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Giving Priorities for America’s Top Philanthropists in 2020

This isn’t a super long post this week, but I did some figuring and chart-making on something that piqued my interest that I wanted to share with you.

Last week Forbes magazine published a list of the top 25 donors of 2020. In past years the list has been longer – it’s normally 50 – and I’m left wondering why, in such a year of incredible generosity as 2020 was, that it was a shortened list.

Still, it’s good to see the venerable publication celebrating how much billionaires have given away versus simply glorifying how much they’ve amassed. I hope that behavior modeling spurs other billionaires to give competitively, if pure philanthropic motivation isn’t enough.

None of the names will surprise you if you’ve been paying attention to mega philanthropy over the years: the usual Buffett, Gates, Soros, Bloomberg, Broad and Moore crowd, with the fantastic new addition of Scott – MacKenzie Scott – to the list.

I was interested to see what this group of 25’s priorities were in 2020, so I created a chart that I thought you might like to see, too. For comparison’s sake, I tried to go back and look at Forbes‘ 2019 numbers to see how they compare by priority, but the Forbes Givers list published in 2019 looked at 2018 numbers. Pffft. So we’ll have to wait to compare these priorities with the Giving USA report for 2020 across-the-board giving when it comes out in the summer.

Education was the number one priority, but as you might expect, COVID-19 relief and related human service needs were big priorities. Here is the breakdown of giving priorities for this group for 2020:

Please be aware that some of this “education” giving included COVID-19 relief such as related assistance to students and university-based virus/vaccine research, so it’s not a pure education category.

My guess is that the environment, poverty, food insecurity, and criminal justice numbers are way up as a percentage of top donors’ giving, but it’s just my sense of how things went last year.

I’d love to hear any thoughts you might have on these priorities or other numbers you’ve seen.

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Opportunity of a lifetime

As I watched the Inauguration ceremonies over the past couple of days and saw those heartbreaking and beautiful flags on the Mall, it made me think about where we are now and how unbelievably changed we are from just a year ago.

If you had known a year ago what you know now, what would you have done differently? What have you found to be more important than you expected? What did you think was important then that you’ve now easily discarded? What do you wish you’d taken advantage of sooner?

One easy thing for me is that I would have made my ‘temporary’ home office a lot more comfortable sooner. I finally did that over the holiday break, but I wish that I’d done it back in July when it settled in my bones that this pandemic really wouldn’t be over as soon as we’d all hoped. Looking back, in some ways it felt like much of last year was just suspended time.

On the other hand, when I was craving lost community last spring I reached out to some folks that I’d always wanted to talk with but hadn’t had time (or hadn’t made time) to reach out to before. Some lovely new personal/professional friendships have bloomed, and it’s been a source of joy in this time of disconnected connection.

Did you do that, too? Did you make new connections over this past year, or re-forge old ties that had gotten frayed?

What about professionally? What did you do that challenged you to learn something more? Did you jump into the deep end and do something scary like take on a role you weren’t totally sure you were qualified for? Or speak at a virtual conference? Or survive being furloughed? Or…what?

What did you do this past year that your January 2020 self would be astonished to know about you? What did you learn about your priorities?

Here at HBG we launched a new Data Insight unit that I’d been inching toward for probably five years. In July, I just said “GO.” No more waiting. No more wondering “are we ready yet?” And now, every Friday my smile is goofy and wide with pride listening in on the DI team strategizing about new screening and analytics projects they’re working on, sharing data sources they found that week, or discussing how they want to visualize key discoveries for a client. It’s keeping me learning, too, and pushing myself and my team to pursue opportunities for services that will offer unique value (more on that this summer!).

Mid-summer, I couldn’t seem to resolve to the reality of fixing up my home office, but we launched a whole new business unit. I guess I discovered my priorities.

This year I’ve been impressed by leaders like Jay Frost and Jason Briggs who prioritized education and community and brought real innovation to our sector. Both of them jumped into the void with great speaker series and new, innovative forms of conferences to keep us connecting and learning. I’m honored to be speaking at the PyroTalks Fundraising Intelligence Conference next month on due diligence, and I hope you will join me.

And the Apra chapters! Wow. The pandemic has shown their resiliency and super-creative thinking to bring great programming that expands their reach and attracts membership beyond their geographical borders. My own chapter, NEDRA, runs research boot camps that will be available to newbies from Alabama and Albania to Nebraska, New England, and Zimbabwe, and they’re offering 11 full scholarships to their annual conference in May, including a brand-new one to support an initiative to bring more diversity, equity, and inclusion to prospect development.

Although the vaccine is slowly rolling out now, we’re probably going to be in the same physical situations for at least another eight or nine months, and possibly another year. Where do you want to be then?

Now is a really great time to break out of time suspension, take stock of where you are, and think about where you want to be personally and professionally this time next year. What do you need (or need to know) to take that next step? What certification or Coursera class or connection with a mentor will help pave the way? This is the opportunity of a lifetime to do that.

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Can your prospects be found at a luxury private community?

To start off the new year on The Intelligent Edge, we hear from my colleague Heather Hoke who shares her knowledge on luxury private communities – their costs and amenities. If you have prospects and donors living in a private community, check out the resources Heather references below. ~Helen

It’s been a rocky start to 2021 and it wasn’t too long ago that I was saying how excited I was to leave 2020 behind and start a new year! Given everything, it’s not surprising that so many of us are ready for a change in geography, including the wealthy.

Many people are migrating from densely populated urban areas, to a place they can have peace-of-mind and feel a sense of security. Private residential club communities may be attractive to buyers now in the time of COVID-19. Stay-at-home mandates and social isolation may factor into an increased interest in resort lifestyle communities that are full of amenities.

