Viewing posts from: January 2017

Donor Fatigue – Fact or Fiction?

Fundraising | 0 comments | by Sheri Hodde

Most of us in the field of development are familiar with the term “donor fatigue.” While specific definitions will vary, most of us would agree that donor fatigue occurs when we go to the same well too many times for financial support. We have this image of donors responding to our request for support by saying, “Really? Again? Am I the only one who gives to this mission?”

So, let’s start with the truth. Yes, it is true that most nonprofits go to the same donors too many times each year. In fact, our (Mission Advancement Professionals) work with development offices throughout the country tells us that independent schools ask their core donor base for money an average of 18 times each year. Social and human service agencies ask an average of 12 times each year. In other words, every time these organizations interact with key donors, their hands are out.

Now, multiply the number of annual “asks” by five. That is approximately the number of nonprofits that the average donor supports. Triple that number to account for the requests that are declined by the average donor. I have already lost count, but we are way beyond reasonable. You can easily see how donors could become fatigued with this extraordinary number of solicitations.

To be fair, there are marketing professionals who will tell you that the more you ask, the more donors will give. Since I am not a mass marketing expert, I am not well versed on the exact statistics, but I have experience with professionals in mass marketing who suggest that nonprofits dramatically increase the number of times they ask, believing the axiom – ask more often, get more often.

So, at the risk of alienating some of my good friends in the mass marketing world, I say BALONEY! Enough already! Just because you can ask more often and get a little more doesn’t mean you should!

If I ask my good friend Stuart for $50 today, he would give it to me without hesitation. If I asked him for $50 tomorrow, he would give it to me again. If I asked a third time, he would probably ask me what is going on, and then give it to me a third time. But now I am stressing our relationship. If this went on, he would eventually say “no,” and our relationship would be damaged.

Isn’t development really about building and deepening relationships? Most would offer that answer when asked, but then behave in a way that says otherwise.

News flash: development really is about relationships! And these relationships must be kept in balance – meaning that donors should receive something they personally value in return for their giving. If this basic principle were followed, then there would be no donor fatigue. Fatigue comes from donors who are unfulfilled in their giving and whose relationships are out of balance with the nonprofits they support.

Okay, so I admit I am a bit worked up over this, but I am done with my rant. Here is some practical advice for all development offices:

Remember that you are establishing and deepening relationships with real people

Try to step into your donors’ shoes and gather a sense for how they experience your organization.

Consider consolidating the number of requests to one or two for your most important donor relationships. Then, make a point of interacting with them two or three times a year without asking them for money. In other words, treat them as something more than a checkbook.

Put creative energy into how you help your most important donors feel fulfilled in their giving. If someone gives $25,000 to the annual fund, help them understand how your organization spent the gift and how it changed people’s lives.

Just my two cents: If you try the suggestions above, you will see some exciting results. And donor fatigue? It will be replaced with donor passion.

 

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The Curse of the Mega-Gift

Fundraising | 0 comments | by Sheri Hodde

We have all daydreamed of an angel-donor who appears out of nowhere and drops in our laps a massive amount of money for our mission. Think of the immediate financial problems it would solve: It would completely take away the stress associated with managing monthly cash flow. It could also make those grandiose dreams of expansion an immediate reality. But is there a downside? In short, yes – if not managed properly, a mega-gift can often create more harm than good, and can sometimes lead to the demise of a nonprofit organization.

I was channel surfing late one night when I came across a documentary following previous lottery winners. You can already see where this is going, because we have all heard enough stories about lives being ruined by financial windfalls. It is true – with very few exceptions – when millions of un-earned dollars drop in the laps of normal people, more bad things happen than good.

Most of the lottery-winner stories in the program began with the elation and celebration of winning, and circumstances went downhill quickly from there. Most of the stories included divorce, loss of friends, depression, lack of self-worth, and the loss of most of the money. A few even ended in the attempted murder of a spouse.

Now, to be fair, there were a few success stories as well. These were people who strategically prepared before they allowed any significant change to happen in their lives. They were smart about it! They maintained their values, integrity, and life strategy and did not let the money take over. In fact, in every success case they continued to work at their jobs, even though they had no financial need to do so.

Even after watching this documentary, I must confess that, like many of you, I would be willing to take on the challenges of winning the lottery. Think of the good we could do!

