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.

Growing Philanthropy Part 3: Identifying New Audiences, Channels, and Forms of Giving with Strong Potential for Growth

Encourage the adoption of monthly giving. Monthly giving has so many benefits for charities and donors that I am always amazed at how few nonprofits promote this option. Per Sergeant and Shang, the lifetime value of supporters giving in this way is estimated to be 600 to 800 percent higher than "non-sustainer" donors. They note that younger donors prefer monthly giving because it is considered more convenient and environmentally friendly, requiring less renewal and reminder mailings. Donor retention is far higher for sustaining donors as well. It's a no brainer.

Improve the sector's engagement with young people. Promote giving at an early age and help develop a "giving habit". Utilize new digital media such as digital applications, virtual environments, gaming platforms, and social networking. Find ways to make it easy, affordable, and enticing to include them in the philanthropic process.

Encourage and promote best practices in social media. Traditional giving channels still significantly outperform online giving, and social media accounts for only just over 10 percent of that small portion. Nonetheless, social media has a huge potential to greatly increase a supporter's engagement, and engagement is the key to healthy giving. Social media also has the potential to build donor commitment, trust and loyalty. But it must be done well. This is a great opportunity for an astute nonprofit since so much social media based fundraising is done so poorly.

Encourage asset-based giving. 93 percent of American wealth is made up of stocks and non-cash assets such as real estate, business interests, and personal property. Charities are "missing the boat" if they are solely focused on chasing the 7 percent cash available. Provide easy means for donors to contribute asset-based resources.

Improve the quality of bequest fundraising. Although 80 percent of Americans will support the nonprofit sector during their lifetimes, only 8 percent will provide for charities in their estates. Sergeant and Shang believe part of the challenge is that charitable bequest solicitation has been relegated solely to the planned giving departments at nonprofits. They suggest that soliciting bequests should receive wider and broader communication and informational materials be accessible and employed by all staff.

Leveraging companies to promote philanthropy. Since many individuals spend most of their waking hours at work, provide opportunities in the workplace to educate employees about charity missions and outcomes. It must be more than simply a card table and brochures set up in a lobby. One nonprofit had launched a campaign to address obesity and set up a fajita bar at a local business to teach workers how to prepare healthy fare. They effectively hammered home their brand, their goals, and addressed latent objections such as proper dieting is no fun.

Although Sergeant and Shang's report included other recommendations, they concluded with this insightful statement, "Instead of viewing donors as a source of revenue and maximizing the value of that relationship, they (nonprofits) need to focus more on the individual and the articulation of that person's philanthropy. Only when we stop asking for money and instead ask for individuals to reflect on their own philanthropic identity will the needle truly be moved on giving."

Let's move the needle.

Growing Philanthropy

As mentioned in my March 20th blog post, back in June of 2011, fundraising experts Adrian Sargeant and Jen Shang from the School of Philanthropy at Indiana University published a report presented by Blackbaud, entitled Growing Philanthropy in the United States. Their research had found that, despite increasingly sophisticated fundraising practice, the development of sophisticated planned giving vehicles, the appearance of the Internet, and the rise of new digital channels, giving as a percentage of average household disposable (after tax) income has been static at 2% for at least 40 years. This, despite the increased level of human need presented as a challenge to nonprofits.  The number of natural disasters has tripled since the 1960s, the number of armed conflicts almost doubling during this period, one in six Americans are challenged with hunger and one percent of Americans are homeless.

Sargeant and Shang’s findings were reviewed at the Blackbaud 2011 Nonprofit Executive Summit and the conclusion of the participants included the following needs within the industry:

• Enhance the quality of the donor relationship
• Develop public trust and confidence in the fundraising sector
• Identify audiences, channels, and forms of giving, with strong potential for growth
• Enhance the quality of fundraising training and development

For the next four posts I will share additional details of each of these findings. First, addressing the donor experience:

Enhance the quality of the donor relationship

• Understand donors have their own philanthropic aspirations and goals and find new ways for them to express their own philanthropic identity
•  Go beyond maximizing the donors gift to your organization and develop the philanthropy of your supporters
• Allow donors to have greater control over their giving relationship
• Enhance focus on retention of donors by building the loyalty of supporters, since a 10% increase in retention can result in a 200% improvement in lifetime value of a supporter
  
• Breakdown organizational silos and encourage greater collaboration between teams
• Reduce high turnover rates (30% per annum) in the fundraising profession, often caused by CEOs and Board members who value their own limited personal experience or “gut feel” more than they do the accumulated fundraising body of knowledge, so that meaningful relationships have time to develop
• Educate stakeholders about the necessity of a longer term and integrated approach to fundraising

I know many of these issues have been the topics of industry webinars and conferences. But how much progress has been made over the past three years since Sargeant and team published their report? I dare say, not much. Certainly, the lingering effects of the recession have prevented many organizations from indulging in what they may feel is the luxury of donor relationship building. Tight budgets may have reduced opportunities to invest in any activities beyond bare-bones solicitation. Unfortunately, failing to make progress regarding the foregoing issues has a direct impact on current fundraising success and the next blog posting topic - Developing public trust and confidence in the fundraising sector. 

Until then…

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.

Half of Nonprofits Say They Are Hurting

Half of the 500 nonprofits recently surveyed by Guidestar state that fundraising results have been very bleak this year. The percentage of charities reporting a decline was the second highest since the survey was started 11 years ago. Not only were the charities receiving fewer gifts, but even contributions received were smaller than before. Many institutions predict that the traditionally strong year-end gift giving period will not close the gap. Worse yet, this seems to be happening at the same time that many nonprofits state that their communities are requiring more of their charitable services.

Now, the recession has been dragging on for a number of years. Why has 2012 been so tough for charities? One fundraising professional speculates that many nonprofits have done a poor job of stewarding their donors and its "coming home to roost".

For me, stewardship is receiving a high priority. I have enlisted my Board to call all our donors and thank them for their past support. I have also engaged staff and volunteers to call unrenewed supporters. We are finding as many ways as possible to be donor-centric and share impact and outcomes of our donors' philanthropic support.

Take the time. Reach out. Touch your donors in an authentic, meaningful way. And make sure it is not just once a year but throughout the year. It may take a while to see results but it's worth it. The "new reality" is that it is going to take a lot of effort to retain and engage your supporters. But frankly, it's probably something we should have been doing all along - isn't it?