Fundraisers: Tap HENRY, the Moderately Affluent Donor

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June 27, 2012; Source: MediaPost.com

A HENRY is a “higher earning, not rich yet” household with an income of $100,000 to $249,999, solidly ranking in the affluent middle class. Media and marketing expert Layton Han says that HENRY had disappeared due to the recession around 2008, but he’s “back now, and he’s got some cash to spare.”

Don’t get carried away about these households. Fortune pegged HENRYs at $250,000 to $500,000 before the recession. Truth be told, many of today’s HENRY households are two-income households devoting a big chunk of their income to mortgages and children. But like an anthropologist looking for signs of a formerly extinct species, Han cited evidence from a study by Unity Marketing that they are back—spending 11 percent more on luxury goods in 2010 and 2011.

How do HENRYs spend their money? Han says that their affluence allows them to shop at Restoration Hardware and Williams Sonoma, cumulatively accounting for 80 percent of the luxury market, including spending on travel, eating out, and cookware. (Han says that “ultra-affluents” have cut their spending.)

HENRYs are critically important to accessible luxury brands like Coach, Kate Spade and Restoration Hardware, as well as to higher-end mass brands such as Williams Sonoma, Ann Taylor and Banana Republic. They may also make smaller purchases from more premium luxury brands, like a Chanel lipstick or a Louis Vuitton wallet, even if they can’t indulge in larger purchases from core product lines.

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Han’s concern is how marketers can get HENRYs to connect with their products, but for readers of the NPQ Newswire, the issue might be how to reach HENRYs for individual charitable donations. With cutbacks in government contracts and foundation grants, there’s nary a fundraising expert who isn’t advising nonprofits to spend more time on individual donors. What is the charitable giving of HENRY households like? How charitably generous are they?

The testimony of the Congressional Budget Office’s Frank J. Sammartino before the Senate Finance Committee last October is revealing [PDF]. Sammartino said that itemizers with incomes between $100,000 and $200,000 accounted for $41 billion out of a total of $173 billion in charitable deductions, 23 percent of all charitable deductions, behind only the $49 billion or 28 percent of charitable deductions by itemizers with adjusted gross incomes of over $500,000. Although like itemizers with incomes below $100,000, the bulk of their charitable giving goes to religion. This middle income segment gives the highest proportion of its charitable donations to “organizations devoted to helping meet basic needs” (12 percent, compared to 6 percent for taxpayers with incomes between $200,000 and $1 million and 4 percent for taxpayers with AGIs over $1 million) and ties with the $200,000 to $1 million taxpayers in the proportion of their charitable giving that goes to “combined purpose funds” like the United Way (11 percent).

If these moderately affluent households have come back to life after a hiatus because of the recession, they would seem to be good candidates for many nonprofits’ individual giving campaigns.—Rick Cohen

  • John Clese, Avectra

    Mr. Cohen, you are correct in your assessment that moderately affluent households/HENRYs have come back to life after a hiatus because of the recession and they are good candidates for many nonprofits’ individual giving campaigns. A good way to target those individuals is though outreach to them and inviting them to become part of the non-profit’s private online community. By joining the community, the HENRY can feel they are part of a community dedicated to making a real change for their cause. By encouraging the HENRY to get involved in community discussions and other initiatives non-profit community managers can monitor and identify key issues that motivate these members and can build new programs based on that information that can spur more giving.