What Does the Donor Hear?

I loved cartoonist Gary Larson. It was a sad day when he retired in 1995. One of my favorite cartoon panels was "What we say to dogs". There we go. Barking out commands to our canine friend, fully expecting that he hears and understands every word. Even raising our voice to ensure we are understood. What hubris! What the dog hears is it's name. That's it.

Sasha Dichter of the Acumen Fund cleverly illustrated the parallel between "dog/human" and possible "non-profit/donor" communication.

As Sasha wrote, "I wonder if we could re-title this cartoon 'our needs', as in: every time we regale someone with 'what we need' we remember all they're hearing is 'blah blah blah blah.' But whenever we say their name, whenever we paint them into the picture, whenever we make them a part of the story, they hear us loud and clear.

If you agree with the notion, rather than thinking tactically how to make this shift by 'changing your pitch', you might instead ask yourself who's keeping you from actually seeing the person across the table as an integral part of the story...because she is."

Amen,  Sasha! The donor is more likely to hear you if the presentation or case is more about them. It's like hearing your own name. And everyone loves to hear their own name.

Is Your Job To Serve Or To Sell?

Back in 2011,  one of my favorite fundraising blogs, Passionate Giving, penned by major giving experts Jeff Schreifels and Richard Perry, posted about a new year's resolution they suggested all fundraisers adopt for that year. Make sure you are serving your donor, not selling them. Jeff shared an experience he had in an Apple store when it was clear, to his chagrin, that he could have been easily "sold" a solution to a computer problem he had by chucking his old computer and upgrade to a more expensive and newer model, but wasn't. He asked the salesperson why he wasn't trying to sell him a new iPad? The salesperson's said he was there to make his experience the best it could be, show him the product and let the product sell itself. He added, "We don't get commission on sales. It is all about serving the needs of the customer." Jeff continued, "I didn't buy the iPad that night, nor were they able to fix my software problem (it was a Microsoft product), but I left feeling so good about my experience that I can't think about NOT buying an Apple product in the future."

Do our donor interactions leave them with the same sort of feeling? If the moment was not right to make a gift, do they walk away feeling they couldn't even think about NOT giving to our organization when they are ready to contribute? If our objective is to sell them, put another notch in our "closed deal belt", then it will likely fail. Serving our donor demands more listening, research, and interaction. It will be necessary to unearth what our donor's goals or interests are that need to be served.  It must be more than just identifying financial capacity or finding out about their other philanthropic giving.

Listening, really listening, demands putting aside our egos and our objectives and really concentrating on the prospect. Listening, not to find a window to "pounce" but to find a connection between what our organization does and how that aligns with the donor's aspirations. Listening. So important, and seemingly so hard to do. Which reminds me of a fantastic TED talk by deaf Scottish percussionist Evelyn Glennie titled "How To Truly Listen". But that is for another post.

Back to the Future

Roger Craver, one of the founders of the fundraising agency Craver, Mathews, Smith & Co, currently provides insights through his fundraising blog, The Agitator. Back in 2011 he posted an article titled The Future of Fundraising. It was based upon Blackbaud’s recently released report Growing Philanthropy in the U.S.  The report contained reams of helpful recommendations and insights. A lot has happened since 2011. Osama Bin Laden is off’d, Occupy Wall Street begins, Muammar Gaddafi is killed, the Sandy Hook massacre takes place, the Japan tsunami wrecks havoc, Prince William and Kate Middleton marry, and NASA’s Mars rover detects evidence liquid water once flowed on the red planet. Where stands fundraising? Were the Blackbaud recommendations heeded? You be the judge.

Here are a few of the top takeaways from the report and Craver’s analysis (minus some of his entertaining but salty language):

•     Redefine Relationships. Stop being selfish. Focus on giving for giving’s sake.

•     Re-orient toward longer-term measures of fundraising performance. Immediate measure of ‘success’ (response rates, immediate ROI, giving totals for the year) doom us. Look at long-term values.

