and they did the research manually.  In this scenario, we provided medium-depth research into the new parents’ education, career, real estate, giving to other organizations (especially educational institutions), affiliations and wealth indicators.

Planning, planning, planning

While this project made for a busy time for my team during the long, hot summer, one of the most important things I learned from it is the importance of planning. I recommend that to the extent you can, work with the stakeholders involved in the project – including your Admissions office, your vice president and your gift officers – to map out the project as much as you can before it begins.

Of course, your ability to do this will depend, again, on the time and resources you have available, as well as your organizational culture. But if you can take the initiative and plan ahead, it can make an overwhelming project a little less so. At the liberal arts college, I made a point to arrange a meeting with Admissions soon after the winter break to discuss the timelines for the project, when my team could anticipate getting data and what that data would look like. Those timelines didn’t always hold, but having an open line of communication and a general plan was always helpful.

After I met with Admissions, I arranged a meeting with my vice president, gift officers and our events department to discuss their timeline and expectations and how the results my team found would be used. The college hosted an annual parent dinner that coincided with new students moving in.  Thus, the point of the project was to determine which parents should be invited to that event. Knowing from our events team when invitations needed to be mailed helped us determine our ultimate deadline.

But parent research need not revolve around an event. At your institution, the point of the project may be just to get parents assigned into portfolios so that your gift officers can begin trying to engage them.  Either way, this information is important to know so you can adjust the project’s timelines and deliverables accordingly.

Researching – and advising – with strategy

Not every parent will be unknown to you as you may find some who have a second or even third child coming to your institution. In that case, don’t forget to look in your database, where you may find valuable information – including information that can help you provide context and, sometimes, a reality check – about certain parents.

 

For example, at the liberal arts college we had a father who was a member of a famous band.  The band was long broken up, but this parent was still on the radar.  With a second student coming to our institution, interest in him was renewed. In our research, we made sure to include that although he certainly was a top parent in terms of wealth and capacity, he was not someone we recommended spending time pursuing. He had never given, never responded to any outreach and never attended any events. Remember, your gift officers and other colleagues rely on you not just for information, but also for the analysis and expertise you can provide.

Finally, think about the big picture.  Whether you screened your parents through a vendor or manually, did you notice any trends or patterns in the results?

  • Are the families from particular states or geographic areas? If so – and your institution is such that your gift officers are assigned to certain regions – should that regional alignment be re-evaluated?
  • Is there a commonality in the parents’ careers? If so, is there a further screening you can do based on occupations or companies where your parents work?
  • Who are the parents whom, while they may not be major gift prospects, could be ideal for your annual fund?
  • Based on the results of your screening, are there other segments of your constituency that you want to examine further? For one client I worked with at HBG, the result of their new parent screening led them to then do additional screenings of legacy families and grandparents. Those constituencies were later targeted with specific mailings that resulted in some new and nice gifts.

When I worked at the liberal arts college, the new parent project, although it was a lot of work for my team and me, was my favorite project of the year. I always thought of it as Christmas in July because at the end of the project, we were giving our gift officers the “gift” of new prospects. What could be better as prospect researchers? Let the holiday season begin!

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Crafting a Meaningful Donor Profile: Connect with the Donor Behind the Dollars

by: Susan Barclay, Consultant

Susan Barclay

Profiles are the bread and butter of the prospect research world. We write them day in and day out. But, have you ever thought about what makes a good profile go from good to, well, great?

Say you’re like my colleague Karla Davis and you’ve been asked to research someone like This Guy. Your fundraiser has already had the initial visit with This Guy and is anxious to learn more, counting the moments until your profile is in their hands (or inbox). A good profile includes all the usual information, but what else can make it great?

A great prospect profile goes beyond the numbers; it delves into the prospect’s interests and values and presents a picture of the donor behind the dollars. It answers questions.

Let’s take a look at those different categories, shall we?

 

What’s in a Name?

First things first: always include the essential details. This includes the donor’s name, contact info, and affiliations.

But don’t stop there!

Make it a point to understand who they are beyond these basics:

  • What’s their background?
  • Who are their family members?
  • What led them to philanthropy?
  • What compels them to give?

By grounding your profile in personal details, you set the stage for a deeper connection.

Hint: Two of my favorite sources are LinkedIn (be sure to follow your organization’s social media policy) and Lexis Nexis for Development Professionals.

 

Uncover Their Philanthropic Interests

Let’s dig into what truly drives your donor. Research their giving history to spot patterns—this is where you can find insights that aren’t just about the size of their gifts but also about their values and priorities.

