Wealth in America and its Impact on Fundraising – Guest Blogger: Jim Daniel

18 05 2011

Today’s guest blogger is Jim Daniel.  Jim has really spent a lot of time looking at wealth and what that means for the fundraising professional. This type of analysis should really be shaping how organizations deploy resources in their development shops.

Professor Edward Wolff, a sociologist at NYU, has been studying wealth distribution in America for some time. His most recent findings were published by the Levy Institute at Bard College in March 2010. I think this data is of interest to all fundraisers for the simple reason that fundraising depends, at least in part, on money and wealth. His studies show in some detail what the media has observed casually over the last few months – wealth is quite concentrated and not available equally everywhere.

Here are some of the statistics:

The wealthiest 1% of Americas own more than a third (34.5%) of all wealth in the country. The next 9% control more than the second third (38.4%). The middle class in America – the 2nd and 3rd quintiles – control only 15% of the wealth. And the bottom 40% of Americans, share less than two-tenths of 1%.

Income is distributed, not surprisingly, in ways that are slightly more broad-based but quite similar to wealth:  The wealthiest quintile (20%) capture 61% of all income generated in the nation—including capital gains. The bottom 40% of Americans receive less than 10% of the income—mostly wages. And, the 2nd and 3rd quintiles (the middle class) garner about 29% of income—wages and gains.

The patterns and changes with regard to ownership in this respect are accelerating with a tendency toward fewer having and receiving more.  Two significant implications seem to follow for fundraising:

  1. Larger and larger major gifts are becoming more and more important to philanthropic organizations – build up the major gifts programs, including research.
  2. Annual funds are facing not just the problems of obstacles to communications (fewer direct mail pieces get opened; fewer telemarketing calls connect) but the middle class, the natural constituency for annual giving progressively has less and less to give – work harder to retain donors and emphasize LYBNT efforts.

Special thanks to Jim for his guest blog.  Please be certain to watch his video!  Next week I will be hosting a discussion on the impact of legislation on philanthropy.  If you would like to be involved in the discussion before the post, please feel free to email me mjm@bwf.com  – Mark
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5 responses

19 05 2011
jrudnits

A good reminder to focus – and let’s also remember that people with the ability to make major gifts also have a vested interest in keeping the institution strong – how do others feel about asking for gen op (or annual fund) along with the major gift if you can?

19 05 2011
Dennis Kelly

Thanks for the great info!
For reference, do you have the income ranges for each of the quintiles?

19 05 2011
Dorothy Morrow

Really important info to know…would also be interested in knowing the income ranges mentioned above.

20 05 2011
Tony Grundhauser

This is good information and gets at an important trend in wealth concentration. One issue, then, is to motivate the top earners to give away an equal percentage of their income as the lowest 10%. I think the statistic is on average 2% of income is gifted from top earners compared to over 4% for lowest earners. Or better, asking wealthiest to gift as a percentage of assets.

20 05 2011
Jim Daniel

Look at the following Wikipedia page for a rough estimate of the average family income by quintile in 2007. This is the timeframe for the data that Professor Wolff reported which I graphed in the slides above. I hope this helps:
http://en.wikipedia.org/wiki/Income_distribution

There are other ways to discover this data. Some of the more reliable are the websites for the IRS and for the USCENSUS.

Jim

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