You can be in any stage of life to live in a private community, but some are targeted specifically for families, retirement, or active adults over 55. Communities offer a variety of exclusive concierge services and amenities including an array of fitness and recreational activities, dining, social activities and even security and medical staff. It comes at a significant cost as the properties require an initiation fee and annual dues. Buyers are not only buying a home, but they are also buying a lifestyle.

Let’s explore some of the most exclusive private residential communities….

Bighorn Golf Club in Palm Desert, CA

www.bighorngolf.com

Bighorn is described as casual and comfortable. There are 470 residences and 520 club members. The $100K initiation fee for club membership includes two championship golf courses, social activities, dining venues, tennis and pickle ball, pools, a fitness center, a salon and spa, personal training, and nutritional counseling. There is also private jet and transportation services, and an ultraluxe auto gallery to house members beloved cars. A golf membership is an additional $250K. Current homes for sale are going for up to $9.6 million.

The Hideaway in La Quinta, CA

www.hideawaygolfclub.com

The real estate on the 600 acres includes 447 homes, ranging from designer-built bungalows and villas to custom-built homes of up to 10,000 square feet. Current real estate listings go up to $4.5 million. There is a $75K fee to join The Hideaway Golf and Country Club which is limited to 580 members. Along with two renowned 18-hole golf courses and a 51,000-square-foot clubhouse, recreational facilities feature a world-class spa, fitness center, pool, and sports courts.

Kohanaiki in Kailua-Kona, HI

https://kohanaiki.com

Kohanaiki features a Rees Jones-designed oceanfront golf course, a sports complex, and an Adventure Team that serve as personal guides to the island’s natural attractions of surfing, stand-up paddling, snorkeling, and diving and deep-sea fishing on Kohanaiki’s 39-foot boat. The 67,000-square-foot clubhouse is a place of relaxation and wellness that includes a spa, infinity pools, yoga lawns, relaxation areas and sweeping views of the ocean. It also has a bowling alley, movie theater, private dining rooms, a wine and cheese tasting room, cigar room, and poker room. There is even a master brewer crafting one-of-a-kind beers onsite. Current real estate listings go up to $12.5 million.

Kukui’ula in Koloa, HI

https://kukuiula.com

The 1,010-acre property designed for families offers outdoor adventure experiences, a 10-acre organic farm, hiking trails, spa, and an 18-hole golf course-dubbed one of the best courses in Hawaii by Golf Digest. On staff is a “cultural resource liaison” who oversees programming that delves into island culture, including lei making, hula dancing classes and sunset ritual ceremonies. Kukui’ula offers a range of home ownership opportunities from large home sites to villas and bungalows. Homes range from $600K to $12 million. 

The Madison Club in La Quinta, CA

https://madisonclubca.com

The Madison Club is a community with quiet neighborhoods of luxury estate residences, elegant villas and clubhouse suites. It offers a Tom Fazio-designed golf course, movie theater, game room, full-service spa, a fitness facility, on-site medical practitioner, and a “recreational and lifestyle wellness team.” Initiation fee is $200K plus $33K in dues. 

Ocean Reef Club in Key Largo, FL

www.oceanreef.com

This community is on a private peninsula and has its own 4,000-foot airstrip, school, museum, security force, and fire department. A marina with 175 slips and docks for yachts up to 175 feet are also offered. To live in Ocean Reef, a resident must be sponsored by two current members and purchase a membership for $200K.

Royal Palm Yacht and Country Club in Boca Raton, FL

www.rpycc.org

This 450-acre community has 700 estates, many on deep-water and golf course lots. Royal Palm is internationally acclaimed as one of the most exclusive yachting communities in the country. Notable features include a Jack Nicklaus Signature golf course and full-service marina. Membership is by invitation and the candidate selection process is overseen by the members. Current real estate listings go up to nearly $17 million.

Silo Ridge Field Club in Amenia, NY

https://siloridge.com

On 800 acres, Silo Ridge opened in 2018 and is a project of Discovery Land Company, a developer and operator of some of the world’s most exclusive residential club communities. Silo Ridge has $250 million worth of amenities, including a Tom Fazio-designed golf course with gourmet snack stations, an organic garden, farm-to-table dining, hunting, fishing, hiking, mountain biking, an equestrian center, a spa, an outdoor theater, and a pool with a 150-foot water slide. About a 90-minute drive from Manhattan, Silo Ridge is especially appealing to NYC residents. There are 245 predesigned houses priced at an average of $5 million and going up to more than $10 million. Members pay annual dues of $24K and an initiation fee of $100K. Silo Ridge has vertical membership where members’ children and parents also become members.

The Summit Club in Las Vegas, NV

https://summitclubnv.com

This ultra-luxury resort community on 555-acres had its first residents in 2018 and has contracted 154 of its 260 lots, pre-built residences, and clubhouse suites. There is a clubhouse for dining and events, a pickleball facility, sports and tennis courts, and a championship golf course designed by golf architect Tom Fazio. It also has mountain biking and hiking nearby in Red Rock Canyon National Conservation Area, a kid’s club, and residential services in which staff will do everything from grocery shopping to a turn-down service and housekeeping. Some of the homes built were more than $20 million. The average custom lot sells for more than $3.5 million. Club membership is $200K, annual dues are $39K and homeowner’s association fees are $16.8K.

