Rich but Not So Different

Author says fund raisers are as likely to find wealthy people hanging out at trade shows as attending the ballet

As Albert Hoffman makes his way to daily Mass, few of his Chicago neighbors see a millionaire philanthropist. The retired engineer doesn’t wear expensive suits or drive a fancy car, and he still lives in the home where he was raised in a working-class neighborhood on the city’s North Side.

But he is a major benefactor of the Jesuit order. “We consider him one of our dearest friends,” says the Rev. John F. Costello, chief fund raiser for the organization’s Midwest division. Over all — in his life and through his will — Mr. Hoffman intends to give at least $1-million to support Catholic educational and missionary work.

Although his financial status may not be apparent, Mr. Hoffman is quite typical of most wealthy people in America, says the best-selling author Thomas J. Stanley, who has studied the affluent for more than 20 years. And while his latest book, The Millionaire Next Door — which has been on the New York Times best-seller list for more than 40 weeks — was not specifically written for fund raisers, Mr. Stanley says they could glean much useful information from his findings.

The book, which Mr. Stanley wrote with William D. Danko, paints a surprising portrait of wealth in America. Most of America’s approximately 3.5 million millionaires, the authors say, favor Fords over Jaguars, run mundane businesses such as construction companies and dry-cleaning plants, and live well below their means. Wealthy people work hard, shop for bargains, and guard their savings jealously, the authors say.

On the other hand, they note, many people who seem wealthy build lavish life styles on mountains of personal debt and can’t afford to give much money away. But, says Mr. Stanley in an interview in his Atlanta home, it is those people who mistakenly get the greatest share of fund raisers’ time and attention.

“A lot of times the whole fund-raising system becomes self-fulfilling,” says Mr. Stanley. “You hang around with beautiful people, and you assume that donors are beautiful people.”

Indeed, a common misperception among fund raisers, says the former Georgia State University professor of marketing, is that rich people enjoy events associated with high arts and fine dining. “Like hell they do,” he exclaims. “Most of the people who accumulate wealth in one generation — the bulk of the wealth in this country — are not beautiful people. They don’t have time for that.”

The plain-speaking Bronx native suggests that rather than hanging around the polo grounds and ballet, fund raisers should identify the most important industries in their region, find out the key players in those industries, contact those people, and start pursuing them in their natural habitat: trade shows.

“If I were in this business, I would be in a booth at the Georgia Timber Growers Association, because Georgia is one of the top five states producing timber in the country,” he says.

To those fund raisers who might not be comfortable attending trade shows, Mr. Stanley offers the following advice: “Get another job.”

Despite the book’s great success — and countless news stories about it — some fund raisers warn that charities should not accept the authors’ description of wealth in America uncritically.

Susan Cronin Ruderman, a fund-raising consultant in Arlington, Mass., questions the research methods used by Mr. Stanley and Mr. Danko in assembling their portrait of American millionaires.

The main problem, she argues, is that the authors included a dollar bill with the survey questionnaire. That common research practice, which is designed to grab a person’s attention and encourage a response, presents a particular problem when studying wealthy people, says Ms. Ruderman.

Put simply, she says, the millionaire who takes time to respond to a survey when a dollar bill is used as incentive is likely to be more thrifty than other millionaires.

“I am just baffled as to how they can draw the conclusions they did,” says Ms. Ruderman, vice-president of Veritas Information Services and a former associate director of development research at Harvard University. “You are going to get a biased result here.”

Still, many fund-raising experts find a good deal of truth in Mr. Stanley’s assessment.

Robert F. Sharpe, Jr., a planned-giving expert from Memphis, says it does not take a genius to figure out that appearances can be deceiving. “This just confirms what people in planned giving have been doing by trial and error,” he says.

“Folks who work for small non-profits need to be particularly aware of the Tom Stanley millionaires,” says Joan Roeber-Jones, director of development operations at the University of Georgia.

“Everyone is going after the same Atlanta 100 or the same Forbes 400,” she says. “You have to discard them and look for people who have stronger relationships to your cause.”

She adds, “You have to open your eyes and look for successful people across the board and not be swayed by the trappings of wealth.”