•     Enhance focus on retention and building supporter loyalty.  Listen up! With retention rates in the dumper too few nonprofits really understand that a 10% improvement in retention results in a 200% improvement in lifetime value.  Time to get real.

•     Develop a more integrated approach to fundraising. It’s not the method, stupid, it’s the message. And the message must focus on the donor’s concerns, not yours.

•     Break down organizational silos and encourage greater collaboration between teams. The authors are too kind to say it, but you should be ashamed of your territoriality.

•     Give supporters greater control over the relationship. Ken Burnett, The Agitator, DonorVoice and scores more have been preaching this for years. This is the arena where you can quickly add the most value.

•     Tackle high turnover rates in the fundraising profession. Face it. It’s not the pay it’s the lack of respect from CEOs and board members that drives folks out of this trade. We have an identity crisis and have to deal with it.

•  Educate all stakeholders about the necessity of a longer term and integrated approach. I know, I know, it’s like playing Mozart to a cow, but we have to do it. It’s a real challenge, but we must not allow Boards to be stupid about fundraising, stewardship and philanthropy.

•     Empower the regulators to enforce 100 percent filing of Forms 990 to increase their utility. Hey, I know this seems picky, but the fact is that some organizations don’t file, some lie, some don’t.  Transparency is key to the future of philanthropy. Get with it.

•     Blow the whistle on organizations claiming to have zero costs of fundraising. As long as watchdog organizations reward ‘zero’ costs, organizations will lie. It’s time to call out the phonies in the watchdog groups and blast the nonprofits that play this game. There simply ain’t no thing as ‘zero’ fundraising costs.

•     Encourage nonprofits to develop complaints schemes. Anyone who knows anything about donor retention and commitment is familiar with the importance of feedback. (See http://thedonorvoice.com)  This report reminds us of the absolute necessity to provide multiple methods for donor feedback.

•     Develop new and more appropriate measures of performance.  Efficiency and cost of fundraising sucks as a measurement of anything.  There are far more appropriate measures.

•     Develop the self-regulation of fundraising. Ethics be damned.  There’s a whole host of scumbags out there. But, we can do something about them.

•     Encourage the adoption of monthly giving. Serious Monthly Giving or Sustainer programs produce 600% – 800% more revenue. Get to it. Now!

•     Encourage and promote best practices in social media.  Importance of social media isn’t $, it goes to building loyalty and commitment.

•     Encourage asset-based giving. The Report claims that 93% of a person’s giving potential is realized with a bequest or other planned gift.  Get at it!

•     Improve the quality of bequest fundraising practice. Death is our friend. But, with at least 8% of our donors willing to make a bequest, this just has to be taken out of the incompetent (marketing-wise) hands of planned giving officers and placed in the hands of those capable of selling.

•     Redesign the system of professional development and certification for fundraisers. Important stuff here. Knowledge and understanding of donor behavior is key for the future, not the number of AFP merit badges.

•     Educate board members about the intricacies of fundraising.  Among all the barriers to successful fundraising and philanthropy, the ‘board’ is the mightiest barrier and pain. This report rightly targets the boards for education and improvement.

I’d say all of these would make the list of priorities for 2014.  What say you?

I Resolve to...

A year ago January, the Advancement Best Practices LinkedIn Group asked their members to list their fundraising resolutions or goals for 2012. Here is what they answered:

42% Build a philanthropic culture
20% Link metrics to ROI
17% Engage trustees/ CEO
16% Identify new potential donors
5% Not one of the above

I think it is interesting that the top goal was to build a philanthropic culture. You would think that was a given for anyone working for a nonprofit. The fact that it was yet to be built, (not even simply improved), says something about the state of our business. If a nonprofit or charity doesn't have philanthropy at the core of what they do, how are they surviving? How are they connecting with and motivating their donors? By coercion? Yikes!