Yellowstone Club in Big Sky, MT

https://yellowstoneclub.com

Yellowstone Club is the world’s only private ski and golf community. Designed by Discovery Land Company, it is situated in the Rocky Mountains spanning 15,200 acres with 2,900 acres of ski trails and an 18-hole golf course. There is a 282-acre ranch under contract there for $18 million and custom homes ranging from $11 million to $29 million. The grounds are reportedly protected by a security team that is led by a former Secret Service officer and it has its own fire department and emergency medical services team. The Club is limited to 864 members. Initial membership fees are $400K, and there is an annual fee of $41.5K.

 

These properties seem to have everything you will ever need to ease even the most stressed mind and body!

You can do some prospecting around private communities too. A helpful resource is the Private Communities Registry (www.privatecommunities.com) which is searchable by state for various community-types including gated, golf, luxury, and equestrian communities. Perhaps some of your constituents already live there!

In 2021, I am looking for wellness, peace of mind, and to be outside in nature as much as possible. Now I need to figure out a way to move to Kohanaiki! Since there is a master brewer on staff there, I have buy-in from my husband!

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December edition – Who’s Doing Well Now?

It’s been eight months since I did a blog post on the topic of “Who’s Doing Well Now” and I thought the end of the year – giving season – might be a good time to revisit that question.

If you read that original blog post and the follow-up white paper, many of the industries from that period remain at the top, but over the summer innovation (and pivotation) pushed a few other companies and industries into the spotlight. I wanted to share my resources to help you dig a little deeper to find prospects that might be flying under the radar a bit.

For example, it’s not a secret that puzzles and games are doing well, so of course we should look into who makes them. Manufacturers like privately-held (and very diversified) Allied Materials and Equipment Co. of Kansas City, MO, whose subsidiary Allied Products is the maker of Springbok puzzles, are doing well this year. According to their website, Allied also makes American flags that fly “over some of our nation’s most important institutions as a result of contracts with the United States Senate, Department of Defense, and GSA recipients.” Those flags are also used for military (and veteran) keepsakes and burials, which unfortunately have seen an uptick this year. Allied’s DOD contracts also extend to military equipment, such as chem/bio life support systems.

Want to find more suppliers with US government contracts? There’s a database for that: https://www.usaspending.gov/. You don’t have to know the name of the company, either. If you’re prospecting, the surprisingly well-built search tool allows for a large array of filters, including recipient (awardee) type, NAICS code, state, zip code, and congressional district.

Specifically interested in companies that have received contracts for COVID-related purposes? You can find that on the USASpending site, but ProPublica has also created a very search-friendly tool at https://projects.propublica.org/coronavirus-contracts/ for finding companies that have recently increased sales due to government contracts.

In the Washington, DC area, it would be natural to think that the fastest growing company would be a government contractor. Holistic Industries, which has grown 447% over the past three years and is considered an essential business will probably not be a DOD contractor anytime soon, though. The cannabis retailer reported growth over 30% for the first quarter this year and beat estimates for Q3 by $3 million. CEO and University of Maryland alumnus Josh Genderson has hopes to double sales next year. Cannabis retailers can’t use traditional banks to park their money, and they frequently donate to local nonprofits to prove their place in building up community. If your nonprofit doesn’t include cannabis retailers in your due diligence ‘no-no’ list, you may want to check out your local retailer’s leadership.

With the disruptions in the supply chains over the past several months, grocery retailers have needed to utilize more cold storage facilities to keep things fresh and relatively close-by. Two companies control nearly 60 percent of all of the cold storage in the US – Lineage Logistics and Americold Realty and both are growing quickly, according to The Wall Street Journal. The CEOs of both companies are graduates of Midwest universities that mention nonprofit interests on their LinkedIn pages.

I found the three specific company examples mentioned above by searching for “companies doing well” and limiting my search dates, but there are other resources (stronger than a search engine) that you can use to prospect for successful industries and companies (and the people who are doing well because of them) right now.

One of my all-time favorites is an expensive resource that used to be found only in hard copy in business libraries: ValueLine. Imagine my delight when I learned earlier this year that not only is ValueLine online and searchable, but my library card to my little local library gives me free access to it. (Maybe yours does, too?) ValueLine gathers information about 6,000 publicly-held companies and 18,000 mutual funds (as well as other invest-ables) and provides insights on which companies and industries are “timely” (how they’re doing as compared to others in their industry) and “safe” (the likelihood that the company will continue to do well over the coming months – or not) at the current moment.

My search in ValueLine this week showed that 26 companies are at the Venn diagram nexus for both growth and safety. The list includes several you’d expect like Clorox, Costco, General Mills, Home Depot, JM Smucker, Procter & Gamble and Walmart, with a few interesting ones like Jack Henry & Associates (payment processors for the financial services industry); Landstar (shipping and logistics); and Synopsys, an electronic design automation company focusing on silicon design, verification, and intellectual property and software security and quality.

Another resource to check for companies doing well right now is the Fortune Global Fastest 100, a listing of the fastest-growing companies in the world. I like to break their list down into industries to get an overview of sectors that are growing quickly in order to spot trends and outliers. This year the top three categories for growth are commercial banks; homebuilders, engineering, construction, and building materials; and internet services and retailing.

One last resource I wanted to mention is LinkedIn. Since it was first published on March 31, senior editor Andrew Seaman’s article, “Here’s Who’s Hiring Right Now” has been regularly updated. Its long list of companies that are doing well enough to be hiring this year is worth a look for prospecting ideas.

What places are you looking when you’re prospecting these days?