  • What causes are they passionate about?
  • Do you see a consistent history of giving to particular organizations, or are they one-time givers?
  • What are their most significant gifts?
  • Do you see any endowments, major gifts, multi-year gifts, or scholarships?
  • Are they involved with any organizations as a member of a board or as a trustee?
  • Do they serve as a volunteer in other capacities?
  • Do they support those organizations?
  • Have you run across any articles mentioning their involvement with non-profit organizations?

Hint: One of the first sites I always go to when looking for board involvement is ProPublica.

 

Analyze Their Giving Capacity

Look for wealth indicators—like properties or business ownership—but also consider their lifestyle.

  • Do they have an art collection, watercraft, horses, car collection?
  • What about public company securities?
  • Are there any assets held under their spouse/partner’s name or under an LLC?
  • Do you see evidence of a DAF, family foundation, or a family office?

Hint: DAFinitive® is a great tool to help you search for DAFs. It contains over 90,000 funds from over 700 DAF sponsors, with more being added every week!

 

Personal Insights Matter

This is where you really start to connect with the person behind the donations.

  • Can you find any personal anecdotes?
  • How about information on their hobbies, or passions?
  • Has the donor been featured in a local magazine or spoken at events?

Quotes or stories can provide a glimpse into what matters most to them. Occasionally a tiny nugget of information mentioned in an article about your donor can reveal a world of information you never expected.

Hint: My favorite resources here are to check out local publications and newspapers for your prospect’s hometown, as well as their alumni magazine and any trade journals within their business industry.

 

It’s Alive!

Finally, remember that donor profiles should evolve. Update them regularly with new information or changes in the donor’s status.

A dynamic profile ensures you always have the most relevant information at your fingertips, keeping the focus on the person rather than just the data.

Creating a detailed donor profile doesn’t need to be overwhelming or complicated. By keeping it simple, answering the immediate questions and focusing on the individual behind the donations, you can craft profiles that truly resonate.

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Ode to the Obituary – A Prospect Research Perspective

by: Maura Monley Baron, Consultant

Maura Monley Baron

Maura Monley Baron

From the beginning of my career as a researcher I have always been drawn to obituaries. Not only because they provide information essential to our work, but I also love the stories they tell and the generational history that can be learned from them.

I see obits as a window into the lives of individuals and families and the people, places, and things that they care about. Last December I worked with my family to write an obituary for a beloved family member. As a researcher, my first instinct was to be cautious with the amount of personal information shared because I know how researchers use this information, and I knew it could be used for identity theft.

However, as we started writing, I found myself letting go of my concerns and wanting to share because I was proud of my family member, and I wanted to tell their story. This experience advanced my appreciation for obituaries and inspired this blog post.

A Brief History of Obituaries

As I started working on this blog my first step was to do a little research about obituaries. In doing so I learned that obituaries have evolved from simple death notices to detailed narratives that tell the story of a person’s life.

The earliest known obituaries date back to ancient Rome. With the invention of the printing press, the newspaper industry boomed, and the tradition of publishing death notices continued. During the American Civil War newspapers published death notices for soldiers, which included biographical details. This practice helped communities keep track of the living and the dead, making obituaries a vital part of the public record.

By the late 20th century, obituaries had become more personal, including family stories and photographs. Today, obituaries are often published online, allowing for even more detailed memorials. Funeral home websites, and the platforms they utilize provide space for families to share photos, stories, and memories, creating a digital tribute and a valuable source of information for our research.

Sometimes you cannot find an obituary – which is frustrating – however my research informed me that obituaries are not a legal requirement, and certain religions and cultures may choose not to publish them for various reasons. Some families may opt not to publish an obituary due to privacy concerns, financial constraints (most newspapers charge by the word to print obituaries), or because the deceased requested not to have one.

Newspaper archives are the best place to find older obituaries and a subscription to Newspapers.com is helpful. Other resources include Legacy, Genealogy Bank, Family Search, Dignity Memorial, and Find a Grave.

Tips for Using Obituaries in your Research

The Basics

To be clear I do understand that a deceased person is not a good prospect. However, the obituary can confirm key information about a person’s life, including birth date and place, education, career, where they lived, and other life events. This gives you an overview of an individual and is useful for verifying information about surviving family members.

Generational Wealth

A “good” obituary can be one of your most valuable tools when working on a complex prospect with generational wealth. Most obituaries list surviving relatives, including spouses, children, siblings, and sometimes even grandchildren or great-grandchildren. This information can help you build family trees and identify connections between different branches of a family. I often find myself revisiting an obituary as I move through my research, and I like to keep the obit open in my browser for reference.

