Episode 39:Employment Issues in Non-Profits

Welcome to another edition of “Around with Randall;” Your weekly podcast on making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett. 

It's great to welcome you back to another edition of “Around with Randall” as we enter this month, the next four podcasts, including this one, are all going to be thematic. We're going to talk about the issues involving our profession as it pertains to employment. You may remember a couple of podcasts from the past that are tangentially related. We'll refer to those on and off as well as a great reference to you to go back to and listen again, if appropriate. What we're really wanting to get at is how do we, both from the leadership perspective, as well as the employee perspective, increase the average amount of time within the philanthropic fundraising industry that we have employees stay in their jobs.

If we look at the statistics, we find whether it's Case AFP, AHP, each industry or segment of the industry is a little bit different. The average tenure is somewhere between a year and a half and three years or so, in particular when it comes to gift officers and it's incredibly painful for everybody involved when we have the constant turnover of people within their jobs. It's bad for the organization. It's bad for the donors. It's bad for the clinical, educational, or social services programs, the other side of the organization, who's not in fundraising. It's bad for them because they don't know who to believe, trust, build relationships with and it's bad for leadership and it’s bad for the gift officers. So why is this so important beyond just the comments that I make here? Let's talk about maybe some tangential statistics. 

I love what Malcolm Gladwell says in his book, Outliers. He talks about it from the perspective that for anyone to be successful, they need to do that particular task, that kind of work for somewhere around 10,000 hours. Basically, if you include vacation, that's the equivalent to five years. There are about 2,080 work hours in a year at 40 hours a week. And we all know fundraisers only work 40 hours a week and if you take vacations included, it comes to up to about five years.

On top of that, an old friend, Bruce Flessner in his firm did some great work many years ago about an investigation, really of gift officer productivity. They found that to see significant growth in a gift officer's performance, within their portfolio. It usually happens somewhere after year three, in particular between year three-and-a-half to four-and-a-half, and that the output was significantly more. It jumped exponentially from year two to three, from three to four. We know that anecdotally, if you've done this for a while, that's kind of what we see, but they did some pretty good work. Bruce did some tremendous work in terms of statistics.

The other thing that we know is that studies have shown that it takes several years to develop the kind of relationships that consistently and continually provide opportunity for larger major gift chances. We read about and I've got a client who has a primary example of this. We read about the one-time gift of $10 million or $20 million and it was a new relationship and everybody's happy. If we read the numbers and if we look at the research, what we know is that's not traditional. It's not something we see on a normal basis. The client, I was referring to started a grateful patient program and one of the first gifts out of the gate was a gift for $10 million. The organization thought, well, this is how it's going to go all the time. I was trying to tell them for many years, this is unusual. Most of the time an initial gift comes in, it could be $10,000, $15,000, $25,000, if you're building a major gift program with the right kind of pipeline. 

Number two, then they get started after they make that gift that increases to a $100,000, $250,000 to $500,000. And it's the third or the fourth gift that gets you into those principal gift opportunities. I sometimes think we miss that. We also know that longevity produces a better yield. The longer someone's in the job, if they're doing the right things and there's accountability, the more productive they are. We tend to highlight those long-term gift officers. Someone who's been with the organization 15 years, they're doing $5 million a year, $10 million a year and should be celebrated every day. But for every one of those, how many are there that are there those 18 months? The answer is multiple. 

So, in the end, we have these issues that we've got to figure out because everybody's losing. Why is it that fundraisers leave? I mean, there's statistics on this, particularly at the chief development officer role I'm seeing more and more what I would call quick turnover. That has kind of two meanings in my world. Number one is that quick turnover could be the CDO, the Chief Development Officer, President of the Foundation, Vice President of Philanthropy or Advancement, whatever the title, comes in and they're not what they should be. So, they think, or so someone thinks, and so within a couple of years, they're out the door and someone else's coming in, or you have a Chief Development Officer who's been there for a while and a new CEO comes in and that CEO has a different vision. 

Let's talk about that relationship for a second because it's part of this larger conversation. It's just not gift officers, CDOs play an important aspect in this, in this challenge. What we know is that according to a study done by Compass Point, just over a third of CEOs are dissatisfied with their CDO’s performance. Interestingly enough, it appears that one in five CDOs think that there's a non-existent relationship, 20% with their CEO and that's being described as they're not engaged in fundraising activities at the level that should be/need be. We also know that a number of CEOs, and there's not a hard number on this, but we're hearing it more and more, to steal from Erma Bombeck, think the grass is greener on the other side of the septic tank. And what I mean by that is, and if you're too young, that's a book, by the way, is that they believe that there's more money to be raised and that the person who's in charge of it, isn't in charge of that effort and isn't doing what they should be. A third of fundraisers say that they lack support and a basic understanding of what it is that they do. In the end, these are the things that are pushing people out of their jobs as primarily a CDO in these statistics, but also major gift officers. 

What this has all led to is what I call an epidemic of job jumping. I'm really tired of helping clients do some interviews. I'm not tired of actually helping the clients, but I'm tired of seeing when I helped them look at resumes and somebody's been in a job for 18 months, 12 months, 16 months, 20 months, 8 months. It's just this complete turnover every single time. It challenges the notion of bringing someone in, hopefully for long term, so that the organization can invest in them and their productivity can be realized by the organization who did that investment. I'm not sure if there's anybody to blame. I'm not sure that we should cast dispersions on one side of the equation or the other. But I do think we all have a part in fixing it. 