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Art Imitates Life

This week my HBG colleague Angie Herrington writes about extracurricular prospect research learning that we can’t get enough of, from the unlikeliest sources – movies and television. You expect to be incredulously skeptical about a tv program showing hedge fund managers blowing insane amounts of cash on yachts or other ‘toys,’ but to then learn later from those in the know that the depiction is actually pretty spot-on? Maybe it’s worth spending time watching these shows! In today’s article, Angie details some “homework” that we might not want to miss. ~Helen

Trompe-l’œil, Cullercoats Metro Station
cc-by-sa/2.0 – © Andrew Curtis – geograph.org.uk/p/4746285

Let’s be realistic. Our researcher brains don’t magically shut off at 5:00 on Friday. I’ll go to the grocery store and see the niche cookies of the small company I researched and watch my husband’s eyes glaze over telling him their backstory. At the museum while looking at a painting I’ll guess its value. After all, I researched another work by the artist for a recent donor’s profile.

Thanks to 2020, I’ve watched a lot of television. I want to zone out but realize my researcher brain is still on the clock. Gleaning information from movies and TV about the worlds we research isn’t new. The first one I remember watching as “homework” was 2003’s Born Rich, an Emmy nominated documentary about 10 heirs to some of the wealthiest families, including a Bloomberg, Weill, Newhouse and a Trump. Directed by an heir himself, Jamie Johnson, the documentary explores wealth and dysfunction.

We now know so much about our donors we can watch a movie like The Big Short and critique what Hollywood got right or wrong. There’s been other “homework” I’ve watched all for the sake of my career. Remember the documentary The Queen of Versailles? Candy Spelling’s wrapping paper rooms, beanie babies and porcelain doll collection on Selling Spelling Manor will forever haunt me. I was four seasons into Netflix’s Narcos and Narcos: Mexico when I realized someone I’ve researched was mentioned.

A surprising thing for me is how I learned more about venture capital and the Silicon Valley from a television show than anywhere else. As researchers we have to know a little bit about a lot of things. I had a basic understanding of venture capital but watching the ups and downs of a little startup called Pied Piper simplified it.

HBO’s Silicon Valley was a comedy that ran from 2014 to 2019, created by Office Space’s Mike Judge and nominated five times for a Primetime Emmy Award for Outstanding Comedy Series. It’s been praised by insiders for perfectly capturing the tech culture as well as not being dark enough on its realities.

Silicon Valley is a story about a group of software engineers who develop a startup for a data compression algorithm. Over six seasons, we watch the ups and (mostly) downs of Pied Piper, its CEO Richard, and the team including Gilfoyle, Dinesh, and the unexpectedly mysterious Jared. The show starts by focusing on establishing their startup through a business incubator after they’ve left another tech company called Hooli. Most of their conflicts are with Hooli’s CEO Gavin Belson who tries to duplicate the app, takeover the company, and sue them for copyright violations.

Pied Piper is always struggling to find funding and even fighting against an investor who replaces Richard as CEO. His replacement is convinced the future is in hardware and not cloud-based technology. One might say this sounds similar to Steve Ballmer’s tenure at Microsoft. New investors reinstate Richard, and the original idea of the app continues to evolve.

From season to season the show couldn’t keep up with reality – click farms, video chat apps, cryptocurrency, bypassing encryption, Chinese duplication of technology, government violations, a Zuckerberg-esque Senate hearing, and even Hooli’s board selling the company to CEO Gavin’s nemesis, Jeff Bezos.

In a 2014 interview with Vox, Elon Musk said about the show, “I really feel like Mike Judge has never been to Burning Man, which is Silicon Valley.” Guess what? Pied Piper later strikes a deal with an investor, Russ Hanneman, to use their technology at his music festival – RussFest.

Along the way the show throws in what I thought were ludicrous storylines or situations. I thought Gavin’s anti-aging treatment from the “The Blood Boy” episode was a gag. It’s not. There was also the app that texted “Bro.” Turns out there was actually a $7 million app that did the same thing, called “Yo.”

Articles and the people themselves have commented how characters are parodied after real executives like Mark Zuckerberg, Larry Ellison, Marc Benioff, Peter Thiel, Marissa Mayer, Megan Quinn, Steve Ballmer, Mark Cuban and many more. Consultants for the show included former Twitter CEO, Dick Costolo, who helped to parody his own rise and fall.

It’s reported the show consulted with over 250 tech insiders on one season alone. Bill Gates is a fan. On his blog he said he tells reluctant friends, “You really should watch it, because they don’t make any more fun of us than we deserve.”

If you want to learn more about Pied Piper, they have a comprehensive profile on Crunchbase. For me, Silicon Valley became a case study showing Richard as an idealist facing the realities of a complex and frequently ego-driven culture while he struggles with ethical and moral tests. It’s odd to say I learned more about venture capital and Silicon Valley from a half hour comedy. Turns out Silicon Valley the show is entertaining satire but not necessarily fiction.

My homework list is forever growing with suggestions like Equity (film), Billions (Showtime), Succession (HBO), Too Big to Fail (film), and The Laundromat (film), but I’m always happy to add to the list! What’s something work-related you’ve unexpectedly learned while watching a movie or television? Any suggestions while we stay home during the holidays?

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Real Estate in the Age of Coronavirus

COVID-19 has impacted every single industry, usually for better or worse. But with real estate, the impact of the pandemic has been both better *and* worse, depending on the area of real estate you’re looking at. In today’s article, my colleague Josh Ostroski brings his deep knowledge of real estate to help us understand how our prospects who work in real estate (or who own well-placed properties) may be impacted now. ~Helen

There has been a lot of talk about real estate trends during the coronavirus pandemic. We have all heard about the urban exodus, housing prices increasing, and people working from home. I wanted to dig a little deeper to see if what we’re hearing is true or merely anecdotal and the reasons why.