From the 1870s to the 1950s, in conjunction with the publication of an obituary was the practice of publishing details about a deceased person’s will and estate in newspapers. While this seems like an incredible invasion of privacy, I learned that during this period, newspapers were a primary source of information for the public, and legal notices, including probate notices, were often published as part of the public record. This was how surviving family members were notified of the contents of a will and provided a means for distant relatives to discover information about an inheritance (or a missed one). These articles, though not an obituary, will provide detailed information about how much family members inherited, including cash, securities, and real estate.

Democrat and Chronicle, Rochester, NY, February 12, 1944

So Much Can Be Learned from a Name

A middle name or even a middle initial can be very helpful for confirming a prospect with a common name. An obituary can also confirm where a prospect lives. By finding these additional details it will be much easier to confirm your prospect when you utilize research tools like LNDP, Kindsight, or ResearchPoint. I also look for a relative of my prospect with a less common name and search for that person on social media which can lead to more information about the family and the ability to confirm relationships.

Obituaries can be particularly helpful in identifying women’s maiden names. Often, I find an indication of generational wealth from first or middle names which identify a last name of a previous generation.

    Baltimore Sun, May 23, 1973

Finding Clues for Further Research

Obituaries detail community affiliations, such as religious organizations, professional associations, or social clubs. Sometimes they include information about where a prospect’s family has lived, including second homes, that may still be in the family. The name of a business found in an obituary can lead to the discovery of a current company and a history of stock ownership by the family. Following these leads often brings you to additional records and sources of information.

 

Star Tribune, Minneapolis, Minnesota, May 6, 1996

 

Sacramento Bee, April 15, 1952

Philanthropy

Obituaries also indicate organizations a person was affiliated with as an alum, board member, or volunteer. This may help you confirm gifts from your prospect to these organizations. Information about where a family directs memorial donations can confirm a family’s philanthropic interests or reveal significant donations recognized through naming opportunities. Sometimes a specific donor advised fund name is provided as well.

Democrat and Chronicle, Rochester, NY, February 1, 1995

In the End….

When using obituaries for research, it is important to remember that the information provided may not always be 100% accurate, as it is often provided by family members. Cross-referencing with other sources is always necessary for verification.

As with many things in prospect research the obituary will serve as a piece of a larger puzzle. A detail from an obituary may lead you down the road to finding information about your prospect that influences your rating or creates a connection to your organization. I feel most satisfied with my work when I can provide my client with a strong prospect in terms of capacity but also when I feel I have found evidence of a connection between the prospect and their family and the work of the organization, and an obituary often helps with both.

Obituaries have changed significantly from their simple beginnings to the detailed digital memorials of today. They continue to serve not only as a public record of death but also as a celebration of life.

It will be interesting to see what the future holds for obituaries. Like all things their evolution will be influenced by the complex digital world we live in. As a human and a prospect researcher I hope they do not become obsolete as they are important to the process of grieving and provide an opportunity to tell the story of a life well lived while also being an indispensable resource.

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Private Member Clubs

The Cosmos Club, Washington, DC

Traveling by air in recent years has become a slog that no one enjoys. For frequent travelers, the appeal of an airport lounge makes all of the inconveniences slightly more bearable. They’ve got free food and drinks, a place to plug in your laptop, and all the wifi your devices need. There are showers, nap rooms, and gathering spots if you need to hold an impromptu meeting. What’s not to like?

Maybe the overcrowding and the decrease in exclusivity, for two. Credit cards and add-on ticket fees have allowed greater numbers of folks access to airport lounges, making them less pleasant than the club atmosphere of old. But it’s given more middle-to-upper income folks a taste of how the 1% lives, and that is fueling another trend: the rise in private member clubs (PMCs) open to a wider clientele.

For a certain tier of wealth, PMCs have always provided an oasis of calm with food, drinks, and social opportunities. Instead of hanging out with a host of harried nine-to-fivers, there’s just you and others in your profession, or neighborhood, or school affiliation, or sport/leisure activity, (or gender, or race, or other exclusivities). It’s quiet, and there are armchairs and fires.

Or at least that’s how it used to be. Now, if you’re looking for a club where you can relax in a hyperbaric oxygen chamber and chat while getting a vitamin C IV drip, or where you can collaborate with other artists, or discuss the relationship of physics and stock derivatives with other like-minded souls, there’s a place for you.

Some PMCs feature a learning element, with lectures and guest speakers and seminars around social change. Others provide space for golfing/racing/yachting, supper clubs and charity events. There’s really something for everyone and, although there are still clubs with stratospheric membership and annual fees, some clubs provide limited low-cost or even free membership based on the values (or personality, or artistry) an individual brings to the club.