According to Guidestar, up to 60,000 nonprofits fail each year and in 2010 8% claimed they were in imminent danger of going under. Why?

I think the lack of a philanthropic culture is part of the problem. But more importantly, there is a fundamental misunderstanding as to how and why donors give. Here is what nonprofit leadership must understand:

• The heart is more important than the head. Executive Directors and Boards are often embarrassed to present the emotional side of their story. They want to "convince" the donor that they are a good "investment". Leave the investment up to the bank. Your charity or nonprofit most likely grew our of a compelling need. Don't forget that. 
• You must ask to receive. The classic "If we build it they will come" is hooey. If you don't ask, someone else will -- and they will get the donation.
• Everyone in your organization must be comfortable with the fundraising process. I have heard some fundraisers say, "Everyone in our organization is a fundraiser". I don't buy that. Fundraising is a skill forged from experience and an art born of personality. Not everyone is good at it nor do they have to be. If this wasn't so, why would we hire fundraisers? But the entire staff should understand how it works, if only to support the efforts of the fundraising team. The one thing that can kill an organization is an employee who is constantly denigrating the fundraising process.
• Take advantage of every avenue to raise funds. There are 1.5 million nonprofits in the US. That's a lot of competition. Make it easy for the donor to give to you through the channels they prefer. You must have an annual fund program, solicit major gifts, make use of social media and e-philanthropy, create profitable events, accept planned gifts, and keep abreast of whatever is working for other organizations.
• Test, test, test. Be fiscally prudent but don't be afraid to take risks. Risk can often be reduced by testing. I am constantly astounded to find experienced nonprofits that fail to test fundraising approaches. 

There are certainly other elements of successful fundraising. As the survey identifies, link your metrics to return on investment. (This is especially true of events. I am sure many organizations would be shocked if they included direct and all indirect costs in their event profitability assessment.) Engaging trustees and all leadership in the mission as well as the fundraising process is helpful. And yes, finding new donors is important. But, I would have ranked "steward current donors exceptionally well" ahead of prospecting and that isn't even listed! Your most valuable donors are the ones who have already provided you with a gift.

What are your resolutions for 2013? I will list mine in my next post.

Fundraising and Coaching

Even though during football season I am a NFL fanatic, I love non-mainstream sports. The Olympics provide a great opportunity to indulge in viewing these unique endeavors. Beach volleyball, archery, luge, curling, modern pentathlon/biathlon/triathlon and others are a nice diversion from the highly commercialized core professional sports. I also catch myself pausing while surfing TV channels at up-and-comers in the popularity category such as women's college basketball. But the growing popularity of women's basketball has a backstory. Women's basketball has reached a level of interest, and I dare say legitimacy on the back of one incredible coach -- Pat Summitt of the University of Tennessee.

What does this have to do with fundraising? Well, consultant Jason McNeal of Gonser Gerber Tinker Stuhr, LLP and author of the wonderful blog The Far Edge of Promise, provided this thoughtful post recently: Donor Engagement as Coaching.

This month Coach Summitt received the Arthur Ashe Award for Courage at the 2012 ESPY awards. She recently retired but not until she racked up these unbelievable statistics:

• 1,098 wins - the most ever by a Division I college basketball coach (men's or women's)
• 16 conference titles
• 8 national championships
• 12 Olympians

And perhaps most extraordinarily, 100 percent graduation rate for all Lady Vols who have completed their eligibility at Tennessee.

See the moving ESPY award tribute to Coach Summitt here

She was known as a tough coach holding her athletes to incredibly high athletic and personal standards. Many a teammate was brought to tears by her pointed rebukes or stern admonitions. Yet, as Jason brings out in his blog, many of her players claim they would run through a wall for "coach". 

To quote Jason's post:

"...what struck me as I watched the video were the many student-athletes she coached talk about (and to) her about what a positive difference she made in their development as people and in their lives generally, far beyond the basketball court. More than one of her players made the tearful statement: "I wouldn't be the woman I am today if not for you." 