The Urban Exodus

We have all heard that families are leaving cities to find more space in the suburbs. As the country was in lockdown, many people began to re-think what was important to them. With restaurants, bars closed, and shops closed, along with food delivery service expanding to more rural areas, there was less of need to be able to walk to amenities. However, according to a recent report by Zillow’s Economic Research team, they found that in most areas of the country “suburban housing markets have not strengthened at a disproportionately rapid pace compared to urban markets.”

There are some outliers, such as the Northeast, where new pending listings in urban zip codes re-accelerating more slowly than in the suburbs. “Some regions saw stronger evidence for a suburban-urban diverging trend than others. For example, in the New York City metro, home values in urban ZIP codes were decelerating in June relative to pre-COVID trends ( -0.2 pp) while suburban ZIP codes were accelerating (0.2 pp).

The same trend holds in Boston with urban home values down 0.5 percentage points and suburban homes values up 1.3 percentage points. However, this deceleration was already a trend (comparing February YoY to January YoY) in the Northeast Region overall, and the New York City metro.

Conversely, the Chicago metro area experienced the exact opposite trend with growth, decelerating in suburban areas while urban areas accelerated. And areas like Philadelphia and Miami saw accelerated growth in both regions, but more so in urban ZIP Codes.”

San Francisco is seeing a trend to becoming a buyers’ market, as inventory and days on market are up. According to Zillow’s report, “in San Francisco, list prices have fallen 4.9% year over year and inventory has risen 96% with a flood of new listings. Higher levels of inventory, up 96% year-over-year following a flood of new listings during the pandemic, are sitting on the market in the city proper, a significantly larger jump than the surrounding suburbs. In San Francisco, though, the softening is clear as sellers flood the market with their listings and buyers have not changed their pace to match.”

The markets where the largest share of renters in the center city would gain the power to buy if they looked outside city limits are San Francisco, Seattle, Washington, D.C., and Boston.

Check Out These Market Trends

Zillow: 12 mid-sized markets to watch

Realtor.com: Hottest Zip Codes

Insurify: Cities with the greatest pandemic real estate booms

Housing Price Increases

Normally in an economic crisis, housing prices drop. However, in this pandemic, prices in many locations have increased. Part of the reason is the drop in demand was matched with a drop in supply at the same time, protecting prices. Then when people began to look to move, the lack of supply has created a seller’s market, increasing prices.

Historically Low Interest Rates

Interest rates are still at an all-time low, so buying a home is more affordable. There has also been an increase in homeowners refinancing, putting themselves in a better economic situation.

Lender Standards

During the housing crisis of 2008, the use of subprime mortgages and lenient qualifications caused homeowners that were not really qualified to purchase homes out of their price range. When prices plummeted, they owed more than the house was worth (became “upside-down” or “under water” on their mortgages). Since then, the government and mortgage lenders have become much stricter in their lending qualifications. That means more homeowners are qualified now. According to CoreLogic, lenders have tightened credit requirements or increased payment requirements, making riskier loans less common. This helps to protect homeowners in a down market.

Home Wealth Gains

According to the Federal Reserve, housing wealth is a major component of total household wealth in the United States. According to the National Association of Realtors, “as of 2018, a homeowner who purchased a typical existing home five years ago (2013) gained $79,488 in wealth (equity), of which $64,200, or 81 percent was from the home price appreciation ($197,400 in 2013 to $261,600 in 2018).”

Home equity is at an all-time high in the U.S., which has not only helped weather the economic downturn, but has allowed homeowners to use that equity to their advantage by having flexibility to be able to sell their home for something that works better for them, like investing in another property (which can generate rental income), home renovation (which further increases the home value), a child’s college education, emergency or major life events, or expenses in retirement. National Association of Realtors has calculated equity reports on 181 metropolitan areas.

Default rates have also remained low during the pandemic. According to ATTOM Data Solutions, “Equity-Rich Properties Continue to Outnumber Those Seriously Under Water by Four-to-One Margin; Portion of U.S. Homes Considered Equity-Rich Ticks Up to 27.5 Percent; Seriously Under Water Properties Down to 6 Percent.”

Second Homes

Another trend that we are seeing is people are moving into their second home and using it as their primary residences. According to an article in the Colorado Sun, schools in Aspen, Vail, and Crested Butte reported record interest in enrollment as part-time resident relocated to their second homes. At the same time, the market has seen increased home sales in these resort towns as people are wanted to get away from cities.

This is also happening in New York City, which was one of the hardest hit cities by COVID-19, where people are moving into their upstate NY, Hamptons, and CT homes.

Real estate agents are also seeing an increase in people that live in cities, but are renters, buying second homes outside of the city.

As researchers, we should keep an eye on surrounding communities outside of cities that were historically vacation areas to see if there is an increase in sale prices. This could also trigger people to sell a home in a vacation area to take advantage of the increased demand.

Commercial Real Estate

One industry that is struggling is commercial real estate. As many businesses struggle to stay afloat, they have not been able to pay rent and commercial real estate companies are feeling the effects. Also, since many companies are having their employees work remotely, they are finding out they don’t need all the space they have and once their lease is up, they are either looking for smaller space or going fully remote.

Physical distancing is also changing the physical layout needed in office areas, meaning that potential tenants are going to demand less open spacing (can this mean we can finally put a nail in the open workspace concept?), updated HVAC systems, and improved amenities.

There is an increased demand for warehouse and storage space, as e-commerce has surged. Biotech companies are also seeing increased demand for lab space.

I think it would be smart to look at a commercial real estate firm’s portfolio and see what types of companies are in their portfolio. Consider using the HBG Whitepaper on who is doing well to help you determine if the RE firm has any of those clients or companies in industries that are doing well. At the same time, if the portfolio is full of restaurants or retail it could mean lean times for the commercial real estate firm.

