Rising Dow and Looming Tax Code Changes create Big Opportunities for Prospect Researchers

The Dow Jones Industrial Average closed out the month of October 2010 at 11,118, having gained 269 points or 2.5% during the month. Since the beginning of September, the Dow steadily rose by over 980 points, representing an increase of almost 10%. The stock market's solid advances, as well as looming capital gains tax changes that will take effect in 2011, likely influenced the significant increase in stock sales by US executives during the month of October.

Donor Watch's most recent report, which covers stock sale transactions in October by wealthy college graduates, covers $4.6 billion in sales, a significant up-tick over last month. The top sellers that were reviewed in the analysis all received undergraduate degrees from major US colleges and universities.

Topping the list were the University of Chicago and the University of Southern California, both of which had total alumni selling activity that was greater than $350 million in stock during the month of October. Like the 3rd Quarter of 2010, UofC's Marc Benioff of Saleforce.com (CRM) and USC's Larry Ellison of Oracle Corp (ORCL) led their respective universities in cash raising transactions.

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Finding prospects flying under the radar: A nuts and bolts approach

Let’s say you’re a prospect researcher in higher education. You’re getting some pressure – from your boss, from some of the gift officers you work with, maybe the campaign director – to come up with a list of new prospects. They use different words, but their message is clear:

“We’ve picked the low hanging fruit. We don’t want to keep going back to the same alums who’ve been helping us out in a big way for a long time. We need to find some new people who have the capacity and willingness to make a nice gift. Maybe not a huge gift, but a nice gift.”

If you’ve been working in the field awhile, this isn’t the first time you’ve faced this problem, nor is it the first time somebody has offered advice on how to solve it. Truth be told, you may have gotten too much advice:

• “You haven’t done a screening for five years. You need to do a new one.”

• “Our company has gotten very sophisticated about predictive modeling as well as gift capacity ratings. Use us.”

• “You’re not using social media resources effectively. Facebook and MySpace are great places to find out about alums who have lots of financial resources and are philanthropically inclined.”

• “You need to learn how to do data mining and predictive modeling or add somebody to your staff who already knows how to do it.

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Donor Watch analysis of Wealthiest College Graduates identifies high potential targets for fundraisers

US Executives significantly cashed out of their stock holdings during the third quarter of 2010. According to a recent Donor Watch report, a selection of wealthy college graduates accounted for more than $5 billion of selling activity during the quarter. The top sellers that were reviewed in the analysis all graduated from major US colleges and universities. Topping the list were Princeton University and the University of Chicago, both of which have alums that sold more than $200 million in stock during the quarter. A significant portion of Princeton’s selling activity was made by Amazon.com’s (AMZN) founder and CEO Jeffrey Bezos who sold over 1 million shares of AMZN over the quarter. University of Chicago graduate and Oracle Corp (ORCL) founder, Larry Ellison accounted for the majority of his alma-mater’s selling activity. Mr. Ellison, who sold 8,000 shares of ORCL, made all of his transactions during the month of September Other schools whose alumni surpassed the $100 million mark are the University of Michigan, the University of Southern California (USC), the University of Maryland, Boston College, the U.S. Naval Academy and the University of Minnesota. USC’s alumni sales were led by Marc Benioff, another tech industry success story, who is the founder, CEO and Chairman of Salesforce.com (CRM). Mr. Benioff sold a series of 10,000 share lots of CRM throughout the quarter, which together raised more than $60 million in cash. According to Donor Watch, many small schools also made the list, including Amherst College, Rice University, Union College, Bowdoin College, Wesleyan University, Lehigh University, Colgate University, and the College of the Holy Cross, among others. The top school on the list was not even an undergraduate institution; instead it was a graduate school. Combined, the Harvard Business School’s MBA graduates sold almost $300 million in stock over the third quarter. HBS’s list of sellers was led by William McKiernan who recently oversaw the sale of the company he founded, CyberSource Corp, to credit card giant Visa (V). Another HBS top seller is Google (GOOG) board member John Doerr who reported selling 132,215 shares of Google on September 24, 2010. Vivek Ranadiv, who is the founder and CEO of TIBCO (TIBX), netted more than $37 million by selling off shares of TIBX. Other graduate business schools with significant selling activity were the University of Pennsylvania’s Wharton School, Columbia Business School, Stanford University, Carnegie Mellon, Xavier University, George Washington University and Dartmouth’s Tuck School. J3 Donor Watch provides its reports and analyses to the development offices and prospect research teams at many leading colleges, universities and non-profits. Donor Watch’s unique and robust set of research tools empower fund raisers to manage their relationships with top and high potential donors. Donor Watch monitors the stock holdings of top donors and alums by using SEC filings and provides its users with best-in-class analyses, filters and alerts, empowering fundraisers to focus on the big picture. For more information about Donor Watch or the report, please visit Donor Watch’s Website.