When a nonprofit mission becomes the beneficiary of a seven- or eight-figure gift amounting to multiples of its annual budget, it can have the same result as an individual winning the lottery. I have personally witnessed this in three organizations in the past few years – and watched them manage the gifts in three very different ways.


Nonprofit #1

An independent school received $10 million from a single donor to provide operational support to the school and remove the need for the school to do so many special events (golf tournament, auction, gala, etc.). Once the news of the gift broke, there was first celebration, followed by a downhill slide. The large gift came from one donor who was known to have a net-worth of more than a billion dollars.  That huge gift sent the message that this donor would take care of funding the school’s needs. The result was that the rest of the school’s donor base stopped giving because they believed they were not needed.

This school quickly realized that it had not managed the large gift properly, and set about trying to counter the negative impact. Although it has taken a few years of hard work, this school has mostly recovered and nearly brought giving back up to where it was before the receipt of the gift.


Nonprofit #2

A mid-sized social service agency received a $50 million gift in the midst of trying to raise only $25 million in a capital campaign to build a new facility. Twice the goal in one gift. Not bad, right? Wrong! The mega-gift donor gave the gift with multiple strings attached, one of which was a demand that they stop raising money from other donors. Other strings attached to the gift were related to changes in the floor plans and appearance of the proposed facility. This was an ego-driven gift of a size that would put all of us in the same dilemma: do we take it, or walk away from it?

This nonprofit decided to take the gift and then to put all of its energy into satisfying the donor. It is struggling to this day doing just that. Meanwhile, the broad and generous donor constituency has been left out in the cold and the nonprofit will likely not rebound quickly from this situation.


Nonprofit #3

A small college in the midst of a $25 million capital campaign received news that an out-of-state anonymous donor wished to give $25 million. While the notification of the gift provided some distraction for the board and staff, an emergency strategy meeting was immediately called to discuss the ramifications of such a gift. After much discussion, the college adopted a position to strategically channel the large gift into an area that was not currently being addressed by the capital campaign. Further, the college expanded the campaign to $50 million and utilized the gift as a challenge to motivate the broader donor base to act.

The result is that the college is making excellent progress toward its goal of $50 million, and there is more excitement than ever about giving to the campaign.

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Three stories with three different outcomes – the difference being how each nonprofit allowed itself to be changed by a windfall of money. The lesson is to stick to your values and never abandon the base of donors that you depend on to sustain your mission. Just like the lottery and unsuspecting winners, an eight-figure gift can ruin a nonprofit if not managed properly. Receiving such a gift should never be a reason to slow down or stop fundraising. Rather, it should make the participation of other donors more important than ever.

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The Whole Organization Fundraising Mindset

Fundraising | 0 comments | by Sheri Hodde

Whose job is it within your organization to raise money? Most who answer this question give the name of the Development Director – and they would be wrong. The right answer is every staff member, every board member, and every volunteer. Creating the right mindset among the entire team will lead to new opportunities for growth in your mission.

Asking whose job it is to raise the money is a little like asking whose job it is to keep the house clean at home. If my kids were asked this question, they would quickly and incorrectly respond that it is Mom’s job to keep our house clean. That is because Mom (my wife) is the one who manages our house and makes sure that everything gets done. So while it is true that their Mom is the force behind keeping the house clean, it is the entire family’s job to actually do the work.
This mindset is a common and recurring problem in non-profits stemming from the notion that raising funds is something most want no part of. Fundraising is the activity that is often excluded in statements from staff and volunteers when they say  “I will do anything for this organization as long as I don’t have to ask people for money” or, “I am not good at fundraising.”

There is an inherent fear of fundraising in many people. It is this fear that leads to decisions that take the path of least resistance – to only conduct non-intrusive, non-confrontational fundraising events like auctions and golf tournaments. This is a widely-held and incorrect mindset that leaves a single person (the Development Director) left to raise all of the money.

So to all other staff and volunteer support in nonprofits, I have good news and bad news. The bad news is that you are all part of the development team whether you like it or not! The good news is that you don’t have to ask other people for money to be part of the team. There are other functions to perform that do not involve asking for money. But for the sake of this article, I will focus on the majority of the team who can and should get involved in asking others to give.

