Tag Archives: HNWIs

Insiders. Profiles. 3 Tips to Keeping It Simple.

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Whether you are trying to improve your profiling skills on public company insiders or whether you need to upskill your research team, when it comes to insiders, it pays to keep it simple! Because once you master the core skills, it is much easier to tackle more difficult financial concepts. Following are 3 tips to keeping it simple.

1. Get really good at the two key wealth indicators first, and then keep adding to your expertise.

When it comes to public company insiders, whether they are top executives or directors, there are essentially two types of wealth information to find first: (a) annual cash (non-equity) compensation, and (b) stock (equity) holdings. Yes, there are all kinds of other equity compensation, such as stock options, performance stock units (PSUs), and more, but mastering cash compensation and stock owned right now is a big step. If you don’t have a subscription tool like KALEIDOSCOPE Insider Focus to make it easy, you can always find the Proxy Statement (Form DEF14A) by searching the Securities and Exchange Commission (SEC) database named EDGAR at www.sec.gov From the Proxy Statement you want to master two tables: (a) Executive (or Director) Summary Compensation Table, and (b) Beneficial Ownership Table. Following are some tips for you:

  • On any table in the Proxy Statement, be aware of whether the number is a count (#) or a dollar amount ($).
  • Read all the footnotes! Especially on the Beneficial Ownership Table, this is where you often discover how much of the count of are actually shares of stock and how much of the count is potential stock, such as options or units.
  • If you don’t understand the word, look it up or let it go, but don’t add something to the profile that you don’t understand. Because of course that will be the one thing the development officer asks you about!

2. Drop the jargon for your end-user.

As I type this up it makes me cringe to realize how much jargon we still use at Aspire when we present insiders in our profile! It sounds easy, but it is a challenge for researchers who want to be accurate and correct to drop jargon. Of course we need to be accurate and correct, but how we present our accurate and correct information can be in plain language. Consider the difference between the two compensation tables below. Complex Non-Equity Compensation

  Salary Bonus Non-equity Incentive Change in Pension Value Other Comp Total
Year1 $852,000 $0 $4,000,000 $450,000 $760,000 $6,062,000
Year2 $845,000 $1,250,000 $3,500,000 $125,000 $725,000 $6,445,000

This table includes all compensation that is non-equity (no stock). I have been very guilty of this for decades! (Thank you to Elise Lynch at Kaleidoscope Insider Focus who asked me why I was reporting on compensation that is not cash.) Does your development officer really need to know the change in pension value that was realized during the company’s fiscal year? Of what value is it to the development officer to know the type of other compensation, such as use of the company jet? If you are wondering whether to include information, ask yourself if it has any relevance or meaning for fundraising. If it doesn’t, drop it. Keeping It Simple Cash-Only Compensation

  Salary Bonus Total
Year1 $852,000 $4,000,000 $4,852,000
Year2 $845,000 $4,750,000 $5,595,000

This table only includes the compensation that puts cash into the insider prospect’s pocket. Even better, the table consolidates the bonus and non-equity incentive compensation. Why? Because for the everyday person, they are the same thing. Bonuses got a bad reputation during the Great Recession when insiders were paid their performance bonuses even as companies went bankrupt. If the insider met their performance obligation, then they were entitled to their bonus. To counter this negative publicity, creative professionals created a new category of “non-equity incentive” that is simply a performance bonus by another, more obscure name that the general public is less likely to understand.

3. Emphasize the context.

If you want to be a truly valuable intelligence asset to your major gift team, you need to do more than find, understand, and present the numbers. Even if you are an insider novice and just beginning to master cash compensation and stockholdings, you can provide key insights that could make all the difference for your development officer. Following are three simple things you can assess – especially in times of volatility or uncertainty like recession, pandemic, or political chaos – to give your development officer context for the compensation and stock values you provide in the profile.