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Billionaires Pledge Majority of Wealth to Philanthropy

Forty of the wealthiest families and individuals in the United States have committed to returning the majority of their wealth to charitable causes by taking the Giving Pledge. The announcement of this first group was made by Warren Buffett approximately six weeks after kicking off the long-term charitable project with Bill and Melinda Gates.

“We’ve really just started, but already we’ve had a terrific response,” said Warren Buffett, pledge co-founder and chairman and CEO of Berkshire Hathaway. “At its core, the Giving Pledge is about asking wealthy families to have important conversations about their wealth and how it will be used. We’re delighted that so many people are doing just that – and that so many have decided to not only take this pledge but also to commit to sums far greater than the 50% minimum level.”

Wealthy supporters from throughout the country have come forward to join the pledge, including the following 40 families and individuals. A full list of those taking the pledge and personal pledge letters by many of these supporters outlining their commitment to give is available online at www.givingpledge.org.

Buffett will be joined in commenting on the announcement by three other individuals who have likewise taken the pledge: Mayor Michael Bloomberg, along with husband and wife Tom Steyer and Kat Taylor. A media call and Q&A will take place at 12:15 p.m., EDT on Wednesday, August 4, 2010. Dial-in information for the call is (866) 901-4714 (toll-free) or (702) 599-4277 (int’l.), with conference ID # 92438683. The call is open to all accredited media and will focus uniquely on philanthropy and the Giving Pledge initiative.

The Giving Pledge is an effort to help address society’s most pressing problems by inviting the wealthiest American families and individuals to commit to giving more than half of their wealth to philanthropy or charitable causes. The pledge is a moral commitment to give, not a legal contract, and it does not involve pooling money or supporting a particular set of causes or organizations. While it is specifically focused on billionaires, the idea takes its inspiration from other efforts that encourage and recognize givers of all financial means and backgrounds.

Pledge Signatories:

California
Eli and Edythe Broad
Michele Chan and Patrick Soon-Shiong
Ann and John Doerr
Larry Ellison
Barron Hilton
Joan and Irwin Jacobs
Lorry I. Lokey
George Lucas
Alfred E. Mann
Tashia and John Morgridge
Bernard and Barbro Osher
Herb and Marion Sandler
Jeff Skoll
Tom Steyer and Kat Taylor

Georgia
Bernie and Billi Marcus
Ted Turner

Hawaii
Pierre and Pam Omidyar

Washington, D.C. / Maryland
David M. Rubenstein
Vicki and Roger Sant

Michigan
Thomas S. Monaghan

Missouri
Jim and Virginia Stowers

Nebraska
Warren Buffett
Walter Scott, Jr.

New York
Michael R. Bloomberg
Barry Diller and Diane von Furstenberg
Elaine and Ken Langone
Ronald O. Perelman
Peter G. Peterson
Julian H. Robertson, Jr.
David Rockefeller
Jim and Marilyn Simons
Sanford and Joan Weill
Shelby White

Oklahoma
George B. Kaiser

Pennsylvania
Gerry and Marguerite Lenfest

Texas
Laura and John Arnold
T. Boone Pickens

Utah
Jon and Karen Huntsman

Washington
Paul G. Allen
Bill and Melinda Gates

Select Pledge Letter Excerpts: The following excerpts have been taken from letters written by pledge signatories on their personal motivation to give. Please visit www.givingpledge.org to view these letters and others in their entirety.