The recent pandemic had everything to do with the rapid growth in clubs. New York Times writer Anna Kodé visited seven clubs in the course of her research to learn more about the proliferation of PMCs. She wrote: “These clubs have risen by filling two voids left by the pandemic: the loss of “third places,” or locations distinct from work and home that can foster a sense of community, and the abundance of empty office space amid a new work-from-home culture.”

Both membership in clubs – and clubs themselves – are mushrooming. Over 60 percent of clubs in the US saw growth in membership between 2021 and 2022, according to GGA Partners, a consulting firm for private clubs. Real estate research giant KnightFrank writes that “more PMCs have opened in the past four years than in the three decades following the 1985 opening of London’s iconic Groucho Club.”

And it’s not just in the cities. What piqued my interest to research and write this article in the first place was Knight Frank’s research report showing that that the opening of private member clubs well outside of London is impacting real estate prices and days-to-close by multiples in those areas.

For example: the Cotswolds is an area northwest-ish of Oxford in England. It’s a popular second-home spot for Londoners looking for country air and scenery. Knight Frank reports that demand for homes within a 15-minute drive of the exclusive club Soho Farmhouse (tagline: “A home for the world’s creatives to come together and belong”) was more than twice the rest of the area.

Typically, 12% of buyers registering in the Cotswolds are from outside the UK, but that rises to 26% within the all-important 15-minute drive to Soho Farmhouse. Not only that, but houses within a mile of these clubs sell faster (by 2.5 weeks) compared to similar properties five miles further away.” ~Knight Frank, A Guide to Private Members’ Clubs.

Can it be that proximity to a social club also elevates the price of a property? That’s something worth considering in your research as well. According to the Knight Frank report, “the impact on property values can be significant when the clubs come with luxury facilities.” If you’re wondering why prices are popping upwards in a particular area that seemed steady before, take a look and see if a membership club has moved into the neighborhood. (Or, if your donor/prospect lives in an area where a club is about to move in, watch for an uptick in their property value).

For now, let’s take a look at annual membership for the top 5 “most exclusive private clubs in America” in 2019 according to media and consulting company Private Club Marketing (the full list of the top 11 is  below in the section for further reading).

  1. The Union Club, New York. Initiation fee: $50,000. Annual dues: $10,000
  2. Cosmos Club, Washington, D.C. Initiation fee: $50,000. Annual dues: $10,000
  3. The California Club, Los Angeles. Initiation fee: $25,000. Annual dues: $5,000
  4. Union League of Philadelphia. Initiation fee: $20,000. Annual dues: $4,000
  5. The University Club of Washington, D.C. Initiation fee: $25,000. Annual dues: $5,000

FURTHER READING

11 Most Exclusive Private Clubs in America. Private Club Marketing. (2019)

The Future of Private Clubs: Trends Shaping the Next Decade, June 2024. Private Club Marketing.

A Guide to Private Members’ Clubs. Knight Frank Research. 2024.

A Look Inside New York’s Most Exclusive Social Clubs, by Amy Rosner and Chandler Presson. Gotham. May 21, 2024.

Members-Only Mania: Why Are More Private Clubs Popping Up in New York? by Anna Kodé. New York Times. March 29, 2024.

The Most Exclusive Private Members Clubs in New York by Sasha Huang. PSC. Sep 2, 2023

Top 50 City Clubs 2023-24. Platinum Clubs of America.

 

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365 Days, Six Continents, and 26 Countries

This week the blog belongs to Angie Herrington, who is one of the most resourceful research professionals I know. “Resourceful” in two ways – because not only does Angie always have a great stack of resources in her back pocket, she is the undisputed magnet on our whole team for the most complicated/obscure prospect research assignments, and that has made her very canny. We’re all very lucky to have Angie sharing her resources this week on her new favorite topic – international research. ~Helen

          Angie Herrington

My supervisor: “We have a new client you’ll be working with, and they want to focus only on international research.”

Me: …

Me: …

Me: Sounds great!

The past year has been a travelogue through six continents (sorry Antarctica) and 26 countries. I began with a severe case of imposter syndrome but within a few weeks realized I loved doing international research! In the past my initial reaction was always “where do I even start” or “I’m never going to find anything.” I now look forward to the challenge and creative ways to approach finding actual substantive information to help my client.

The thing about international research is you can’t rely on databases to do the work for you. Channel your prospect research ancestors who looked at primary sources like phone directories and business registries. You have to jump off the modern and well-paved path that’s become a push of a button with data aggregators and start putting together clues to build a picture. Even if you only have a name and a city, the odds are still in your favor you can find something helpful.

Corporate Directories

Corporate directories can be the key to your success when you don’t have information from your database or LinkedIn to rely on for biographical information.