What a legacy. What an impact. What a life's work."

Jason goes on to comment about how might we, as fundraising professionals, view ourselves. Do we see our job to be a solicitor or even a facilitator? Are we simply extracting money from our supporters? Or, as what made Coach Summitt a "life-changer" for her basketball players, do we really care about our donors? Really, really care and take the time to understand the donor's needs, aspirations and goals.

Again, to quote Jason:

"Just like Coach Summit, we ask donors every day to help our institutions succeed. And when we know our institution's donors well enough to inspire them and challenge them, we have the opportunity to be more than a solicitor or a facilitator. When our donors know that we care for them as people first and donors second, we have the chance to become a coach. And, then, we have an opportunity to help change their lives."

It's Not About You.

Yesterday, I read a short, fascinating little tome by Bob Burg and John David Mann called "It's Not About You: A Little Story About What Matters Most in Business". (Bob is also the author of "The Go-Giver: A Little Story About a Powerful Business Idea".) "It's Not About You" is a compelling parable about how extraordinary leadership is achieved when you focus on others. A no brainer, right? Well, it's amazing how often we get tangled in the web of "meism" without noticing it. This book will help you identify whether this is an issue for you and how to redirect your thinking process.

A blog post by Jeff Schreifels of the Veritas Group entitled "The Six Secrets to Becoming an Extraordinary Major Gift Officer" -  Secret #5 - You Don't Have All the Answers, covers similar territory.

As Jeff states, "Curiosity is such a powerful tool for a MGO (Major Gift Officer). Yes, I said tool -- because curiosity can become the driver to help you figure out a problem. It creates the basis for understanding a donor and can catapult you to the answer to some very complex situations.
So, quite frankly, if you are not a curious person, you should NOT be a major gift officer."

The post continues by describing a real-life instance of a brand new, inexperienced gift officer who proceeds to build a caseload of over 100 high-value donor prospects -- multi-millionaires and leaders of industry-- and in one year secures over $300,000 in donations simply because she was brimming with curiosity, loved to ask questions, and was fearless. It wasn't about her.

Similar to the tact the character initially employs in Bob Burg's parable, how often do we go to a donor meeting or address a fundraising event thinking, "I have to persuade them to do what I want"? Even if we thoroughly believe it is the best course of action for said donor or charity, it is an approach doomed to fail.

It is about the donor, the charity, the charitable foundation, and the beneficiary of your work -- it's not about you. Find out all you can about them. Do your homework. Be curious. Ask questions, probe, and be truly interested. You may be amazed at how much you learn that can be helpful. And how much fun you'll have listening to the inspiring stories and lofty aspirations shared by the people you meet along the way.

The Two Faces of Fundraising Events: Part 2 - A Hydra Head?

In The Two Faces of Fundraising Events: Part 1, I noted that fundraising events are very popular with many nonprofits. The big charities often make a boatload of money on their "walks" and other "thons". Most staff and volunteers "get" events. They know the purpose is to raise money for the cause. Attendees understand this too and don't object to paying their share. They also feel they receive something tangible in return - a fun time, a chance to rub shoulders with community leaders and maybe even "the famous". Staff and leadership like events because they are often well covered by the media and goodness, they don't have to make a complicated "pitch and ask".

But is it the most effective fundraising vehicle?

Let's look at the potential investment numbers. Here's where the hydra-headed aspect of events raises its ugly...well, you know.

Let's suppose a nonprofit puts on an annual black-tie gala with music, upper tier catering, and an auction. Planning starts a year in advance. At least one staff member spends half of his/her time working on the event. Board members are involved in touching their friends and contacts. The President and Director of Development have roles. The event goes off well and grosses $100,000. Super, huh? Maybe. (Thanks to Nell Edgington, President of Social Velocity for the following cost presumptions. They ran a superb series of blog articles on the cost of fundraising which can be found here .)