But even Mr. Stanley says that many wealthy people, especially those who have built small fortunes almost entirely on thrift and savvy investing, may be virtually impossible to track down.

Stories of cleaning ladies, secretaries, or spinster teachers who have accumulated large fortunes and turned them over to charity have become “a staple of philanthropy,” says Mr. Sharpe, the planned-giving expert. Most large bequests, he says, come not from people who have made big gifts during their lifetimes but from people who have given many small gifts over a long period.

Some public broadcasters have tailored their direct-mail fund-raising activities to encourage long-time supporters to put the stations in their wills. As donors become older, they often decrease their donations or stop giving altogether. To maintain ties with those people, some fund raisers extend membership privileges, including viewer guides, to former donors. And more and more, elderly public-broadcasting fans are including the stations in their wills, sometimes very generously.

As such stories become increasingly common, fund raisers are working harder to identify those hidden philanthropists — and to encourage more of them to give.

The Jesuits are making an effort to do just that. More than a decade ago, the religious order’s Chicago office started encouraging people who included the order in their wills to let fund raisers know of their plans. Newsletters and other fund-raising materials sent by the Jesuits often contain stories about people who have supported the order through bequests.

“That seems to encourage other people to let us know about their intentions,” says Father Costello. What’s more, he says, “It helps cement the relationship so we can connect the donors to the work and enable them to have a fuller appreciation of their own philanthropy.”

Fifteen years ago, he says, the religious group was generally unaware of bequests until after the donors died. But now, Father Costello estimates, the order is aware of a donor’s intention to make a bequest in nearly 90 per cent of the cases.

And more and more, he says, the order’s best donors — like Mr. Hoffman — are those that fit the profile suggested by Mr. Stanley.

Mr. Hoffman has lived frugally. “He could have lived in a very lovely apartment on Lake Shore Drive, but he chose not to,” says Father Costello.

In fact, Mr. Hoffman’s largest expense is his philanthropy.

Mr. Stanley argues that the attributes that helped shape most wealthy people’s lives also help shape their giving habits: They want to be sure that their philanthropy is efficient and effective.

“The central theme for these people is productivity,” says Mr. Stanley. “If you look at how they run their businesses, how they run their households, how frugal they are, these people really want to know where the money is going to.”

That is certainly the case with Mr. Hoffman, who says he likes to keep close tabs on the programs he supports. “I watch everything,” he says. “I don’t trust the hierarchy to spend the money properly.”

The Chicago donor, who grew up during the Depression and never forgot the opportunities afforded him by his Jesuit education, has established a half-dozen scholarship funds for needy students. Most recently, he contributed $50,000 to help Hispanic students at a new Jesuit high school, Christo Rey, located in a gang-infested neighborhood of Chicago.

True to his values, Mr. Hoffman sets a limit on his philanthropy and won’t cover a student’s full expenses. Students who receive one of his scholarships must come up with half the money themselves. “When they don’t pay anything,” he says, “they don’t value it.”

One place to which wealthy people definitely do not want their money to go is government, says Mr. Stanley. In fact, his research has found that most wealthy people are distrustful of large institutions. “They are not happy about bureaucracy, whether it’s big government, big business, or big fund raising,” he says.

That skepticism could provide a “great opportunity” for charities, especially small, well-run organizations, Mr. Stanley says.

“When all their other fears are taken care of, the only fear left is the fear of government taking away their money,” he says. And most wealthy people, he maintains, “will do anything to avoid giving it to the government.”

But too many fund raisers waste time trying to divine the complex psychological factors that prompt donors to give, Mr. Stanley says. Donor motivation, he believes, is not so complicated.

“Why do people give? Because someone asked them,” he says. “It’s so simple it’s frightening.”

Mr. Stanley offers his own experience as proof that most fund raisers have failed to tailor their efforts in the most-effective way. “I went to three colleges and taught at four colleges and I have been on the best-seller list for 43 weeks straight, and I haven’t gotten a note from any one of them,” he says. “It’s astonishing to me. Don’t you think people are more likely to give when they are flush with money?”

Mr. Stanley is quick to add, however, that he is not hoping to be inundated with requests. “I am not crying in my beer at all,” he says. “But this is a joke.