First search to see if the country has a government corporate registry database similar to the U.S.’s individual Secretary of State offices. Examples include the U.K.’s Companies House, the Australian Business Register, or Switzerland’s Central Business Name Index.

There are several sites with varying levels of information searchable by an entity or company’s name. Although some require a subscription, most provide basic details for free. Be sure to use more than one source to verify its accuracy.

  • B2BHint – search over 100 jurisdictions
  • Dato Capital – search companies and officers for 14 countries
  • Infobel – covers 73 countries from 300 telephone subscribers and 270 million businesses
  • Infoclipper – search companies in over 200 countries
  • Kompass – search companies in 70 countries
  • North Data – search companies and officers for 18 countries
  • OpenCorporates – search companies and officers in over 140 jurisdictions
  • OCCRP ID (The Organized Crime and Corruption Reporting Project, a partner with the ICIJ) – search 181 countries for links to corporate and director databases, stock exchanges, land, legal sites, and more

By using a combination of these sources, you might find incorporation and dissolution dates, addresses, directors, and business descriptions. Look for patterns:

  • Names or addresses connected to other companies or people
  • An address might be their residence
  • Family members who are also part of the company
  • Several sites let you search by a director’s name, and you’ll find current or past employers or board affiliations

Real Estate

Even if you don’t have an exact address, you can still provide an estimate based on the general area, neighborhood, city, or province they might live. Start your search with the full address and based on what you find work backwards by removing the house number, street name, and so on until you can get a sense of the price range, reputation for highly sought after areas, and other indicators. Don’t expect to find exact home values but you can give estimated ranges which are enough to determine wealth, lifestyle, and an initial estimated capacity.

Examples include:

  • Switzerland is one of my favorite countries to research because of its easy to find real estate, even down to the exact address. I’ve had a lot of success with ch, a phone and address directory to find or verify a person’s most up to date home address or phone number. RealAdvisor lets you search homes, rentals, and provides the median value for homes in a postal code. Another good one is immobilier.ch.
  • Idealista Spain, Idealista Italy, and Idealista Portugal are frequently compared to Zillow.
  • Area guides like the UAE’s Bayut also provide details about districts, neighborhoods, and communities including price ranges, amenities, and other valuable information to consider. Area guides and expat discussion boards give some of the best information about where your prospect lives.
  • It’s important to understand address formats. For example, knowing which of the 12 administrative districts in Taipei or the postal code in Bangladesh can help you narrow down neighborhoods and districts to find a range of sales prices.

Bits and Bobs

  • Bookmark the HBG Prospect Research Links Library for more resources, including due diligence, salary and compensation, and global privacy laws.
  • It’s possible the person you’re researching has lived or attended school in the U.S. If you have a subscription to Lexis Nexis for Development Professionals search for current or previously owned homes, family connections, professional licenses, and more. Always use the Advanced Search feature for potential business connections and contact information, biographical details, articles, and due diligence checks for red flags.
  • If you have a subscription to iWave PRO search under the individual’s name AND company. Although the charitable donation amount is shown in USD, double check the provided donor report source or search for one externally. The gift amount from the annual report is usually in the home country’s currency, and you’ll need to convert it.
  • Remember naming conventions can vary and will affect your search results
  • Research the cost of living, especially for putting real estate and compensation in context
  • Search expat websites, travel websites, and similar resources to find the insider information about neighborhoods, income, and culture
  • Copy and paste full text into Google Translate
  • Add a translation extension to your web browser
  • Create a spreadsheet of all of your go-to bookmarks and share them with your coworkers. I’ve collected over 200 bookmarks and organized them by country, type of resource, name/description, and URL.

When it comes to international research it’s important to manage everyone’s expectations. You’re inferring wealth based on pieces of information that might give you a ballpark capacity for your gift officer to further evaluate and work their magic.

And finally, DO NOT forget that prospects in countries in the European Union fall under GDPR and prospects in the UK fall under the very-similar Data Protection Act. Worldwide privacy laws are always evolving including within the U.S. See HBG’s Michele Borucki’s Data Privacy: Where We’ve been and Where We are Going and Jessica Woodbridge’s Data Privacy (Part 2): Practical Tips and Better Practices for additional information.

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Deciphering Form ADV Filings

One thing that’s great about our profession is that we get to learn a little bit about a lot of things. Sometimes, though, the learning is more of a slog than we’d like. This week HBG Senior Consultant Heather Hoke forges a path for us through the dense mire of SEC Form ADVs, so that we can get better information about financial advisors and the companies they work for. Thanks, Heather! ~Helen

Heather Hoke

        Heather Hoke

There is so much wealth among people in the finance industry. If you are researching someone who is a founder, partner, or executive officer of an advisory firm, including private equity and hedge funds, be sure to look at the SEC Form ADV. It provides an abundance of information about registered investment advisory firms and their affiliated professionals.

