Altruism has become the new must-have accessory of the elite. In today’s world, where appearances often mask reality, the wealthy view giving as a way to display their power and image. This isn’t just a trend—it’s a modern twist on something as old as the Gilded Age but now at an all-time high. There’s a reason why figures like the infamous Sam Bankman-Fried turned to philanthropy as a tool to bolster the status of his fraudulent crypto empire. By using charity to show wealth and influence, even the most questionable characters can appear esteemed and virtuous.
Rather than shake our fists at the sky, we’d rather seek to understand this trend.
Veblen giving
/ˈveblən ˈɡɪvɪŋ/
noun
Philanthropic donations made primarily to gain social status and prestige, where the perceived value of the gift increases with its size and public visibility. This form of giving is characterized by high-profile, large-scale donations that serve not only charitable purposes but also as public displays of wealth, social status, and moral virtue.
Origin Early 21st century: from Veblen (after Thorstein Veblen, American economist who described conspicuous consumption) + giving.
Coined by Whole Whale, 2024
Understanding Veblen Goods: When Higher Prices Fuel Demand
Named after the economist Thorstein Veblen, a Veblen good is a product whose demand increases as its price rises. Think limited-edition watches, rare wines, or exclusive artworks. These items are coveted not just for their intrinsic value, but for the status they confer upon their owners.
Interestingly, Veblen himself was a staunch critic of philanthropy by the wealthy elite. In his seminal work, “The Theory of the Leisure Class”, Veblen argued that such philanthropy undermined society’s natural workings and was often a form of what we might call “conspicuous compassion” – the ostentatious use of charity to enhance the donor’s social prestige and reputation.
Veblen believed that true social reform would only occur through the redistribution of wealth, not through the charitable activities of the rich. He viewed elite philanthropy as another manifestation of conspicuous consumption, serving more to display wealth and virtue than to address fundamental societal issues.
In a twist that would likely both fascinate and dismay Veblen, philanthropy today appears to be evolving into a form of Veblen good itself. The concept of “Veblen giving” we’ve introduced encapsulates this paradox: philanthropic donations that increase in perceived value and desirability as they grow in size and visibility, mirroring the economic behavior of the luxury goods Veblen critiqued.
This transformation of philanthropy into a status symbol raises important questions about the nature of giving in our society. Are we seeing a new form of conspicuous compassion, where the act of giving itself becomes a luxury good? And if so, how can we navigate this landscape while staying true to the core purpose of philanthropy – creating positive social change?
“Veblen giving” By The Numbers
The numbers tell a compelling story. In 2023, charitable giving in the United States reached an astounding $557.16 billion. Yet beneath this impressive figure lies a troubling trend: while total donations soar, the number of individual donors is shrinking. This paradox hints at a fundamental shift in the nature of philanthropy, one that mirrors the economic concept of a Veblen good.
The Rise of “Veblen giving”
Consider these striking statistics from the “Gilded Giving 2022” report:
- Households earning $200,000+ now account for 67% of all charitable deductions, up from less than 25% in the early 1990s.
- The share of donations from millionaire households has quadrupled, from 10% in 1993 to 40% in 2019.
- Less than half of U.S. households now give to charity, down from 66% in 2000.
- The threshold for “mega-gifts” has skyrocketed from $30 million in 2011 to $450 million in 2021.
Add to this that in 2023 giving by individuals declined by 2.4% (Giving USA 2024 report). These trends paint a clear picture when looking backward over the past 4 decades:
Source: Lilly Family School of Philanthropy
Big picture: philanthropy is becoming the domain of the ultra-wealthy.
Implications for “Veblen Giving”: Marketing Philanthropy Like MacLarens, Not M&Ms
For nonprofit organizations, the evolution of philanthropy into a Veblen good presents both significant challenges and unique opportunities. Traditional fundraising methods that appeal to broad-based altruism and community support may no longer be sufficient when engaging high-net-worth individuals who view their philanthropic contributions as symbols of status and prestige.
Just as marketers wouldn’t promote M&Ms—an affordable, everyday candy—in the same way they market a luxury sports car like a McLaren, nonprofits must adjust their strategies to appeal to the elite donor’s desire for exclusivity, impact, and recognition. The marketing of a McLaren focuses on the craftsmanship, exclusivity, performance, and the lifestyle it represents. Similarly, nonprofits need to position their causes in a way that resonates with the values and expectations of affluent donors.