We are all gifted in different ways. To think that we all must be able to perform in one specific way equally is a misconception and an assumption that will only lead to frustration. That being said, fear of asking others for money is not a great reason for not trying it. In most cases, people fear something because of two reasons:

  1. They don’t know how to do it.
  2. They don’t have the proper mindset.

So let’s attack each one of these. Knowing how to ask for money is academic and can be resolved by having a reliable and credible resource lead a training and orientation session with board and staff members. A thorough understanding of the entire invitation process, supportive tools and material, and role playing can ease the anxiety associated with asking and even help most get comfortable with something they never thought possible.

Adopting the proper mindset involves simply thinking through the logic and perspective of representing a nonprofit.

As a volunteer or staff member (non-Development Staff) of a nonprofit, you have chosen to associate yourself with a mission in which you believe and, therefore, are the best possible representative to extend the invitation to others. In a very real sense, you are better positioned to ask others than the Development Director, who is the only person paid to ask others.

When you invite others to give, you are doing so to fund a mission that you are passionate about and, presumably, that you have already supported personally. You are simply asking others to join in support of a worthy mission.

When you extend an invitation to give, you are passing on something that has enriched your life in some way and that you believe will enrich others lives in the same way if they choose to give. In this sense, it is no different than recommending a good book or movie.

So before you say “no” to getting involved or before you accept “no” too easily from others, give a second thought to adopting the proper mindset, and then getting the appropriate training to make it happen. The Development Director is not the only fundraiser in the house. Rather, the Development Director is the paid fundraiser and coordinator of a Development team that includes everyone in your organization.

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Managing a Major Gifts Portfolio: It’s About People, Not Process!

Fundraising | 0 comments | by Sheri Hodde

The very term “major gifts” is intimidating to many. What does it mean? Who are these so-called major donors? These are the questions asked every day by organizations that haven’t yet ventured into a relational model of fundraising.

In some regard, the fundraising world has changed dramatically since I started consulting with no-profits nearly 30 years ago. Technology has put a new face on much of what happens in a development office, from the way it communicates to the way it records results and measures progress. However, one area that technology has not replaced, and I personally believe never will, is the manner and means of communicating with the large donor.

If I asked you to describe your social life outside of work, you would likely talk about a group of friends associated with things like your church, neighborhood or sports teams. These are all friends that we make through social activities and maintain in a variety of ways – most certainly including face time. This hasn’t really changed much in my lifetime, either.

The amount of time we choose to invest in some personal relationships is significantly more than in other relationships. So, what are the criteria for choosing the specific relationships in which we invest our time? Simple – we invest significantly in relationships that provide us with the greatest return on that investment. If you lock yourself in your home and choose to live life as a recluse, the relationships in which you have invested would soon suffer. If the only means of communication with the people you know is an annual holiday card, then a card is probably all that you will get in return.

Back to major gifts fundraising……

The same logic applies to your donor base. The degree to which you invest in specific donor relationships is directly proportional to the return on that investment. If the only means you use to communicate is a piece of direct mail or an e-blast, don’t be surprised if your return is proportional to that investment.

So how does this relate to managing a major gifts portfolio? It begs the question: how do you spend your time? If it is behind a desk most of the time managing technology, then you are probably living life more closely to the recluse. If you are out having coffee and muffins with donors every day (something technology can’t do for you), then you are probably building some important relationships. And this is the foundational component to successful major gifts fundraising.

Many of you right now are replying, “I am already doing this.” Great! Now let’s talk about how to manage your work more efficiently. The most common error made in major gifts fundraising is with portfolio size. How many donor relationships can you realistically develop and maintain? Not that many.

Let’s go back to your social life for a minute. How many best friends can you have? Not that many. It takes time to build and maintain a close friendship. If our friend portfolio gets too big, we find ourselves with scheduling conflicts and inevitably irritating some friends for choosing others over them. If we believe that key friendships don’t require time and attention, then we are sadly mistaken. We too often take relationships for granted and then are surprised and disappointed when they come to an end.

The same is true with major donors. These relationships are too often taken for granted when we say things like, “We don’t need to do anything special for our donors – they give because they love our mission” or “Our donors don’t want recognition – they give for the right reasons.” Then, one day, a major donor stops giving to your organization, and instead, gives to the organization that better meets his/her passions and interests.