• Laura and John Arnold: “We view our wealth in this light – not as an end in itself, but as an instrument to effect positive and transformative change.”

• Michael R. Bloomberg: “If you want to do something for your children and show how much you love them, the single best thing – by far – is to support organizations that will create a better world for them and their children. And by giving, we inspire others to give of themselves, whether their money or their time.”

• Eli and Edythe Broad: “Those who have been blessed with extraordinary wealth have an opportunity, some would say a responsibility – we consider it a privilege – to give back to their communities, be they local, national or global.”

• Warren Buffett: “Were we to use more than 1% of my claim checks (Berkshire Hathaway stock certificates) on ourselves, neither our happiness nor our well-being would be enhanced. In contrast, that remaining 99% can have a huge effect on the health and welfare of others.”

• Bill and Melinda Gates: “We have been blessed with good fortune beyond our wildest expectations, and we are profoundly grateful. But just as these gifts are great, so we feel a great responsibility to use them well. That is why we are so pleased to join in making an explicit commitment to the Giving Pledge.”

• Barron Hilton: “It is my hope that others are inspired by my father’s story, and by our family’s steadfast adherence to his charitable philosophy.”

• Jon and Karen Huntsman: “It has been clear to me since my earliest childhood memories that my reason for being was to help others.”

• George B. Kaiser: “I had the advantage of both genetics (winning the “ovarian lottery”) and upbringing. As I looked around at those who did not have these advantages, it became clear to me that I had a moral obligation to direct my resources to help right that balance.”

• Gerry and Marguerite Lenfest: “The ultimate achievement in life is how you feel about yourself. And giving your wealth away to have an impact for good does help with that feeling."

• Lorry I. Lokey: “There’s an old saying about farmers putting back in to the ground via fertilizer what they take out. So it is with money. The larger the estate, the more important it is to revitalize the soil.”

• George Lucas: “My pledge is to the process; as long as I have the resources at my disposal, I will seek to raise the bar for future generations of students of all ages. I am dedicating the majority of my wealth to” improving education.

• Tashia and John Morgridge: “The more personally involved we have become with the causes we support the more effective we seem to be.”

• Peter G. Peterson: “As I watched and learned from my father’s example, I noticed how much pleasure his giving to others gave him. Indeed, today, I get much more pleasure giving money to what I consider worthwhile causes than making the money in the first place.”

• David Rockefeller: “Our family continues to be united in the belief that those who have benefitted the most from our nation’s economic system have a special responsibility to
give back to our society in meaningful ways.”

• Jeff Skoll: “The world is a vast and complicated place and it needs each of us doing all we can to ensure a brighter tomorrow for future generations.”

• Tom Steyer and Kat Taylor: “Surely the pleasure we derive from St. Francis’ active verbs of consoling, understanding, loving, giving and pardoning far outweigh any selfish and passive pleasures of owning, having, or possessing.”

• Ted Turner: “I’m particularly thankful for my father’s advice to set goals so high that they can’t possibly be achieved during a lifetime and to give help where help is needed most. That inspiration keeps me energized and eager to keep working hard every day on giving back and making the world a better place for generations to come.”

• Sanford and Joan Weill: “Our Pledge is this: We will continue to give away all of the wealth we have been so fortunate to make except for a very small percentage allocated to our children and grandchildren between now and the time we pass because we are firm believers that shrouds don’t have pockets.”

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The Donor Watch List of Wealthiest College Graduates identifies high potential targets for fundraisers

With a large number of college annual giving campaigns concluding at the end of June, it is very likely that the recent precipitous drop in the Dow Jones Industrial Average is not helping college development teams in their final push to achieve their annual goals. As of Friday May 21st, the Dow was down 1,115 points from its April 26th high and down 663 points since the end of the first Quarter. Given that many top donors and college trustees have large portions of their net worths invested in publically-traded companies, these invaluable contributors may be less inclined to donate large sums over the next month.