Let's suppose some direct expenses:

Venue, music, food, decorations, invitations: $50,000

Often, this is how many nonprofits view their net profit from the event - $100,000 in gross revenue minus $50,000 direct expenses = $50,000 net profit.

But we need to consider the total costs of running this gala and how that compares to other fundraising opportunities. It is imperative to look at the indirect expenses such as:

Cost of staff members to prepare for and manage the event (hours worked by staff members times salary + benefits). 

Staff Event Coordinator's time: $15,000

President's time: $4,000

Development Director's time: $5,000

And let's also figure Board Member time utilizing the standard value of volunteer hours ($20.25): $3,000

Total indirect costs are $27,000

Add direct costs of $50,000

Total indirect and direct costs = $77,000

Our new net revenue is $100,000 - $77,000 = $23,000

The nonprofit made $23,000. Still seems like a reasonable number doesn't it? Especially, since so many new people attended the gala, and the mayor was there -- and it was mentioned on the 6 o'clock news.

But let's look at the cost to raise each of those 23,000 dollars. 

Cost to raise $1.00 = Direct + Indirect costs/ Net Revenue

$77,000/$23,000 = $3.35 cost to raise $1.00

(Also, how many of those new people are really connected to your cause? Is the mayor a prospect? Will anyone remember the 6 o'clock news?)

Now let's suppose you have a salaried staff person working on major gifts prospects. This person's salary is $65,000 per year plus benefits. Indirect costs might include leadership or Board members attending donor visits for a total of $100,000. Their activities result in $500,000 worth of donations in a year. The net revenue figures work out like this:

$500,000 - $100,000 = $400,000

... and the cost per dollar raised ($100,000/$400,000) would be $0.25.

Not only that, but hopefully you have been soliciting and stewarding warm prospects, not a random group of event attendees who may or may not be smitten by your mission.

Doing the math is illuminating.

Does that mean events are a waste of time? No. But it does depend on how you view the investment. How much staff time do you want devoted to this sort of return? Can it be spent more effectively elsewhere? Maybe you can afford to have staff devoted to events and major gift prospecting. Or, maybe you look at the value of events being more resident in their friendraising, cultivation, and stewardship value?

Do the math -- and see what makes sense for you.

Mega-Donors Gave More Last Year.

According to an article in today's Chronicle of Philanthropy, America's top 50 donors gave over $7-billion dollars more in 2011 than they did in 2010 ($10.4-billion vs. $3.3-billion). 29 individuals gave $50-million or more to their foundations or causes, up from 22 in 2010. The list was topped by the estate of agribusiness heiress Margaret Cargill, followed by deceased steel executive William Dietrich II,  co-founder of Microsoft Paul Allen, financier George Soros, and New York Mayor Michael Bloomberg.

It also appears that larger, more well-known charities are receiving the bulk of the larger charitable gifts. 36% of the dollars went to higher education, 35% to private foundations, 15% to hospitals, medical centers, and medical research, and 7% to museums, libraries, and historic preservation. Additionally, the concentration by larger donors on higher profile, well established institutions may be in part because donors are worried that some of the newer and smaller charities may not be around in 25 or more years.

Should smaller nonprofits consider soliciting large or even "mega-donors"? Some consultants and charity heads believe they can. But big donors certainly won't consider an organization they don't even know exists. It is therefore critical that each charity consider the following:

• Consistently get they word out on the work of your organization. Court the media, create compelling print and electronic communications, utilize social media, involve community leadership, share successful outcomes.
• Provide an informative, inspiring website. Many donors research institutions on their website prior to making a gift.
• Connect donors directly to your programs and beneficiaries. Have them visit a classroom, take them to a project site, invite them to join your board. Don't just tell them about your good work show them.
• Be realistic. The number one ranked billionaire may have loved cats but she is likely already connected to a favorite charity. Don't allocate all your resources for that one big donation "hit". Like anything else diversify your cultivation. 