Now, to the close of this speech…..

Invest in a few key relationships that are vital to funding your mission.

Make your major gifts portfolio look like your friend portfolio – some friends are more important than others.

If you are a full-time major gifts officer, start with 50 or so donors, initially – it’s best to err on the side of too few. If you have half your time allocated to this kind of work, focus on 25 or so.

And don’t get too hung up on process. Remember, these are people giving for a reason. Try to discover that reason and act on it. A greater investment in these key donor relationships will pay off in dividends.

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Our Greatest Responsibility

Board | 0 comments | by Sheri Hodde

There are a lot of resources on the topic of stewardship and accountability in the development office, and most of them are helpful for development professionals as they strive to be responsible. However, the problem with most of the material on this topic is that it only applies to relationships with donors. As development professionals, you are also faced with other relationships that demand your stewardship and accountability – and those relationships are your greatest responsibility.

Let’s consider the obvious perspective first. Yes, it is absolutely critical that you are a good steward of your donors and that you account for the gifts they give to fund the mission of your organization. But sending out a thank-you note isn’t cutting it – not even a handwritten note, especially for your most important donors.

The question to ask is, “What can I do for my most important donors that will result in their belief that giving in support of the mission was the best decision they could possibly have made?” The answer is different for every donor, but it is always more than a thank-you note.

Even when your donors tell you not to do anything for them, do something – the right thing. You should do this for the same reason that your mother was right when she taught you to always say thank you. Say you were invited to your friends’ home for dinner and, at the end of a lovely evening, you thank them. It is common for the hosts to say, “It was nothing – our pleasure – no thanks necessary – we are happy to do it.” Regardless, you still say thank you – and you probably reciprocate by inviting them to your home for dinner in the future. That is how you truly behave as a good steward of that relationship. To not say thank you or not reciprocate in some way takes the relationship for granted and, over time, the relationship suffers.

Okay, that one was pretty easy to grasp. How about a new perspective on stewardship and accountability? You are also accountable to and the steward of a great resource – your board. The accountability side of this is easy to grasp, but perhaps not the stewardship side. Both are critical to understand.

Accountability to the board includes quality and appropriate planning, frequent and accurate reporting, and delivering results that resemble the planning. It is critical to gain and keep the trust and confidence of the board. Your ability to do this directly impacts the board’s ability to sustain and grow the mission.

Another key reason to account to the board is to tap into it as a resource to strengthen your development office. If the board is informed and believes the development operation is working as it should, you are in a much stronger position to engage the board as a strategic resource – replicating your arms and legs in various aspects of your development plan. While engaging the board may still be a challenge, it is far more likely to happen if the board feels in touch and informed.

Another perspective on this topic is stewardship and accountability to the mission of your organization. Whether your mission is to feed the poor or educate children, it is the reason why your job exists. The way you act to engage donors and thank them must be influenced by the mission.

Take the relatively simple task of giving a thank-you gift to an important major donor. I was approached recently by an organization that was contemplating the right way to do this. The question posed to me was: “Is it appropriate to buy our biggest donor an iPad as a way of saying “thank you”? We know he could easily buy one himself, but he won’t. We think he would enjoy this.”

Let’s examine this case carefully. The iPad is certainly within the acceptable cost range of the large gift given by the donor (the cost of the iPad is less than one percent of the size of the gift). He probably would truly enjoy the gift. But my answer is “NO!” While the gift may meet certain criteria of good stewardship and accountability to the donor, it raises too many questions. And it does not meet the criteria for good stewardship and accountability to the board or to the mission. If your mission is to feed starving children in Africa, it is pretty hard to justify buying iPads for your best donors.

So, in this case, the compromise was that the organization above invested its “thank you” budget in a video depicting orphan children (the focus of the mission) singing to and thanking the donor by name. The result was an experience that the donor will never forget and an emotional connection he could not have experienced with a traditional gift.

The long and short of this conversation is this: as a development professional, your greatest responsibility is to be good stewards of the resources entrusted to you and to be accountable to all parties engaged in the mission. As you create and implement your development plan this year, use a quick litmus test:

  1. Will it honor our donors?
  2. Will it honor our board?
  3. Will it honor our mission?

If the answer is yes to all three, then you have managed your greatest responsibility with excellence and integrity.

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