Bringing More Buffetts to the Table
Chief Executive Officer,
Community Foundations of America
Commentary & Opinion: Bringing More Buffetts to the Table
While Bill Gates and Warren Buffett undoubtedly value the outpouring of guidance they are receiving in wake of The Really Big Gift, their horse is already out of the barn. Having utterly transformed their respective industries, these business icons will act on their own strong opinions to revolutionize education and health care.
That said, Buffett's historic $31 billion gift to the Bill & Melinda Gates Foundation raises urgent questions about what the Third Sector can do to engage more wealthy individuals. It's possible that nonprofits will continue battling one another over funds that will end up with organizations that are already the best connected and have the most resources, rather than those that deliver the greatest quality. But there is another way. Research conducted by Community Foundations of America over the past six years on behalf of the country's more than six hundred community foundations has demonstrated that:
More Americans are wealthy. According to the Wall Street Journal (5/20/05), the number of super wealthy in the United States has surged, with 430,000 households now worth more than $10 million. That figure is up from 65,000 households in 1989 (their assets adjusted for inflation). Critically needed new resources could be tapped if even a fraction of the heads of these households became meaningfully engaged in questions of how their dollars might do good better.
They want more from their giving. In his work on the motivations of major donors, John Schervish of Boston College's Center on Wealth and Philanthropy writes, "Although everyone who gives a gift wants it to make a difference, those who make a big gift want it to make a big difference." This includes varied opportunities for involvement as well as a full accounting of outcomes.
They are getting harder to reach. Wealthy people make it their business to limit access to those who would like to relieve them of their money. This trend is likely to continue as the wealth-management industry floods the market with products aimed at its most profitable segment. Community foundations have responded to this by co-marketing their services through partnerships with financial service advisors who are paid to be vigilant "gatekeepers," at the same time mindful of how they can add value to client relationships.
Current approaches aren't scalable. At one end of the spectrum, national donor-advised funds have proven their ability to attract new donors but provide few tools to inform more strategic giving. The middle of the spectrum is dominated by established and emerging intermediaries that can deliver intriguing, responsive information in a face-to-face setting, but the costs for such high-touch service limit the donors' reach. At the other end of the spectrum are intensive, peer-based workshops that focus on increasing the impact of a subset of existing donors. What we don't have are scalable methods to increase donor engagement more broadly across the super-wealthy demographic.
While two iconic entrepreneurs have staked their own new claims, the field remains open for those visionaries who will revolutionize the ways that wealthy donors connect their big gifts to causes they care about, ensuring that Buffet's is only one of many.
Carla E. Dearing
CEO, Community Foundations of America
July 24, 2006
Carla Dearing is the founding CEO of Community Foundations of America in Louisville, Kentucky. Focused on identifying and capturing market opportunities created in the evolving philanthropic sector, CFA creates programs that increase the scale of philanthropy.