by Olivia Tranfo
Strategic Account Executive, Windfall

The economic landscape is rarely static, but recent trends suggest a period of significant transition for the United States. While some indicators point to cooling inflation, the Federal Reserve's cautious stance on interest rate cuts, coupled with shifts in government spending, stock market volatility, and evolving consumer behavior, paint a complex picture of today’s economy. This blog post examines key economic indicators and their potential impact on high-net-worth households, as well as the impending transfer of wealth from one generation to the next.

High Net Worth Households & The Economy

One of the primary focal points in 2025 remains inflation. The Consumer Price Index (CPI), a core measure of inflation, has retreated from its 2022 peaks. This offers a glimmer of hope that the aggressive monetary policies enacted over the past few years are having their intended effect.

Despite this silver lining, many Americans are pinching pennies, and the US economy is increasingly driven by the spending habits of its wealthier population. Data  suggests  that approximately half of all consumer spending originates from the top 10% of earners. This concentration of economic power means that nonprofits are increasingly focusing their strategies on engaging with high-net-worth individuals. Understanding the preferences and behaviors of this demographic is becoming paramount for navigating the current economic climate.

Analyzing this consumer behavior reveals a significant shift in personal savings rates. The pandemic saw a surge in savings due to direct payments and reduced spending opportunities. However, post-pandemic, the savings rate has fallen below historical averages and remains low. However, this trend is not uniform across all income levels.  According  to  the  Federal  Reserve, data indicates a divergence in savings trends, with the top 10% of earners still holding a significant excess of savings compared to pre-pandemic levels. In contrast, the remaining 90% of the population has seen their excess savings largely depleted.

Over the past three decades, high-net-worth consumers have steadily increased their share of overall consumer spending, now accounting for roughly 50%.

Adding another layer of complexity is the ongoing trend of government spending cuts. For nonprofit organizations, a substantial portion of their revenue often comes from federal government grants. These cuts are placing considerable pressure on their operations and their ability to fundraise from other sources effectively. In an environment of economic uncertainty, securing private donations can become increasingly challenging, further exacerbating the financial strain on these vital organizations.

Examining past recessionary periods, as highlighted by  Giving  USA's  2024  study, reveals that individual giving tends to be relatively stable, often remaining flat. This stability in overall giving during turbulent times is significantly supported by affluent households, who not only participate in philanthropy at a higher rate but also contribute gift sizes that are, on average, eighteen times larger than those from the general population. This necessitates a strategic focus on identifying and cultivating relationships with these individuals, leveraging tools like wealth screening and AI to prioritize engagement efforts.

Windfall updates its dataset weekly, tracking the wealth of high-net-worth individuals. Currently, high-net-worth individuals (those with a net worth above $1MM) hold over 75% of the total US wealth. This demographic comprises over 20 million households, representing 15-20% of the population. Their wealth has increased considerably since the pandemic, a trend supported by third-party research showing higher savings rates.

The Great Wealth Transfer

The impending transfer of generational wealth is another significant factor to consider. The “Boomer” generation currently holds the vast majority of wealth in the US. Over the next 25 to 30 years, an estimated $125 trillion will be transferred to younger generations, with a significant portion, around $18 trillion, expected to flow to philanthropy. This will create a new cohort of ultra-wealthy and high-net-worth households. However, it's crucial to note that philanthropic preferences are not automatically inherited, requiring nonprofits to actively engage with younger generations.

This generational shift underscores the need for nonprofits to not only understand the unique interests of younger donors but also to apply AI and data strategies to tease out signals that will allow these organizations to maintain relationships with the next generation of donors.

Windfall's new generative AI dossiers (see below), built on wealth screening and career data, provide frontline fundraisers with crucial contextual information at scale. Generative AI can also create tailored content like emails and social media posts that resonate with individual donor preferences, especially important for younger, affluent donors who prefer social media outreach.

To leverage these AI insights to prepare for the upcoming wealth transfer, organizations should segment their donor databases using triggers and attributes. Examples include segmenting by philanthropic causes to align messaging with donor interests, identifying foundation affiliations for hidden wealth, recognizing liquidity triggers for short-term gift asks, and targeting small business owners for sponsorships.

In summary, the current volatile economy is significantly reliant on high-net-worth households, who possess greater post-pandemic savings and are the primary contributors to 501c3 organizations. While a substantial wealth transfer to the next generation of high-net-worth individuals is anticipated over the next two decades, philanthropic tendencies are not guaranteed to follow. Therefore, it is crucial for nonprofit organizations to proactively identify and cultivate relationships with both current and future affluent households to ensure continued support.