Also, be on the lookout for commercial real estate firms to take advantage of opportunities to acquire properties at a good price and build their portfolio. Here is a good place to keep an eye on commercial real estate transactions and news.

Working Remotely

Due to the pandemic, many people were forced to work remotely. According to Business Insider, following the pandemic more than half of Americans want to continue working remotely while two-thirds of companies may render their current work-from-home policies permanent. A few major companies have announced they will continue to have employees work remotely, including Google, American Express, Uber, and Airbnb. REI plans to have its employees work remotely indefinitely and recently sold its brand new headquarters in Bellevue, WA to Facebook for $368M.

The National Association of Realtors created a Work From Home Score that studied “3,142 counties that are best poised to provide a supportive environment for working remotely, mainly, working from home.” They used nine factors to calculate the score. The top 30 work from home counties represent the top 1%. The top five counties include:

  • Forsyth County, Georgia

Part of the Atlanta-Sandy Springs-Alpharetta metropolitan area, 11.3% of the workforce already works from home and 99% of the population is served by three or more broadband internet service providers (ISPs). It’s a fast-growing area, and the population rose nearly 21% over the last five years.

  • Douglas County, Colorado

Part of the Denver-Aurora-Lakewood metropolitan area, 11.7% percent already work from home and 98% of the population is served by three or more broadband providers.

  • Los Alamos County, New Mexico

Part of the Los Alamos micropolitan area and the Albuquerque-Santa Fe-Las Vegas combined statistical area, less than 3% work from home but what stands out is that 68% of the workforce work in office-using industries. Homes are very affordable and only 11% of homeowners pay  30% or more of their income on their mortgage.

  • Collin County, Texas

Part of the Dallas-Fort Worth-Arlington metropolitan area, 8.6% of the workforce work from home, and its population expanded 17% from 2014 to 2019, indicating it is a fast-growing county.

  • Loudoun County, Virginia

Part of the Washington-Arlington-Alexandria metropolitan area, 7.5% of residents work from home, with 44% working in office-using industries. 100% of the population is served by three or more ISPs.

These areas could also be a good place to keep an eye on if you have prospects living there as they could see an increase in their property value. It is also going to change the type of home people want to purchase, which may now include two office spaces and an area that can act as a home school.

What trends are you seeing in your area?

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Due Diligence in Prospect Research

Due diligence is incredibly important for nonprofit organizations, especially these days. This week my colleague Michele Borucki shares all of the reasons why, and how to take on this key task. Warm thanks to our partner, iWave, for kindly allowing us to reprint this from their blog earlier this month. ~Helen

At the very core of what we do as non-profit fundraising professionals is the mission to leave this world a better place than when we inherited it. We cannot do the work we love without the generosity of donors who also believe in this mission, which leaves us with the question: Why would we ever say no to a gift?

Due diligence in brief

The term due diligence can be traced back to the 1930’s, but it most likely existed long before that. The legal term originated in the US Securities Act of 1933, where the process is referred to as “reasonable investigation,” but it’s practiced in almost every industry in some form, including fundraising.

But a reasonable investigation, or due diligence, should not be confused as the same thing as prospect research. There are some important differences.

Prospect research vs. due diligence

The goal of prospect research is to assess a prospect’s potential for giving, but the goal of due diligence is to protect the organization from potential harm. As Helen wrote in a recent blog post: “Prospect research asks if they can give, and due diligence asks what their giving says about them.”

The non-profit sector has seen its share of controversy surrounding gifts over the last several years. Recent news surrounding controversial gifts from well-known names has inspired a new push for non-profit organizations to establish due diligence protocols and strategies for their own donors.

Covering your assets

Non-profit organizations have numerous policies in place to guarantee the practice of ethical standards across the entire organization, especially when raising funds for their cause. When dealing with donations of any size, there is no question that organizations must maintain transparency and be accountable to donors and their intentions for giving. Development professionals have governing bodies that write and enforce codes of ethics that must be adhered to on top of internal ones for the entire organization. There are gift acceptance policies set forth by the Council for Advancement and Support of Education (CASE) and protections for anonymous givers. The missing piece is an across the board industry policy protecting organizations from possible risks associated with being connected to certain donors. Each organization must create their own.

In an Apra Connections post, Lindsey Nadeau, Senior Director of Prospect Development at UNICEF USA stated, “Prospect development’s ability to vet a prospect appropriately and thoroughly depends on an organization’s ethical standards.”

Our organizations protect donors through every step of the gift cycle because they are making an investment in our mission; however, policies protecting the organization and ethical standards for donors are rare.

Risky business

The Epstein and Sackler controversies are only a few recent and well-known ones to highlight the need for risk assessment within development organizations. Some prospect research shops are outsourcing their due diligence research to consultants or to firms whose specialty is this type of research. Other organizations are hiring researchers specifically for the task or including it as a part of their prospect research protocol for all researchers. While an organization can never mitigate all of the risks associated with a donation—and a researcher can’t necessarily predict the behavior of a donor—looking at past giving trends and behaviors can determine if a relationship between your specific organization and a prospect will reflect positively.

Getting started

When creating a due diligence policy within an organization, there are so many variables. The first key decision will be to decide whether to outsource this work or keep it within your research shop. Should your team have a designated researcher to complete the vetting process on all those chosen prospects and donors or would it be more cost effective to hire a consultant? That will depend on your organizations needs and resources.

