The Stock Market, Net Worth, and Prospect Development During COVID-19

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Our Q&A series continued with a live discussion on how a falling stock market impacts wealthy households and what prospect development and research can do to help guide their teams through COVID-19 pandemic. See more discussions and resources like this one.

 

How have past stock market drops affected giving?

Dan Stevens, Co-founder and VP of Business Development at Windfall, shared his team’s insights into the ever-changing net worth of $1m households.

“During the last major economic downturn in 2008, total U.S. giving was down by six to eight percent depending on what source you look at,” Dan said. “So the giving decline was more muted than sort of the overall market. I think that’s encouraging in projecting donations. The other thing was that donor participation rates actually did not decline during that period.

There are a number of studies out there, including one from the University of Chicago that point to donations being much more responsive to stock market booms than busts. (Meaning giving doesn’t change as much during periods of decline.)… Looking at that historical data is fairly encouraging.”

 

Big stock market changes do affect affluent households — but not as much as the drop itself.

While a drop in the market does affect the wealthiest Americans, they typically have diverse portfolios which means their overall net worth doesn’t decline as much as the stock market. Donors may be more cautious, but have not yet seen huge declines to their personal wealth.

“There a couple of different ways to look at this,” Dan said. “There are some downstream effects that will take, you know, three, six, or nine months to really show up in the sources or modeling that we’re doing. When you’re looking at a household balance sheet, it’s going to take some time for those effects to hit. 

Take real estate for ann example. It’s going to be a few months before we start to see any softening in the real estate market, which obviously is a big wealth indicator. The other factor will be business ownership. We (at Windfall) have a unique lens into small business ownership and how that affects personal net worth. There’s still a lot of questions out there with sort of how the small business market overall is going to be affected by this downturn…

Our focus at Windfall is on affluent. So if you talk about the top ten percent of wealthy households in the U.S., they own something like 85% of stocks. They are most affected by this downtick in the broad markets. So does Windfall address that [when assessing net worth]? One of the advantages to our model, which gets updated on a weekly basis, is we actually do take into account those day-to-day market fluctuations. 

There are some heuristics out there that Arup, our CEO, wrote about last week. Based on the survey of consumer finances that the Fed conducts, they show how much of a given household’s portfolio is in stocks versus bonds and other asset classes. We take that into account and looking at this high net worth population in initial reaction to the market, we saw around a 6% decline in affluent households in our data set overall. That was from week one [of this crisis]. It’s significant, but’s not down as far as the stock market has gone.”

See how the EverTrue + Windfall integration delivers constantly updated net worth data and wealth insights to help your team automatically spot overlooked, affluent prospects.

 

Be sensitive, stay active.

Julie Craig, Senior Director of Prospect Analytics and Research at the Kansas State University Foundation, joined the call to share how her team is staying active and moving forward with as many big initiatives as possible.

“We’ve been encouraging outreach along with our stewardship department,” Julie said. “They’ve been doing an amazing job of being resources for our development officers on how to reach out to people, check-in, and say thank you. We’re sharincreative ways to do that and asking for ideas on to show care and appreciation to our donors…

Don’t stop. The worst thing you can do is stop reaching out, touching base, and checking in on people because we do genuinely care. We need to know how [our donors] are doing. We need to know if there’s something we can do to help and keeping them informed of what’s going on here. K-State has a lot of interesting things related to disease research. And so it’s fun to share those updates with our insiders as they become become publicly available.”

Here’s a playbook for prospect development and research teams to follow as they handle the COVID-19 pandemic.

 

Shift to counting virtual visits

The first week the Kansas State Foundation shifted to working entirely from home, the main focus was getting everyone’s remote office set up and settling into new routines. But with that accomplished, they’ve seen an increase in fundraiser activity. 

“Last week was our second week of working from home.  We absolutely had a spike not only with outreach to our donors and prospects, but also in a portfolio cleanup,” Julie said. “If you’re sitting at home and you’re not on a visit, you can take a look to see if your proposals are up to date and your portfolio’s current.”

Activity is up and the Foundation is counting all substantive interactions toward annual gift officer metrics. So while they may not be moving gift proposals forward quite as aggressively, they’re still planning on having their fundraisers stay active and even increase outreach.

More than half of the attendees surveyed on the call have started counting virtual visits or video chats toward gift officer meeting goals.

 

Keep feeding new leads to your fundraisers

Kansas State has a small team of Digital Development Officers in place. They’re charged with connecting with hundreds of alumni a month via highly personalized outreach — essentially delivering a concierge-like experience to K-State donors. 

Julie’s team has pulled Windfall data from EverTrue to send these DDOs lists of wealthy, unassigned, and unvisted prospects. The DDOs use email, phone, video, and social media to try and contact these potential donors, see who’s interested in having a major gift conversation, and pass those “hot leads” onto gift officers.

“We work with our Digital Development Officers and send them lists of people who look great [according to Windfall net worth data, engagement data in EverTrue, and past giving],” Julie said “They work to virtually connect with them. They’re first trying to get ahold of them by Facebook or LinkedIn and then phone calls and emails if if needed. They vet who has an interest in connecting, then that person goes on to our regional team who will qualify the prospect.” 

 

Push and pull data to keep teams on track

Julie talked about the need to both push data out — sending the team new leads and share how the most active fundraisers have been successful during the shift to full-time remote work. But it’s also a chance to pull data back in for analysis to help spot opportunities for growth.

That helps support the partnership between her prospect research and analytics team and development managers as they work together to coach gift officers, share what’s working for others, and guide fundraising efforts.

 

Watch for more

Julie and Dan answered a ton of questions — about the oil industry, how to build and test donor personas, the value of continually fresh data, donor-advised funds, and more. Watch the full webinar for all their responses.

 



Here’s EverTrue’s take on the novel coronavirus pandemic and its impact on advancement: We don’t have all the answers, but we’re going to learn from each other and share best practices for remote fundraising, working from home, managing fundraisers remotely, and handling uncertainty.
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