I remember when I first started looking at Form ADVs and I felt completely overwhelmed! There were so many pages of information, sometimes hundreds of pages. Well, that was many years ago and I am now much more adept at finding the information that I need quickly. I thought I would share some tips with you to save you some time…

The Securities and Exchange Commission (SEC) requires all professional investment advisers to submit the Uniform Application for Investment Adviser Registration (or more commonly known as the Form ADV). For companies that manage funds in excess of $25 million, this form must be updated annually and whenever material changes occur.

Where to find a Form ADV

Form ADVs are publicly available through the SEC’s Investment Advisor Public Disclosure website. There you can search either by advisory firm name or by the name of the individual investment advisor.

For our work, the two most important things to look at are “View Form ADV By Section” and “Part 2 Brochures.”

Choose “View Form ADV By Section” so that it is broken down into sections to view rather than the full, often very lengthy, document.

Sections not to miss

 Part 1A Item 1 Identifying Information includes the name, address and phone number of the investment advisor.

Item 2 SEC Registration/Reporting specifies if the firm is considered a large or mid-sized advisory firm.

Item 5 Information About Your Advisory Business provides number of employees (in sections A and B), number and types of clients (in sections C and D), fee arrangements (in section E), assets under management (AUM) (in sections D and F), and advisory activities (in section G).

Schedule A includes direct owners of the registered investment advisor with a 5% or more ownership interest and executive officers (CEO, chief financial officer, chief operating officer, chief legal officer, chief compliance officer, directors).

Schedule B includes all of the indirect owners.

It is necessary to check both Schedule A and Schedule B to fully understand the ownership structure and ranges. Ownership codes specify a range of ownership interest which can be helpful in considering the capacity of an individual.

Schedule D includes other office locations and affiliated registered investment advisors and broker/dealers.

Disciplinary Reporting Page (DRP) provides details about felony or investment-related misdemeanor, regulatory discipline, or court judgments related to violation of investment-related statutes and regulations by the investment advisor or its affiliated persons.

Signature Page for the date of the document.

Next choose “Part 2 Brochures.” At the bottom of the page, you will find a PDF of the brochure which is a narrative of the advisory firm. Each firm lays out their brochure slightly differently, but there is a table of contents to help you find relevant sections. The document can include:

  • An overview of the registered investment advisor
  • Advisory fees
  • Types of clients
  • Background information on advisors
  • Disciplinary information of any legal or disciplinary events

Now you’re a pro at deciphering the SEC Form ADV!

The information in the ADV can be incredibly helpful when researching people in the finance industry or an advisory firm as it can provide indications of significant wealth for individuals and be useful in your due diligence research.

 

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Digging Deeper into Real Estate

We spend a lot of time learning about the finer points of real estate information in this job, and this week my colleague, Chelsea Morin, shares some great tips and resources to help you confirm the information you have, and perhaps find even more! ~Helen

Chelsea Morin

                 Chelsea Morin

Imagine this scenario: You’re asked to research a couple and you easily come across multiple properties all in both spouses’ names (think a primary property and a secondary property, or two, or three). Sounds nice right?

But it doesn’t always, or even often, happen.

Next week, Melissa Bank Stepno (HBG’s Vice President of Data Insight & Business Development and Managing Director of DAFinitive®) will discuss that real estate holdings are not always the most reliable indicator of wealth and capacity in her webinar R-Cubed: Residential Real Estate Review for the California Advancement Researchers Association (CARA) on May 16th.

But they are often the most visible. And when real estate holdings are considered in the appropriate context, they can provide a fuller view of your prospects. If you feel like you have been hitting dead ends in your real estate research recently, read on!

First things first – confirm what you have

Always try to use multiple resources to confirm information. There are several free resources that I use often in my research. The town or county property/tax assessor’s office where you suspect your prospect owns property usually has lots of local level information.

If you’re researching in the New York City area, using ACRIS and StreetEasy together can help provide a more comprehensive picture of tricky real estate holdings like co-ops.

And finally, OpenCorporates can be used to search for any LLCs you might come across and will show you who the registered agent is for an LLC. You can also search by agent name and find any LLCs they are associated with.

If you have paid resources available to you like LexisNexis for Development Professionals and iWave, they can be used in tandem to confirm information as well. I personally like to start in LexisNexis to view a prospect’s “Real Property” holdings and “Current” and “Prior” addresses (I’ve found that “Prior” addresses can sometimes reveal current holdings too). I’ll then head to iWave to try to confirm what’s in LexisNexis and/or find additional properties by searching on different terms. Some search queries I like to use are:

  • a couple’s names together,
  • each person’s name individually,
  • common name misspellings,
  • reverse searching addresses from LexisNexis, and
  • any P.O. boxes associated with the household.