  • Stock price trends: Check the price of the stock over at least 5 years as well as the past 30 days. The stock price may have climbed quickly over 5 years and your prospect is now sitting on significant stock value. This is great! But if it just had a drop in the past 30 days – even though it doesn’t greatly affect the prospect’s wealth – it could certainly affect the prospect’s outlook on giving! When there is price volatility, including a picture or graph speaks volumes.
  • How many years in public companies: If your insider prospect is sitting on his first ever public company board and has no other public company history, their wealth picture is likely to look wildly different from someone else’s 30-year public company career collecting stock the entire journey.
  • Industry outlook: If you follow the business news, you will probably know when big things are happening, but regardless, it never hurts to look at recent news coverage of the company on a site like marketwatch.com You don’t want your development officer to be caught by surprise in a meeting.

Get out of your own way and get started!

If you are intimidated by SEC financial filings, you are not alone. But if you keep it simple and master the basics first, you will find it is not nearly as difficult as you thought it was. And you will be providing your development officers with fundraising intelligence they can quickly understand and act on. Hungry for more training on public company insiders? If you are looking for training on how to assess public company insider wealth from Securities and Exchange Commission (SEC) filings, check out the training offered at the Prospect Research Institute!  

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Public Company Insider. So What?

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Maybe no-one in your fundraising office would say “So What?” but that does not mean they are not thinking it. What is the big deal about public company insiders and how can you succinctly convey that relevance in conversation – or even profiles? I have three things to say about that!

1. Years of Growth (or not)

Especially during economic volatility, a 5-year or 10-year chart of stock performance can visually demonstrate whether your insider is experiencing heady wealth accumulation – or not.

Because your insider is likely getting paid a cash salary and a cash incentive/bonus, those stockholdings represent long-term incentive and they grow at rates your savings account can merely fantasize about.

That means that if the stock price chart is moving up significantly in value, your insider’s stockholdings are highly appreciated assets that are untouched by living expenses.

What is that stock price chart? Oh that. That is your insider with “excess” assets making great rate returns.

2. Gifts of Stock

I do not know what percentage of insiders make gifts of stock, but at Aspire, we find a good portion of the insiders we research make gifts of stock. However, it is not always to an operating nonprofit.

But many times the stock is gifted to a family foundation, which is significant, or to a family trust, which is, again, excess assets making great returns.

Regardless of who the stock is being gifted to, the key point here is that the insider has the knowledge and maybe even has the habit of gifting stock.

When you reach a deeper relationship and the insider is keen to make a significant investment in your organization’s work, gifting stock may be an option your prospect already uses – no education required.

3. Counting Cashed Out Stock

It is possible to skim through the insider’s Form 4 filings for specific file types that indicate which sales of stock resulted in cash in the insider’s pocket. But you have your work cut out for you untangling them from all the sales of stock used to exercise stock options, pay taxes, or other sale types.

Aspire recently subscribed to Kaleidoscope’s Insider Focus research tool and it is the perfect use for A.I. The software has no problem making the calculations to tell me exactly how much stock was cashed out during a specified time-period.

This is an amazing number! Did your prospect cash out stock to the tune of millions of dollars in the past year or two? Now you can know with a click!

Knowing that this cash is above and beyond salary and bonus gives you a snapshot of what kind of money is “psychologically” available. In other words, it is money that the insider is already comfortable cashing out of stockholdings.

Even if this cash is being invested elsewhere, it gives you a sense of how much money could be available if the insider is deeply motivated.

When someone is an insider it is a good bet there’s significant wealth

For at least the three reasons above, if you are trying to identify $1 million+ potential donors for your campaign, or otherwise trying to spot the most capable prospects in your donor base, do not underestimate the insiders!

Money is never enough, of course. Prospects need to have an interest, be philanthropic, and be reachable, but there is no doubt that big visions need big money.

Do you need to learn to read SEC filings?

If you are looking for training on how to assess public company insider wealth from Securities and Exchange Commission (SEC) filings, check out the training offered at the Prospect Research Institute!

Curious about compensation and beneficial ownership, but also how to incorporate into capacity and the profile? This 3-workshop bundle has you covered! Enroll Now

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Insiders and the Paycheck that Keeps Paying

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Most of us are familiar with getting a paycheck as well as the practice of receiving a bonus incentive for achieving top performance. And many people are familiar with investing in mutual funds to benefit from the stock market without having to manage a personal portfolio. But exactly how is it that public company insiders can accumulate such tremendous wealth? Is it just because the total numbers are bigger?

