Viewing posts from: February 2017

Mid-Level Strategy

Donors | 0 comments | by Sheri Hodde

As a career consultant who has worked with countless nonprofits, I spend most of my time focusing on the top of each client’s donor portfolio – the largest gifts. Helping a development staff, Board and executive leadership establish a sound, relationship-based principal gifts strategy provides the greatest short-term gain, as well as long-term revenue retention. But where does long-term growth come from? The answer or “secret sauce” to a thriving and growing development operation is a strategic mid-level donor strategy.

For most small- to medium-sized nonprofits, the monthly (sometimes daily) challenge is to raise enough money to keep the door open and the mission alive. It is truly a discipline to take the time to plan strategically for the future and have the patience to wait for the results of your efforts. Investing today when we may not see the return for a few years goes against our fast-paced “I want it now” culture. For those of you who are parents, this probably sounds familiar.  Nowhere does this principle apply more than in parenting. As a father of four kids, I consistently attempt to impart my wisdom to them about the foreign concept of delayed gratification.

For a nonprofit, the real questions that must be answered are:

Where will our next 25 to 50 major donors come from?

How does a smaller donor grow into a major donor?

How can we prepare for the day when our current top donors are gone or unable to continue funding the mission by themselves?

The answer: build a solid mid-level donor strategy!

So let’s start by defining what a mid-level donor strategy is. My definition will surprise you because it has little to do with the amount donors give and everything to do with the manner in which they are engaged by the organization. A solid mid-level strategy is about transitioning the donor from a transactional means of giving (typically events and direct mail) to a relationship-based form of giving. In short, a mid-level donor strategy should be about transitioning a donor’s relationship from the mailbox to a person.

A vital resource necessary to establish a good mid-level donor strategy is the person who will be the champion and ambassador for a mid-level donor portfolio. Ideally, this is a full-time member of the development staff. In a small nonprofit, this person may be a part-timer, board member or volunteer. Regardless, it is the role and responsibility of this person to personally relate to the mid-level segment of donors.

Relating to the mid-level donors can take many forms, as long as it involves personal interaction. Personal interaction means phone conversations or small group meetings. It does not include emails, tweets, or voice messages. Remember, the aim is to establish a personal relationship – not simply raise money. The primary goal is to engage donors who have given through mass-marketing efforts and, over time, promote those donors to the major and principal gifts portfolio. This implies that the donor is now ready for a face-to-face, personal relationship plan.

For those of you who have attended our workshops or webinars, you have probably heard me walk through the relationship pyramid as an illustration of a sound development strategy. But the relationship pyramid is also an accurate picture of relationships in our personal lives. At the bottom of the pyramid are all of the people we know – perhaps our Facebook friends or holiday card list. At the top of the pyramid are our best friends in the world – the two or three people in whom we invest the most.

We meet new people every day and add them to our personal portfolio of friends and acquaintances. Some of those we meet move into deeper relationship with us. A few make it to the top. The point of the illustration is that there is a path for some of the people we meet to move into deeper relationship with us. So, too, should be the case for a new donor who gives through your mass marketing efforts. It is the mid-level donor strategy (the secret sauce in the middle) that connects the more impersonal transactional fundraising to the personal, transformational fundraising.

So, take some time to think about the broader long-term strategy of your development efforts. Invest today in a mid-level strategy and watch how your major gifts efforts benefit in the years ahead.

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

Donors | 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 non-profits over 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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When is the right time to engage a professional fundraising firm?

Fundraising | 0 comments | by Sheri Hodde

This is a question that all nonprofit organizations ask as they prepare for a capital campaign. And many nonprofits choose the wrong answer for reasons that seem responsible and sound in that moment. The correct – and short – answer is this: a nonprofit organization should engage professional counsel as soon as the need for capital is determined – long before the campaign begins.

Now, let me acknowledge up front that my answer is self-serving – but it is also correct. It is correct because the most consequential errors in campaigns are almost always made before counsel is engaged. When this occurs, the professional firm eventually retained has all it can do to salvage the remaining fundraising potential.

So let me follow the logic that leads so many nonprofits to the incorrect answer. Suppose we are a school that needs to raise $5 million for a new building of some sort. There will be some board members who view the campaign ahead of them and make the following statements:

“This is only fundraising – how hard can it really be?”

“We have so many board members who are successful businessmen and women who can figure this out.”