Although 2011 experienced a significant increase in large donations in comparison to 2010, giving was still well below pre-recession contributions. Moreover, many believe corporate support has been permanently changed by the bad economy.

Those charities that fared better in 2011 such as the American Society for the Prevention of Cruelty to Animals (ASPCA), invested heavily in often overlooked but lucrative revenue sources such as monthly credit card or direct debit donors. They have also concentrated on building connections with donors through social media where they have obtained a million Facebook supporters.

Be creative. Toot your own horn.
Be persistent. Your cause is worth it.
Be aspirational. Shoot for the stars.
The only thing that ensures failure is not trying!

Check out this info-graphic from the Chronicle of Philanthropy article: Link to info-graphic

How to Be a Great Major Gift Officer

Richard Perry and Jeff Schreifels

Passionate Giving is a terrific blog penned by Jeff Schreifels and Richard Perry, the founders of the major gift agency Veritus Group. At the end of 2011 Jeff posted a wonderful series entitled: Six New Year's Resolutions that will Change Your Life...or at least make you a better major gift officer. 

I am sharing snippets from each of the six but I encourage you to visit their blog and read each one in its entirety. If every major gift officer resolved to enact each one in 2012, they would surely experience success, satisfaction, and great joy. And as Jeff states “…2012 will be an incredible year for you, your donors and your organization.”

       1.    Serve your donor, don’t sell them

To drive home his point in this posting, Jeff relates a story of visiting an Apple store in an attempt to fix a software problem with his MacBook Pro laptop. From the get-go he was impressed by how the Apple attendants interacted with their customers. (If his Apple store was anything like the one I visited recently, it was packed with people waiting to be served, browsing, or receiving instructions for their new purchases.)

He was asked if he had an appointment, which he did not. No problem. Someone would be right with him.

Then, I asked him point blank, “Why are you not trying to sell this thing to me?.”  He said he was there to make my experience the best it could be, show me the product and let the product sell itself.  “We don’t get commission on sales”, he said.  “It’s all about serving the needs of the customer.”

He wandered over to the iPad display and was soon joined by a salesperson. Jeff asked the salesperson about the differences between an iPad, laptop, or an Amazon Kindle e-reader and received an unbiased assessment of the pros and cons of each. Jeff relates:

Here are snippets from the rest of Jeff’s posts.

I’m telling you that if you’re finding you have to “sell” your programs, organization or project to donors, you’ve already lost.  However, if you are truly “serving” your donors, you will understand what brings them passion and present projects and programs they will find joy in.

        2.   Love your work

If you don’t love your work in major gifts you either need to figure out what has to be overcome to love it, or you have to leave. I know that sounds harsh, but this major gift work is too difficult, frustrating and draining to NOT love it. 

        3.   Set better goals

…goal setting allows me to have a direction and something to aspire to.   And, it works! Surprisingly, many major gift officers whom I’ve worked with often don’t have goals- neither caseload, professional or personal.

This is tragic.

        4.   Make mistakes

I think our natural tendency is to play it safe.  It takes “something extra” for a person to take a risk and fall flat on his face.  Look, of course no one sets out to make mistakes.  But if you want to break through with your work, you have to walk through that fire of fear and risk failure. And when you do, one of two things will happen:  1) you will become wildly successful, or  2) you will fail, but at the same time will have learned an incredible lesson and moved forward. 

        5.    Be curious – ask questions

In my experience, one of the major reasons MGO’s get stuck in their work with donors is that they fail to ask good questions.  And they fail to ask good questions because they are not curious enough about their donors, their own organization or the projects they are raising money for.

        6.   Seek joy

When you have served your donor well, when you realize that you can’t wait to get to work in the morning, when you have set goals for your caseload, when you have a plan to take risks during the year and when you’re asking great questions left and right…YOU will find joy. 

Seek joy this year and it will find you.

Amen Jeff. 

If every Major Gift Officer resolved to enact each resolution, 2012 would indeed be an incredible year for you, your donors and your organization!