I have always thought of stock options and stock grants as the “paycheck that keeps paying.” If the company’s stock price continues to rise – and perhaps rise dramatically – the original option or stock value also increases.

In my head I imagine I have my Toyota at the starting line with the insider’s Formula 1 race car next to me. Sure my “Toyota” mutual fund rate of return is awesome, but the insider’s “Formula 1” performance stock units can go so much faster!

But how does the insider make incredible gains on their incentive awards in real life?

NVIDIA Corp. (NASDAQ: NVDA) chief financial officer Colette Kress is our obliging volunteer with a demonstration below.

The savings account is not even a real comparison is it? In that scenario, my Toyota is more like a beat-up, barely moving, 20-year-old Toyota compared to the insider’s Formula 1 – and that is with what has been a generous, harder to get 1% rate!

But when we get to a double-digit rate of return on the mutual fund – which is invested in the stock market – we see something close to a comparison to the NVIDIA stock rise — but not really. Why? Because NVIDIA stock rose in value faster and I had to make the initial investment. Ms. Kress was given the stock for her performance. Yup. The paycheck that keeps paying!

At this point someone usually reminds me that stock prices can go down, too.

This is true. But for a public company executive insider like Colette Kress, she earns a cash salary and bonus every year too, which has been around $897,000 from 2022 through 2024.

Her Performance Stock Units are a long-term incentive (i.e., long-term bonus). She receives her annual salary and short-term bonus in cash and her long-term incentive in performance stock units (PSUs), which vest into stock a little bit each year — adding a very generous layer of stock value.

This is Why I Say That Long-Term Incentives are Like the Paycheck that Keeps Paying

Hopefully, this example gives you a better perspective of how stock is an outsized addition to salary and cash incentives in the compensation package. And it is not just the executives who receive stock as part of their compensation package.

Top executives are considered insiders and must publicly report their compensation, but management and other employees likely receive stock awards, too. Just not quite so many!

When your prospect is a public company insider this automatically indicates the potential for significant wealth.

To know how much – or how little – requires some knowledge and skill. This is where the prospect research professional steps in to clearly present the full wealth picture of a prospect.

If you are looking for training on how to assess public company insider wealth from Securities and Exchange Commission (SEC) filings, check out the training offered at the Prospect Research Institute!

Curious about compensation and beneficial ownership, but also how to incorporate into capacity and the profile? This 3-workshop bundle has you covered! Enroll Now

Want to know more about insiders? Check out “Why Insiders” by Elisa Shoenberger.

Not asking for Millions? Why should you care about HNWIs?

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NOT ASKING FOR MILLIONS? WHY SHOULD YOU CARE ABOUT HNWIS?I get it. Your organization is not going to ask for millions even if the prospect could give millions, so why should you spend your limited emotional energy trying to understand HNWIs (high net worth individuals) and global wealth trends? The clear majority of nonprofit organizations in the U.S., around 80%, have operating budgets of $1 million or less.

Nevertheless, there are three very good reasons why you should care.

1-Mission

I’ve been a consultant for over a decade and no matter what the mission, every organization is sure that fundraisers with a different mission – children, animals, environment – have it easier. That somehow someone else’s mission is easier to raise money for. The truth is that every mission has passionate donors, but it takes careful, skilled fundraisers to understand the donor base and position the messaging and gift opportunities to match.

Sure, you might not have the budget or opportunities to attract million dollar gifts now, but isn’t your mission worthy of receiving million dollar gifts? Aren’t you working together with leadership to grow your organization’s impact?

If you don’t know anything about HNWIs how could you possibly position your organization’s messaging and gift opportunities to grow into million dollar giving?

2-Career Growth

Especially if you are working for a small nonprofit on a thin budget, you need to be in command of your career training. With rampant content marketing your free learning choices can be a bit overwhelming. You’re reading this blog post so I know you care about sharpening and growing your skills. The next step is to find and manage learning sources that are related, but outside the boundaries of fundraising.