“We can already see where the first million or two will come from. We should at least get that far and then hire professionals to help us get the money we can’t see today.”

Makes perfect sense, right? WRONG! WRONG! and WRONG!!! Let’s take a time out here and look at the bigger picture (one of my favorite things to say).

Campaigns succeed or fail in the initial months during planning and early solicitation. This is when precedent is set and expectations are established. Yes, it is possible to gather some low-hanging fruit and falsely leap to the conclusion that this fundraising thing is easy. But most campaigns that are managed internally (without professional counsel) hit the wall after those first fruits are gathered. Further, the few gifts that were gathered were not done with the broader vision in mind and the greatest potential is almost never achieved.

This is not like trying to fix your kitchen sink by yourself and then calling in the plumber later to fix it. Once you accept gifts for your campaign, you can’t go back to those donors with the message “that wasn’t good enough.” Once the campaign is announced and gifts are given, the damage is done, the horses are out of the barn, etc.

So, let me offer some advice to you that is only partially self-serving. If you are looking to cut costs in conducting your campaign, don’t choose the beginning of the campaign to do it. Hire professional counsel early in the process and build your effort right from the start. Then, consider conducting the second half of the campaign on your own after the plan, leadership, systems, processes are all in place.

Finally, pick your counsel early and lean on them for advice through the planning process. Most firms will offer that advice for dramatically discounted rates and, sometimes, pro-bono.

When is the right time to engage professional fundraising counsel? Today – if you are planning on launching a campaign in the next 12 months.

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So who is our customer, anyway?

Fundraising | 0 comments | by Sheri Hodde

For Mission Advancement, it’s nearly all nonprofit organizations … pretty easy answer, right? Think about your mission and vision statements: who the target of your mission is, who the staff and volunteers focus their efforts on. You come up with answers like the students who sit in the classrooms, or the person who is hungry or in need of what it is your mission provides. Well, in one sense you’re right. But in the fundraising sense, you are wrong!

All nonprofit organizations have two customers. The first customers are easy to identify; they are the ones on whom the most effort and energy is focused. They are the reason that your mission and organization exists. The second customers are almost always overlooked and, to some degree, taken for granted, even in the largest and most mature nonprofit organizations. The overlooked customers are the donors who fund your mission.

Now, first I want to ask the forgiveness of the reader for the terminology I am using in this article. Many nonprofits, appropriately so, go to great lengths to use a term more proper than “customers” to describe the beneficiaries of their missions and their generous donors. But for the sake of this article, please bear with me.

Who in your organization wakes up every morning, comes to work, and thinks about the needs of the second type of customer – the donor base? You may be quick to answer, “The development staff.” Again, you’d be right.

Sadly, in most nonprofits, the development staff is the only group that is thinking about the needs of the donor base.

The purpose of this article is not to wag my finger at you. When one considers how nonprofit missions come into being, it is only logical that this phenomenon is so prevalent. Put simply, the idea for a homeless shelter doesn’t start with a desire to raise money. It starts with a desire to help those most in need. Those involved in opening a homeless shelter are focused on how they can impact lives for good and give people a hand up to more productive and rewarding lives. It all begins with a vision for the mission. Somewhere along the way, it dawns on that visionary leader that this mission will require a lot of money.

One very important concept that all who are involved in nonprofit missions need to grasp is that it
always takes two customers
to make it
 work. Both
 customers
 must have
priority, attention and consideration from all who are involved in leading the mission. It is easy, and even intuitive, for a nonprofit organization to understand the needs of its first customer – but much more difficult to understand the needs of the second customer (the donor base). What do your donors need from you?

The quick answer is: more than a thank-you note or a call. Each donor gives for a reason. Donors all have needs and expectations. It is a relationship or their passions and interests that brought them to your mission. What do you do on a daily, weekly, or monthly basis to communicate that each decision to give is a good decision?

The answer to that question will take us far beyond what I can include in this brief article. But it is the right question for the leadership of all nonprofit organizations to ponder. As you begin to plan for growth in your mission, consider taking some time at an all-staff and Board meeting to help everyone understand:

Your nonprofit organization has two different sets of customers.

Both sets of customers are vital to the success of your mission.

Each set has their own needs, and it is critical to understand those needs in order to appropriately address them.

The two customers need each other. The extent to which you can bring them together determines the extent to which you can transform both customers’ lives.

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