Moving on to find new surprises

In iWave, always look at the “Additional Properties” tab when viewing a real estate record – but don’t assume that that includes all affiliated properties! Something as common as a name misspelling can prevent properties from being properly connected in iWave.

Another great paid resource is Property Shark, which can be useful for viewing sale documents and finding finer details like signatures on paperwork. These can be useful in situations where you suspect that your prospect owns a property that is held in an LLC. Finding your prospect’s name and signature on the paperwork can help confirm the connection.

Be curious and look for patterns!

Real estate research can often be like putting the pieces of a puzzle together. I try to keep track not just of owned property addresses, but also the mailing addresses those properties are registered to, any LLCs, and registered agents for LLCs. You may find that the same agent manages multiple LLCs that seem related to your prospect. Or you may start to notice a pattern like I did when I researched a group of properties recently: they were all held in LLCs and had a similar naming convention based on the type of locale of the property.

To help put your new findings in context, you can use a resource like the Federal Housing Finance Agency’s House Price Index (FHFA HPI®) that my colleague Christine Bariahtaris recently shared with our team to better understand the local real estate market.

Being able to learn more about properties and locales across the United States (and sometimes across the world!), is one of my favorite parts of this work. I hope these tips help to make real estate research more efficient and enjoyable for you too!

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Let’s Get Political! Or Not?

by: Melissa Bank Stepno, Vice President Data Insight

 

In case you haven’t noticed, it’s a big election year!  Here where I live in NH, the hype starts early and it’s loud.  Having the first presidential primary in the nation means that the spotlight is on our little state once every four years.

Beyond NH, each election cycle brings a fundraising bonanza for the candidates, for the major political parties and for PACs.  In fact, the FEC reported that in the 24-months of the 2020 election cycle, more than $24 billion was contributed.  I would expect this number to be even higher when the 2024 election concludes.

As for the donors making all these contributions, logic would say that if someone is giving big bucks to politics, they likely have the big bucks for philanthropic contributions as well.

{Side note: this is where I’ll add my public service announcement noting capacity to give is only one piece of the puzzle.  Good prospecting strategy should also include an assessment of someone’s inclination to give your organization!}

 It’s very convenient that the Federal Election Commission not only requires that any contributions over $200 be reported to the FEC but that it also publishes the information making it super easy to access.

But Stop!  Do Not Pass Go.  And, do not collect your $200.

At one point, FEC data provided a treasure-trove of information for prospect researchers.

Historically, we used it to enhance information on known prospects, such as potential capacity, occupation and sometimes even home address.

We could also see who, or what, received the contributions, which could give insight into political interests, and in the case of PACs, sometimes a window into a donor’s charitable interests.

Unfortunately, the treasure ran out in November 2018 when the FEC issued new guidelines on the acceptable use of FEC data.  Included in the guidelines are statements such as:

Information about individual contributors taken from FEC reports cannot be sold or used for soliciting contributions (including any political or charitable contribution) or for any commercial purpose.”

“Commission regulations also prohibit the use of this information to solicit donations, including charitable donations.”

Quickly thereafter, the question of acceptable use of FEC data was brought to Apra’s Ask the Ethicist column.  The Ethicist, leaning on the Apra Principles of Ethics and Compliance, clearly advised us that since prospect research is part of the charitable solicitation process, we should no longer be using FEC data.

In 2021, recognizing the limitations of the new restrictions, ALUMinate, a vendor that was operating in our space, filed a compelling letter with the FEC asking that it reconsider the use case.  Effectively, the FEC declined to comment.

So, here we are, in the middle of an election year with such great data tempting us like forbidden fruit.

My advice? Follow what we do here at HBG which is to avoid any data that is gleaned directly from the FEC. 

However, thinking more broadly, there are some occasions where using political giving is acceptable – just not from the FEC.  Let’s look at a few examples:

But what about information on political contributions that I find in other sources, like a national news outlet?

Typically, referencing your source is sufficient to cite this information in your research.  Here’s an example: “According to a March 2024 article (insert URL) in the New York Times, Smith donated $10,000 to {name candidate}’s presidential campaign.

How about on social media?

First, be sure to follow your organization’s policies around the acceptable use of social media in general.  Assuming it is permissible then follow a similar format to the above: “According to this Facebook post (insert URL) on Smith’s personal page, he attended last night’s gala to support {name candidate}’s congressional campaign.  Gala tickets are known to cost in the $1K-$10K range.”