Local and global economics, including HNWIs should be on your list. Following are three really good (and very readable) resources with a hot tip from each:

Capgemini World Wealth Report

Besides having a fun-to-navigate website that lets you dig in to the data, you can download the report to take advantage of the table of contents and the executive summary. But it’s the attractive charts on pages 17-19 that I want to highlight for you here.

Figure9-CapgeminiWWR-2018

For the HNWIs that participated in this study in North America, 12.4% of their wealth is held in real estate. This percentage is excluding the primary residence, which is helpful because individuals who own multiple properties are more likely to be HNW. We don’t want to use our “back of the envelope” calculations on just anyone – only those that have investable assets of at least $1 million.

So, if you have someone who has multiple properties you can now perform some eye-opening “back of the envelope” calculations:

Real Estate ÷ 0.124 = Estimated Net Worth
Estimated Net Worth x 0.05 = Low Gift Capacity
Estimated Net Worth x 0.10 = High Gift Capacity

The New York Times – How to Get the Wealthy to Donate

Did you miss this article on “How to Get the Wealthy to Donate?” Did you hear about the underlying scientific research anywhere else? If not, you may find yourself frustrated and unhappy with the results of your conversations with HNWIs. It is squarely on your shoulders to understand and relate to donor prospects – in situ!

In this consumer-friendly world of content marketing, you don’t have to have a subscription to benefit from great resources like The New York Times. You can usually find a free e-newsletter or mobile app that will tease you with headlines. My favorite way of keeping up with multiple resources like this is to create a Twitter stream in Hootsuite of various topic lists I create from Twitter accounts that I follow.

Indiana University Lilly Family School of Philanthropy – Current Research

At Indiana University’s School of Philanthropy, the list of research projects creates a wonderful feeling of abundance! From Giving USA to the Study of High Net Worth Philanthropy to Women Give you can’t go astray.

“Nonprofit boards that include a higher percentage of women tend to have board members who participate more in fundraising and advocacy. Members of these boards also tend to be more involved in the board’s work, new research shows.” –Indiana University

The next time you attend a strategic planning session or any other leadership meeting, you now have scientific research at your fingertips to help your organization continue to grow and expand its reach.

3-Success = Preparation x Opportunity

Notice how I changed the formula adage slightly from “Preparation plus Opportunity” to “Preparation multiplied by Opportunity”? I wanted to emphasize how rare and transformative Opportunity is in this world. According to the Urban Institute, as of December 2016, there were more than 1.2 million public charities and private foundations in the United States. That is a lot of noise! How will donors and prospects hear you?

When opportunity does come, will you recognize it?
Are you prepared to seize it?

If you wanted to compete and win at the Olympics, would you wait until you passed initial qualifying tests before hiring a coach? No way! You would have had a coach from when you were a mere tot expressing interest. Don’t wait to get a fundraising mentor or coach. Regularly consume information about communicating with all kinds of people, including HNWIs.

Sales training abounds and one of my favorite resources is Sandler Sales. They have great white papers, articles, and newsletters. Do you have any kind of commute to the office? Visit www.sandler.com or search on iTunes to find their “How To Succeed” podcast, which is about 15 minutes per episode.

One of their recent episodes was how to make “touch calls.” This translates easily to fundraising! After all, we want to retain our donors and becoming more systematic about it is part of the preparation that leads to success. In the episode there is a reference to the DiSC profile and how each client personality is likely to respond to your call, which you might decide to investigate further.

You can create a personalized coaching team by pulling together key resources, like a podcast, and having the discipline to schedule time every day to learn.

Why am I focusing on Wealth instead of Philanthropy?

It is easy to argue that if you needed to focus on only one thing, it should be philanthropy first. After all, a person can have great wealth and refuse to part with a penny. Hands down, if you are in a smaller nonprofit, focusing on philanthropy first is a winning strategy. I’m not suggesting otherwise.

What I am suggesting is that it is important to focus on philanthropy with wealth. Your organization needs dollars and is worthy of money to pay the electric bill, hire competent staff, and deliver programs that are making our world a better place.

It’s important for all of us to assess our feelings about money and any bias we may have about wealth accumulation so that we don’t neglect our education and skill building around philanthropy with wealth.

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