4 New Approaches to Reaching and Cultivating Today’s Billionaires

There are 1,645 billionaires around the world, and they own an estimated 40 percent of global assets. The United States leads, with 492 billionaires, and the rest include 152 in China, 111 in Russia, 85 in Germany, 65 in Brazil, 56 in India, and 47 in the United Kingdom. According to Forbes magazine, 90 percent are male, 65 percent are white, and 60 percent are age 60 or older. These individuals have an extraordinary impact on society, the economy, and politics. Overall, they control about $6.4 trillion in assets. They have transformed dying industries, launched new services, and affected the way the rest of us live.

Many observers rightfully point to philanthropy as an area in which society benefits from great wealth. This is especially the case in the United States, which raises more money from philanthropists than any other country. By funding charitable foundations and supporting the arts, education, health care, and other causes, the super-rich make enormous contributions to society as a whole.

Yet it is not always clear how to cultivate the ultra-wealthy. Models of philanthropy are changing dramatically, and fundraisers need new approaches to reach billionaires. Based on my experiences, there are four lessons in raising money from them and navigating the contemporary philanthropic landscape.

Recognize that the super-rich are different. In 1925, F. Scott Fitzgerald wrote a short story titled “The Rich Boy,” which opened with the widely quoted line: “Let me tell you about the very rich. They are different from you and me.” In highlighting their material advantages, the novelist noted that such people have distinctive lifestyles and psyches.

As an example, many of them today have private transportation that shields them from the annoyances of traffic, parking, and airport security. One observer wryly illustrated the situation by telling The New York Times that “the 1 percent fly first class, the 0.1 percent fly Netjets; the .01 percent fly their own planes.”

Lifestyles that insulate people from others sometimes contribute to idiosyncratic personalities. For example, the liquor magnate Sidney Frank was a generous benefactor to Brown University. He provided the institution with $100-million to build a new life-sciences building and funded scholarships for needy students. In doing so, he helped the university adopt a “need blind” admissions policy, which meant that the ability to pay the tuition would not be a factor in undergraduate admissions.

To persuade Mr. Frank to give that sum of money, Brown University’s president at the time, Ruth Simmons, spent hours wooing the eccentric older gentleman. He did not like to get dressed up, preferring instead to lounge around his residence wearing pajamas. On occasion, he would invite her into his bedroom to watch his favorite movie videos. While he lay on the bed, she sat on a chair praying that the film wouldn’t last too long.

Appreciate the complexity of the family lives of the very rich. Families are complicated everywhere, but when you combine large amounts of money with teenage angst, marital discord, personal jealousies, and sibling rivalries, it is a volatile mixture. Big money turns marriage, divorce, and ordinary family life into high-stakes dramas.

A Chinese billionaire, Cecil Chao Sze-tsung, demonstrated the complications of wealth when he offered 1 billion Hong Kong dollars (around $129-million in U.S. dollars) to any man who married his lesbian daughter. The father explained to the press, “I don’t want to interfere with my daughter’s private life. I only hope for her to have a good marriage and children as well as inherit my business.”

Speaking to a reporter after the offer was made, his daughter commented, “I don’t think my dad’s offering of any amount of money would be able to attract a man I would find attractive.”

Children of the super-wealthy suffer from personal pressures that are very different from those confronting people of lesser means. When such children are growing up, other individuals treat them differently because of their family wealth. That may lead them to wonder whether people are genuinely relating to them as individuals.

Fundraisers must be attuned to the impact of marriage, divorce, and estate planning on philanthropic endeavors. Some spouses and children resent the philanthropy of their wealthy relatives. When billionaires pass from the scene, fundraisers should realize that the children of the very rich often have very different substantive interests than those of their parents.

Understand that the wealthy are focused on impact and outcomes. Wealthy benefactors used to give universities, museums, and other nonprofits endowment money or unrestricted gifts and let the organizations determine the best way to solve problems. The idea was that those entities had the expertise and could be counted on to come up with effective solutions.

Increasingly, though, wealthy business people are pushing beneficiaries to focus on impact and outcomes. A number of them insist on performance metrics that chart progress toward specific objectives. They are results-oriented and want demonstrable impact for their money. Some also have clear partisan points of view on major issues and combine philanthropy with issue advocacy.

An example of this new philanthropy occurred at Georgetown University last year. The NextGen Climate Action group, run by the billionaire Tom Steyer, sponsored a forum there titled “Can Keystone Pass the President’s Climate Test?”

The gathering presented information on the pipeline and greenhouse-gas emissions. This was an issue near and dear to the heart of Mr. Steyer, who has spent freely to elevate public awareness of climate change.

According to news accounts, the event opened with six ministers and priests gathering around Mr. Steyer and putting their hands on him as they prayed for “divine help in shaping public opinion: ‘Soften them. … Open them to you … for your purpose. … Claim the promise made to Moses.” Fueled by divine inspiration, the discussion then proceeded to make a strong call to stop government approval of the Keystone pipeline. All the conference speakers expressed skepticism about the proposed project.

Guard against the political risks of impact philanthropy. With colleges and universities drawn by their donors into divisive policy controversies, it is harder to separate philanthropy from political advocacy. Many donors have a strong point of view and want educational institutions to hold events, hire faculty members, publish reports, or offer courses that address their favorite topics. Such demands put the nonpartisan academy in a compromising position.

I saw firsthand the volatile combination of money and politics while running the Public Opinion Laboratory at the A. Alfred Taubman Center for Public Policy and American Institutions at Brown University. We conducted regular state surveys of public views and asked about politicians’ job approval and views about the economy.

Years ago, to mark the anniversary of the center, the university invited Mr. Taubman to a party commemorating its creation. There were panels showcasing the center’s faculty and a social gathering for Providence residents. Rhode Island’s governor at the time, Bruce Sundlun, showed up at the evening reception. The personal popularity of Mr. Sundlun, a wealthy man in his own right, had dropped to 16 percent in one of our state surveys that year because of a lingering recession and an unprecedented banking crisis that had closed many credit unions across the state.

Seeing Mr. Taubman at my side, Mr. Sundlun made a beeline for the two of us. He was a blunt man who always came immediately to the point. That week he was extremely irritated with me because, when asked in a news interview about his reelection prospects, I had intemperately replied that his political prospects were so poor that if “Mickey Mouse were on the ballot, the mouse would win.”

Understanding the importance of philanthropy to the center’s operations, he turned to Mr. Taubman and declared, “You no longer should fund the Taubman Center.” Glaring, Mr. Sundlun then pointed to me and told our leading donor, “This guy doesn’t know what he’s doing.”

The governor figured that the best way to shut me up was to cut off our money supply.

Fortunately, there were no dire consequences from this encounter. Mr. Taubman saw the center as a place for nonpartisan education, and he was unmoved by the governor’s remarks. Nonetheless, the episode illustrates the risky environment surrounding contemporary philanthropy. Had the donor been susceptible to political pressure or held a strong point of view concerning local politics, as is the case with certain benefactors today, that episode certainly would have created major problems for me and the center.

In a polarized political situation, having activist philanthropists with clear objectives and partisan goals increases the risks for nonprofit organizations. There is a much greater likelihood of donors aligning their gifts with their political philosophies. Fundraisers and nonprofits must move carefully as they navigate this new terrain.