There are many checklists to reference and use as a template once your organization has made the decision to create a due diligence policy. Our prospect research colleagues in the United Kingdom have been doing this type of research for much longer than we have here in the United States, and we can learn a lot from them. In January we published a post on this blog with tips and questions to ask when creating your due diligence policy, which includes links to several guides that our friends in the UK have created, and the Association of Advancement Services Professionals (AASP) released their Best Practices in Vetting Prospects last year. These are two excellent resources to visit when starting the conversation and process of creating a due diligence policy.

We’re in this together

There is no one size fits all approach when it comes to creating policies and structure for our organizations. What works for your operation may not work for the non-profit on the first floor of the same building. Due diligence research for your donors will be specific to what your mission and ethical standards are, but we are all in this together. Collaboration and workshopping with colleagues from other development shops is extremely helpful, and I think we can all agree on one thing: There are few things sweeter than a transformational gift for the causes we love.

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Questioning philanthropy

With so many nonprofit organizations needing funding fairly desperately right now, this might not seem like a particularly great time to critique philanthropy and philanthropists. That hasn’t stopped people like Anand Giridharadas, David Callahan, Rob Reich, Ben Soskis, Alan Cantor, the folks at Mother Jones, an anonymous op-ed writer in The American Conservative, and many, many others.

And the critics have a long list of grievance: Foundations have too much power. Foundations don’t give away enough. Billionaires are stingy. Billionaires are stepping up, but not enough. Wealth inequality is distorting philanthropy. It’s imperiling democracy. DAFs are the best thing since sliced bread. DAFs are evil.

It feels like there’s a crescendo of criticism lately. And they’ve got a point – there is so much more need, the inequity gap is an increasingly yawning crevasse, and trillions are locked away in philanthropic vaults, ticking up interest and income for investment offices and institutional sponsors. And there are billionaires who could change the course of poverty/hunger/you-name-it with one check (and some, like MacKenzie Scott, who seem to be actually trying).

As they have for over a generation, medium and large nonprofits are focused laser-like on that top tier of prospects and those prospects’ assets are growing by the second, even during this pandemic. Some because of the pandemic. Sometimes I think that small triangle at the top of the pyramid is going to separate and blast off like the SpaceX Dragon.

A small voice in me wonders if prospect development has played some role in this problem of declining donor numbers. Because of our part in the fixation on that nose-cone.

And, to be fair, it has made practical sense, right? When bank robber Willy Sutton was asked why he robbed banks, he said “because that’s where the money is.” Well, yeah.

Have we been myopic?

So yes, we’ve focused on the richest of the rich because they’re the ones with the most money to give away. But is that one (of the potentially many) reasons why our nonprofits have shrinking donor pools? Because we haven’t spent the time to identify and involve the next generation of donors because the low-hanging fruit was just so much easier?

What about the next tier who may not be able to make 7-figure gifts now (or ever), but could make multiple 5 or 6 figure gifts over a lifetime? Have we in PD not done our duty to insist to leadership that those prospects are worth the work so we can ensure that fundraisers working at our organization in 10 years’ time have great portfolios to work with?

Is the scarcity mindset that deeply entrenched in our sector’s collective psyche that nonprofit leadership doesn’t feel it can take the long view to ensure that their nonprofit will be here in 50 or 100 years and needs to go for the quick wins now?

Or, to play devil’s advocate, in this increasingly unequal world is it more expedient (and ethical) for us to have stayed focused on the top of the pyramid to the…maybe not exclusion, exactly, but certainly decreased emphasis on that important second tier? I wish I was sure. That small voice gets louder these days telling me “no”.

Fortunately it’s not an either/or choice. Those critics are airing out the Third Sector’s dirty laundry and it doesn’t smell too rosy. So what we have here is an opportunity for all of us, particularly in prospect development.

So what can we in prospect development do?

We have to start involving people below the Forbes 400 level – now – for all kinds of reasons.

First of all, although their bank accounts are growing at astonishing levels and their numbers are creeping up slowly, ultra-high net worth individuals (UHNWI) are still a tiny subset of the general population. Also they tend to give their support exclusively to large, well-established institutions (the equivalent of the Forbes 400 of the nonprofit world).

Second, I don’t know of too many nonprofits whose constituencies are exclusively over 60, male, and white. All-white boards may have worked in the 1970s, but we all know that style of board should have died out long ago. The fact that the status quo has lasted this long is frankly lazy and embarrassing. Female and BIPOC representation amongst trustees, volunteers, donors, and fundraisers, has to increase and fast in order for nonprofits to stay relevant (and afloat).

And third, donors have an increasing number of giving choices that completely bypass nonprofits and go straight to the recipient. Let me repeat that – donors are bypassing nonprofits entirely (read the embedded-linked article in that last line). Or they give money to nonprofits through vehicles like Facebook, which cuts out the nonprofit/donor relationship. Right now, when people can’t get out to volunteer or to attend events, these options are a way for mid-level donors to make a direct impact. This makes prospect identification, philanthropic-interest research, and engagement all the more difficult for an increasingly important demographic.

And although they may not be 100% correct, the critics care enough about the success of our sector to venture an opinion and point out where we need to fix things.

As a prospect development professional, I can’t fix DAFs, or foundation payouts, or wealth inequality, or the tax code. But there are many things we definitely can do to make our sector – and our own nonprofits – better. And that starts with making the pie bigger.

Elbow-grease prospecting and segmentation are even more critical right now. There are opportunities in every single fundraising database to be found through analytics and wealth screening, peer networks and philanthropy. There are common-sense ways to find new or previously overlooked donors in the communities where we operate and that we serve.

As an industry, we need to figure out how to present newly-identified prospects in such a way that fundraisers will rush to set up a Zoom call. And managers need to find new ways to motivate fundraisers to do that. Great prospects sitting in a portfolio growing cold are the very worst kind of waste. Internally we need to discover ways to communicate excitement and opportunity.