Fortunately for many colleges, some of their wealthiest alums have seen their portfolios rise since the end of the first Quarter. According to Donor Watch’s list of the wealthiest college graduates*, which includes 125 alums of US undergraduate institutions, nearly 28% of alums on the list actually saw their equity portfolios of SEC filed holdings rise since March 31st. Combined, these 35 alums’ equity portfolios increased by over $1,180 million. Another 20% of DonorWatch’s wealthiest college graduates saw their portfolios decrease by less than 5%.

Among the gainers on the list, Harvard College had 4 alums whose portfolios increased by a combined $41 million. The group of Harvard alums was led by Washington Post (WPO) CEO Donald Graham whose holdings in the newspaper company jumped by over $15 million. Three alums of University of Pennsylvania outdid their Ivy League rival as their combined equity holdings gained an impressive $263 million. This group was led by Daniel Och, the founder of hedge fund manager Och-Ziff Capital Management (NYSE: OZM), who saw his holdings in his hedge fund firm increase by $203 million.

A couple of University of North Carolina at Chapel Hill alums have also realized major gains, as CEO Levine Howard of Family Dollar Stores Inc (FDO) and Executive Chairman Fredric N Eshelman of Pharmaceutical Product Development Inc (PPDI) saw their holdings in their companies increase by $19 million and $8 million, respectively. Other notable colleges on the top donor list include George Washington University, the University of Southern California, and the University of California, Los Angeles.

Among the colleges represented on DonorWatch’s list of wealthiest college graduates, only 9 colleges have 3 or more alums on the list. The top three institutions include Harvard College with 10 alums, Yale University with 7 alums and Princeton University with 7 alums. The wealthiest Princeton alum, Jeff Bezos of Amazon.com (AMZN), is also the largest seller since March 31st. Through a series of planned sales from May 3rd through the 5th, Mr. Bezos sold 2,000,000 shares of AMZN, totaling over $267 million in cash.

New York University, University of Minnesota, Massachusetts Institute of Technology, University of California Berkeley, University of North Carolina at Chapel Hill, and the University of Pennsylvania round out the top donor list with 3 alums each.

J3 Donor Watch provides fundraising and development professionals at leading colleges and universities with a unique tool to manage their relationships with top and high potential donors. DonorWatch monitors the stock holdings of top donors and alums by using SEC filings and provides its users with best-in-class analyses, filters and alerts, empowering fundraisers to focus on the big picture. For more information about Donor Watch, please visit its product page.

*The Donor Watch list was compiled using publically available information from SEC insider filings. As of 5/21/2010, all individuals on the list had at least $150 million in equities according to SEC filings. The list of wealthiest college graduates excludes graduates of foreign institutions as well as alums that attended a college but never graduated. The Top Donor list also excludes individuals whose public holdings from SEC filings are tied to individual or family trusts, as well as individuals whose investments are part of the portfolios of the hedge fund, private equity firm or other investment institution that they manage. All equities were valued using closing prices as of 5/21/2010.

Despite the recession, schools bring in record contributions

Interesting article from this week's Crain's New York Business:

"Passing the Funding Test"

In 2009, a year in which university endowments lost nearly one quarter of their value and college fundraising posted its steepest drop on record, Fordham Law School had its best year ever. The school raked in $17.5 million in donor gifts and came within reach of its $100 million campaign goal.

“Our fundraising has increased 500% over the past five years,” says William Treanor, dean of Fordham Law. “Even at a point when the markets were suffering, we were still getting very significant gifts.”

Though many longtime donors hung back, a surprising number of schools in the city managed to defy the fundraising doldrums last year. Professional schools did especially well. So did campaigns that were launched before the economy tanked. Some schools entered the recession having overhauled sleepy development departments; others experimented with new fundraising tactics. Virtually all say they are working harder than ever to cultivate alumni and other donors.

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