Strategic Insights for Marketing Philanthropy as a Luxury Experience
- Emphasize Exclusivity
- Create Invitation-Only Events: Organize exclusive galas, private dinners, and intimate gatherings where elite donors can network with peers and influencers. These events should offer a premium experience, with high-end venues, gourmet cuisine, and special performances or speakers.
- Develop “Inner Circle” Donor Groups: Establish membership tiers that provide access to exclusive benefits. For example, a “President’s Circle” or “Visionary Leaders Forum” that offers privileged access to organizational leadership and decision-making processes.
- Limited Opportunities: Present certain projects or initiatives as limited opportunities that only a select few can support, enhancing the appeal through scarcity.
- Offer Unique and Personalized Experiences
- Behind-the-Scenes Access: Provide donors with exclusive tours of facilities, meetings with beneficiaries, or previews of upcoming projects. This insider access creates a deeper personal connection to the cause.
- Customized Engagements: Tailor interactions based on the donor’s interests. If a donor is passionate about education, arrange a visit to a school supported by your organization, allowing them to see their impact firsthand.
- Exclusive Content: Share proprietary research, insights, or reports that are not available to the general public, positioning the donor as a knowledgeable insider.
- Highlight Tangible Impact and Legacy Building
- Personalized Impact Reports: Develop detailed reports that quantify the donor’s specific impact, using metrics and stories that demonstrate the difference their contribution has made.
- Storytelling with Emotional Resonance: Share compelling narratives of individuals or communities transformed by the donor’s support, creating an emotional connection.
- Legacy Projects: Offer opportunities for donors to fund significant, long-term projects that align with their values, such as endowing a program, building a facility, or launching a new initiative.
- Leverage Social Influence and Recognition
- Media Coverage: Collaborate with media outlets to feature significant donations, highlighting the donor’s commitment to the cause. This could include press releases, interviews, or feature articles.
- Public Acknowledgments: Recognize donors at events, in publications, and on digital platforms. Naming opportunities for buildings, programs, or scholarships can serve as lasting tributes.
- Awards and Honors: Establish awards or honors that recognize the contributions of major donors, providing them with public accolades.
- Facilitate Networking and Thought Leadership
- Exclusive Networking Opportunities: Create forums where donors can meet other influential individuals, fostering a sense of community among elite supporters.
- Advisory Roles: Invite donors to serve on advisory boards or committees, allowing them to contribute their expertise and gain influence within the organization.
- Thought Leadership Platforms: Provide opportunities for donors to share their vision and insights through speaking engagements, authored articles, or participation in panels and conferences.
- Align with Donors’ Personal Brands and Values
- Research Donor Interests: Understand the specific causes and issues that resonate with each donor. Tailor proposals to demonstrate alignment with their passions.
- Brand Synergy: Show how partnering with your organization enhances the donor’s personal or corporate brand, emphasizing shared values and mutual benefits.
- Corporate Social Responsibility (CSR) Integration: For donors associated with businesses, illustrate how support for your organization can complement their CSR objectives.
- Pay attention to the Power Law
- Adjust ad spend: craft high-net-worth narratives and get that message infront of the right audience.
- Acknowledge the power-law: 1% of your donor list has 99% of the wealth, which needs to be considered in the communication segmentation.
- Don’t sell M&Ms to MacLaren Owners: Add a couple 0’s to the top 1% of your list.
If you want to understand how to do this with your data, we have a service for that.
Navigating Ethical Considerations
While adapting to this new paradigm, nonprofits must walk a fine line. It’s crucial to engage major donors without compromising organizational integrity or neglecting the broader community. Transparency, accountability, and an unwavering commitment to mission must remain at the forefront.
The Future of Philanthropy
As wealth inequality continues to grow, the trend of philanthropy as a Veblen good is likely to intensify. Nonprofits that recognize and adapt to this shift will be better positioned to secure the resources they need to drive meaningful change.
However, we must not lose sight of the broader goal: creating a society where philanthropy is a collective endeavor, not just a luxury pursuit of the elite. By understanding the current landscape, we can work towards a future where giving is both impactful and inclusive.
In the end, the true measure of philanthropy’s success will not be the size of individual donations, but the scale of positive change we collectively achieve. As we navigate this new era of giving, let us strive to harness the power of elite philanthropy while also rekindling the spirit of broad-based community support that has long been the backbone of American charitable giving.
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