Something that’s been exciting for me is a project we’re working on right now within our Data Insight team: identifying the ways that the research tools we use don’t identify (or appropriately weight) female and BIPOC prospects and building up our own custom appends and methods to counter those deficiencies for our clients.

I’d love to hear your thoughts about any or all of this.

 

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Credit where credit is appreciated

On occasion, a prospective client will ask “How much money has your company helped your clients raise?”

That’s a tricky question, because the truly honest answer is, “I don’t know.”

Some clients hire us simply to provide profiles and we don’t usually hear what happens after the fact.

If we’re working with clients on a dedicated basis – meaning that one of our team works with them side-by-side over a period of months or years – it’s a lot easier. We can trace the donations of the people we’ve identified for them and come up with a figure. Or, as happens more frequently, the fundraiser we’re working with calls to celebrate the donation – and that’s like the sun beaming through after a full week of rain. Pure joy.

We also do prospecting projects, of course, by hand and through our Data Insight team. But again, we rarely hear the long-term results of those projects 18-24 months down the road (the usual time from identification through cultivation to gift).

We would love to hear, of course, but as is the way of things, our clients are focused forward, not back.

And also, (going back to the original question), when you work in prospect development you’re entirely at the mercy of the action and skill of the fundraiser, dean, executive director, volunteer, etc., to convert that prospect to a donor. You could identify the Gates Foundation for a world-class malaria and TB charity with a connection to a program manager, but if the fundraiser doesn’t act on the prospect, that research work had zero impact.

Of course, prospect development often does have a huge impact, and there are lots of ways we can measure it, including…

  • Number of new prospects identified
  • Number of prospects identified who went on to make a gift (and why? what did they have in common?)
  • Estimated capacity of newly-identified prospects
  • Number of reports completed
  • Number of prospects rated and assigned

…and more. But those ways are presented in statistics, produced at our desk, provided monthly or annually in a report. Not the most super-exciting reading for the recipient, nor is the report something that generally causes the reader to call the research manager to exclaim their praises. But, you know, those stats can be kind of a big deal.

What we need, especially now, are examples of ways to communicate and celebrate the impact of prospect development.

Many times staffers will hear exciting news about a big gift in office kitchens or hallways before the monthly announcement at the all-staff or major gifts meeting. But with a pandemic going on and all of us working remotely, those moments of shared joy aren’t happening. We’re cut off from colleagues, physically isolated, and working in a vacuum. It’s hard for those moments of celebration to happen. Which means it’s even harder for staff to stay motivated and feel part of the big picture.

So especially now, when those gifts happen, how can leaders share them? How can fundraisers help prospect development folks feel valued? How can PD managers keep their teams motivated? We need to find every way we can. And honestly, the endorphins that flow with sharing that kind of joy is good for all of us, sharer and recipient alike.

How does your team creatively share celebrations now? How do you as a manager make sure that your team stays inspired – and credited – for their part in making those moments of success happen?

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Silver linings

So here we are, week nine hundred and twenty-whatever, working from home, wearing a mask when we’re out, socially distancing, all that good stuff. We’re w-a-a-y past the novelty and deep into the “Seriously I cannot binge-watch yet another series” portion of this Pandemic-a-thon. And that’s if we’re lucky.

[PSA: Now is the time when it’s really easy to break down and do something that honestly doesn’t seem like it would be that risky but three months ago would have freaked you out. Don’t. You’ve made it this far and we’re all counting on you to keep being a strong link in this virtual chain. Also you’re awesome and cherished].

But, yeah, this is still 17 kinds of awful. I’ve been trying to keep a gratitude list to stay positive, and I wanted to share with you some positive things I noted that wouldn’t have happened if it weren’t for this pandemic.

For one thing, no one is saying “It’s impossible for prospect development folks to work from home!” anymore. There is an element of “be careful what you wish for” here, but if you’re one of the millions who’ve discovered that working from home really is a wish come true, well, there’s good thing #1 to come out of this.

Another good thing happened a couple of weeks ago. My university held a virtual stewardship event for donors to the student COVID emergency relief fund, and one of the speakers said “of course, we’d ideally be all together now so we could thank you in person.” Since my university is across an ocean, the likelihood of my being there in person would be approximately nil, but because the event had to be virtual, there I was, one happy square among many on several pages in a Zoom room. How many great opportunities will nonprofits be able to take advantage of to engage with distanced constituents (who want to be more engaged) because we’re separated?

And speaking of the benefits of virtual gatherings, here’s another good thing: All of the free and low-cost webinars this spring were great, right? Especially in the beginning when we were trying to figure out how permanent or temporary this was all going to be. But if you’re like me, right about now you’re longing to be part of a real discussion again with other prospect development folks. Conversation. Back and forth, not just being talked at.

We’re not alone. Coffee talks are springing up everywhere. Last week Apra-MN had a great coffee hour conversation featuring Janna Lee and Mark DeFilippis on the topic of the legality of using FEC data in prospect research. Lori Lawson (who helped write the guidelines on this for APRA) was able to chime in from her home in Florida. Bonus!

Next month Apra-MN will host another interactive kaffeeklatsch on the topic of New York real estate, and they’re also doing evening happy hours just for conversation. Apra-Carolinas and Apra-PA are also hosting social gatherings…maybe your chapter is doing something, too? If not, volunteer to lead one yourself! It’s great that distance doesn’t have to be a factor – we can share a beverage and talk to peers everywhere! (oh, and hey: chapter membership chairs? Members don’t need to be in your geographic area anymore! Just saying.)

What other good things are happening because of this very bad thing that you can think of?

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