And how contributions to state elections?

State elections are not subject to FEC regulations.  Some states also publish political contribution information.  Each state has their own laws governing acceptable use so be sure to check those out before including anything in your research.

My parent organization has both a 501(c)3 non-profit and a political action committee.  We have separate teams and separate databases, but sometimes we share donor information since we find many of our donors contribute to both our charitable arm and our advocacy arm.  Do we need to stop?

The FEC guidelines state that “The sale or use restriction does not prevent a committee from compiling and distributing its own list of contributors. A committee may donate, sell, rent or trade its contributor list to other committees and organizations.”  So, as long as the staff of the PAC are providing the information to you directly, you should be in the clear.

Bottom line: the political season is heating up, but using data from the FEC is not.  With everything else in our line of work, erring on the side of caution is always the best route.  While this blog post is not meant to replace actual legal advice, hopefully these scenarios give you a sense of how you can incorporate information about political giving into your research.  If in doubt, my best advice would be to consult your in-house legal team or leave it out of your final deliverables.

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Real Estate, 1031 Exchanges, and your nonprofit

This week our resident real estate expert, Josh Ostroski, shares some great background on a real estate trade called a 1031 Exchange. If someone wants to defer capital gains taxes on an investment property, a 1031 Exchange is a great way to do it, and it can mean opportunities for nonprofits, too. How? Read on! ~Helen

     Josh Ostroski

In my research (and in my previous work as a real estate agent) I’ve come across a particular real estate exchange a few times and wanted to share what I’ve learned and how it can be used for prospect research purposes.

What is a 1031 Exchange?

In a nutshell, a 1031 exchange is an IRS rule that allows real estate investors to defer capital gains taxes to some point in the future by swapping an investment property for another property of equal or higher value. For example, you could sell a single-family rental, apartment complex, etc. and purchase a similar or upgraded investment property and defer paying property gains tax. You are allowed to continue exchanging properties as many times as you want and for as long as you are alive.

Benefits of a 1031 Exchange

Deferring property gains tax allows the investor to have more buying power by having more money to put down on the next property. The investor could also sell their current property for one with a better return on investment.

The investor could diversify their portfolio by adding properties in a different market that may be hot, since there are no restrictions on where the new property is located. They could also improve their portfolio by either consolidating properties, or investing in multiple properties, which would create more potential for wealth. You could also increase your cash flow.

Rental properties are considered depreciating assets, and you can deduct a percentage of the cost of the rental property from your taxable income each year. If you exhaust the amount that can be depreciated, you could do a 1031 exchange, which would allow you to recapture your investment properties depreciation.

You can gift the investment properties to your heirs, and they won’t have to pay the accumulated capital gains. The heirs will inherit the properties in a step-up basis, meaning they will inherit the properties at the current fair-market price of the asset.

Downfalls of a 1031 Exchange

When you sell the property, you need to put the entire initial amount – including the downpayment on the property being sold – back into the new investment, so there is no liquidity event with a 1031 exchange.

When you sell the investment properties you will need to pay the capital gains realized on those investments, which could accumulate to large amount.

There are strict timelines: you have 45 days to identify a new property (or properties).

The process can be complicated and confusing, so some people may not want to deal with the rules and structure. It becomes even more complicated if there are multiple investors.

How it Relates to Prospect Research

A property owner could turn a vacation home that they don’t use into a rental property, then either exchange it for another rental or keep it and gift it to their children or a nonprofit.

If a prospect has investment properties, it could be advantageous for them to gift the properties, so they don’t have to pay the realized capital gains while also accomplishing their philanthropic goals. It can be akin to donating stock or crypto.

There are many factors that would affect if donating a property would make sense for your organization:

  • does your organization accept gifts of real estate?;
  • how much equity is in the property;
  • is the property marketable;
  • are there any additional associated costs with the property?

These are all things to consider.

To find the estimated value of the investment property, there are a couple of simple ways:

  • If it’s a commercial property, LoopNet is a good resource to find comparative values (“comps”).
  • If the prospect has single-family home that is used as a rental, you can see what the normal resale value of the home is by checking Zillow. In addition, Zillow will often list what the last asking rent price was on its listing for that property. If the rental price isn’t listed, I recommend doing a search on the property address to see if anything comes up for that property.

If a prospect has either a vacation home or what appears to be investment properties, let that be known in the profile you create and/or let the gift officer or planned giving officer know so they can talk about options with the prospect.

Here is a link to the IRS Fact Sheet about 1031’s. As always, if you have questions about the legalities of 1031’s seek out a tax attorney for information.

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