Who are the Middle-Class Millionaires in Your Organization?

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The concept of the Middle-Class Millionaire can be traced to the landmark book, The Millionaire Next Door, written by Thomas Stanley and William Danko in the late 1990’s. I believe this is a must read book for any nonprofit professional who focuses on fundraising.  Stanley and Danko were hired by an investment firm to uncover the traits of the typical millionaire. To their utter astonishment they discovered that almost all of the millionaires they interviewed were nothing like the common perception most everyone has of a “Millionaire.”

  • Their appearance:  Most didn’t look, dress, eat, or act like the people most of us expect Millionaires to be.  Their names are not Sheldon, Thurston or Chad.  There most likely to be named Bill, Ann or…. Bob.
  • Where they live:  97% own their own homes and 50% have lived in the same house for 20 years or more.  Most live in middle-class neighborhoods, not gated or affluent communities.  The value of their homes in 1998 was $320,000.
  • General Characteristics:  Their average age is 57; they have three children and almost never divorce.  As a couple, they are meticulous budgeters with one spouse demonstrating equal if not more frugality.  Sixty-six percent are self-employed and only one in five have retired.
  • Their Spending Habits: (Frugal, Frugal – and did I say Frugal!)
      • 50% would never spend more than $$150 on a watch – no $5,000 Rolex for these folks!
      • Most will only use Visa or MasterCard instead of American Express – to avoid annual service charges.
      • 81% will purchase their vehicles outright – to avoid loan interest.
      • Only 23% will purchase new vehicles – to avoid depreciation; they don’t want to lose value by simply driving off the lot.
      • 59% will not spend more than $35,000 on a vehicle and most autos are over 4 years old.
      • Ford F-150 and Explorer are top choices for practical reasons: in many cases, they use their vehicles for work as well as play. 
  • Their Jobs: A staggering 66% of all Millionaires are business owners/entrepreneurs even though they make up less than 20% of the work force.  As a general rule, their businesses would fall under the category of what could be called “dull normal” – occupations such as accountants, dentists, plumbers, wielding contractors, farmers, or pest controllers.  Most are generally cash poor because much of their realized income in being invested in assets that tend to appreciate in value without generating realized income (i.e. home, business, or retirement. ) 80% are first-generation wealth holders and less than 20% will turn their business over to their children.
 So who are these “Middle-Class” Millionaires in your community?
And how do you spot them? 

It’s not easy but they tend to be:

  • The owner of that small service company that has five or six trucks parked in front of it.
  • The farmer in the old beat-up truck driving through town with pails of manure in the back of it.
  • The unassuming CPA with the piles of folders on the floor who is always giving “happy buck” at Rotary meetings.
  • The third grade school teacher your daughter loved who has been teaching for 30+ years and her social worker husband.

The bottom line is you don’t really know and can’t easily spot them. But most Middle Class Millionaires – particularly the entrepreneurs –will need financial planning assistance to unlock their assets for philanthropy.  It is estimated that only 3% have plans in place and few are prospected by nonprofits.  However, they are the core business of many financial professionals – the very people you need to serve on your Philanthropic Advisory Council.

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