If you’ve been hearing about the K-shaped economy and wondering what it means for your prospect pool, Valerie Anastasio has some clarity—and a dose of realism—to offer.
Valerie is a fundraising consultant who’s spent decades working with ultra-wealthy donors, transformational gifts, and the finance and technology sectors that have generated so much of America’s recent wealth. She’s worked in small nonprofits where they waited for a board member to bring in a check before making payroll, and she’s worked at Boston Children’s Hospital Trust managing large teams and multimillion-dollar campaigns.
Jennifer Filla sits down with Valerie to unpack what the K-shaped economy actually is, why it matters for fundraising, and—most importantly—what researchers and prospect managers can actually control when it comes to engaging the ultra-wealthy.
What Is the K-Shaped Economy?
The K-shaped economy refers to a split trend in the U.S. between the financially well-to-do and the middle and lower classes. Picture a chart showing the health of the economy historically as one line representing all economic classes moving together—either up or down. At some point in recent years, that line split. One part drifted upward while the other sank. If you imagine that split as a vertical line, with the two branches diverging across time, you get the K shape.
It’s the point in time when economic prospects were no longer a collectively shared reality. They became two very real, very tangible realities.
Why This Matters for Fundraising
If your organization raises money from small donations, many of those donors are likely middle class or less affluent. In a K-shaped economy, those donors may not be capable of the same contributions they made before. You could see programs shrink—donors making smaller gifts or less frequent gifts. At the same time, more people at the lower end face hardships, putting pressure on nonprofits to provide more services with more urgency, even as their donor base contracts.
For researchers, the shifts are more subtle. The K-shaped economy can seem stable for the wealthy—the stock market is healthy, real estate values are high. But here’s the paradox: if you’re researching donors in industries that depend on the financial health of the lower K—franchise owners, residential real estate, retailers—those affluent individuals may actually be adversely affected. Their wealth may look stable on paper, but their capacity for a large commitment might be more constrained than you’d think.
What Researchers Can Actually Control
When asked how researchers can best help development officers engage ultra-wealthy prospects, Valerie says so much depends on things researchers can’t control: the organization’s culture, existing leadership relationships, the readiness of the organization to engage at this level of wealth.
“None of it is within the scope of the ability of a prospect manager or researcher to actually have impact and change,” she says. So what can researchers do? Be very clear-eyed about the energy you devote to the ultra-wealthy in your prospect pool.
Her advice is there are no overnight successes within your control. Define the right kind of donor for your organization based on the relationships you have and the types of people who believe in your work. Then look at the wealthiest members of your prospect pool. If there are 50 people who look like that, decide on the 10% who really closely align with what you’re about and what they’re about. Train your eyes on those five people. Think hard about how you could yield a significant gift in 36 to 48 months. Be incredibly clear-eyed and disciplined. And don’t let them go.
When you look at the data on big gifts, they happen because people developed rapport, kept at it, and didn’t let it go. You’re not going to manufacture it. It takes time, will, and discipline.
Why This Matters Now
In a K-shaped economy, the temptation is to chase every high-net-worth name in your database. Valerie’s message is the opposite: know thyself. Be disciplined. Focus on the prospects who align with your mission. And don’t let optimism override the reality that transformational gifts take years of relationship-building you can’t shortcut.
Listen to the full episode to hear Valerie’s complete take on the K-shaped economy and what it means for your work.
- Connect with Valerie Anastasio: LinkedIn
- Inside Philanthropy by David Callahan: insidephilanthropy.com
- The Wall Street Journal: wsj.com
- Bloomberg: bloomberg.com