So, the tactical is two-fold here. Number one, the first tactical is in the next couple of podcasts. We're going to talk about some of these specific issues. We're going to talk about how salary should be developed, in terms of gift officers, CDOs and other performers, and then comparing them to other jobs in the institution or organization, or just in the industries that have nothing to do with fundraising is problematic at best, troubling in the middle and is causing massive problems in the end. We're also going to talk about this idea of what gift officers should be and what leaders should be looking for in terms of what I think of what Maslow calls self-actualization and we'll get into the details pretty deep on those too in the 15-17 minute podcasts we do. 

Today, the tactical is to give some high-level things that we can be looking at that can be very important. So, the first thing is that we need to improve our hiring practice. That's exactly what I'm talking about when I refer to self-actualization and Maslow. We'll cover that in some pretty detailed aspects, in that particular podcast here in a couple of weeks. Number two is we need to pay attention to fit. I look back at a particular job that I took at way too young of an age when my boss CEO of a medical center hired me in an age, I look back. I can't believe he made that decision. I asked him several years later, why did he make that decision? And besides some of the skillset and things that I had done, he said something that I found to be pretty profound that I had never considered, and this goes to fit. He said we needed someone who was going to come in and shake the place up and probably a younger person was going to be willing to do that. That's what they did need. That's what made and makes Glen Fosdick a phenomenal leader. 

I think about another experience that I had, where I was hired and the CEO in secondary ed, Headmaster had very little philanthropic experience. But he was able to look at it and say, I needed an expert that could come in and be the one who would make the decisions and guide me. We sometimes don't think about fit. What does the office need? What does the organization need? Lots of change, consistency, partnering with other parts of the executive and leadership team or board, how experienced they are versus how experienced you are. Fit can be incredibly important. Not everybody has the same personality, the same place in their career. That fit is something we should pay attention to. 

Number three is pay and as I mentioned, we'll talk about that here in a little bit. One thing I will say about pay is it's just not about cash and we'll talk specifically about that in the next podcast, but it's also the non-cash payments that we should be paying attention to. In podcast 27, we talked about the idea of where people will work, the flexibility coming out of COVID and how our world will probably not be the same and how that may or may not affect people's decisions for employment. In the 33rd podcast, we talked about work-life balance. What do organizations do to create a work-life balance, so employees feel good about both sides of that equation? You might go back and look at those because that's applicable here, but we also need to think about how organizations help their employees grow, give them more responsibility, education. What are the non-cash items that are important in this process?

Number four is to agree on expectations. What we know is that sometimes, executive teams don't understand some of the numbers that we work with. Sometimes we're not very flexible to put them in terms that another executive who's not in philanthropy can understand. Primary example I always get is planned-giving. There were always three sets of numbers I was most concerned about when it came to a year because planned giving numbers are hard to account for. There was accounting, which is a NACUBO standards. There's not a lot of variants on that. That's how our CFOs and our finance departments are required to show revenue. There's counting, which included a whole lot of other things, like how do we estimate plan gifts? How do we include them so gift officers can be rewarded? The third is cash, which seems to be king with most finance and CFOs because that's what they need the money for today to invest in the organization in some way, shape, or form. I always kept track of all three numbers because when I did that, I set up clear expectations with my boss, the board and others, to know how much of each I needed. It saved me a lot of headaches for situations in which you have a need in cash to build something, but you're raising money in plan gifts --mismatched expectations. We need to get on the same page.

Number five is to collaborate more. We need to be working more in concert with the program, if you're in social services or clinical, if you're in healthcare faculty and the college environment, we need to be more in tune with their needs and be able to explain what we do and how we do it. I had a video call this morning with a long-term friend who's in academia and her comment was fascinating. She says, my gosh, we're turning over, gift officers so often I have things I'm being requested to do, and I don't have anybody to turn to, or I don't know who to turn to. The email doesn’t go through or the phone doesn't work. We're not in tune as we should be with that idea of collaborative opportunities within our organization to better ourselves, better the relationships, better the outcomes. That's got to be something that we pay more attention to. 

The last is what I call pipeline together. If you're in a small organization, you're kind of on your own in terms of how you figure out what donors or prospects you should be looking at. I think that, and I've mentioned this a couple of times when we talked about metrics and portfolio sizes and things of that nature. If you have a medium or larger-size organization, it is the system's responsibility and in partnership with the gift officers to create the processes to best identify pipeline. Part of the reason we see people jettison out of their jobs is as they get a portfolio, they go through it the best they can. There's no pipeline, they get all the money they can out of it. It takes about 18 months, and they get the heck out and they take a job for five more dollars. What we know is if we have great pipelines, gift officers stay. They'll take less money for a great environment with a terrific pipeline because it's proven success year in and year out in terms of prospect development. That can't be left alone to the gift officers. That has to be a system conversation, meaning I don't mean the healthcare system. I mean, a system, a process that the organization is identifying, whether it's how we go through alums, how we go through grateful patients, how we look at our community, how boards make referrals. It can't be just isolated in one area. 

So those are your six to start and we'll do some deep dives. I'm still working on the fourth one here, but we know next time will be about salaries and following that will be about the idea of self-actualization and what that means for gift officers. I think it'll be an interesting month to look back and say, did we find some nuggets that might be helpful to you?

Just a couple of quick reminders, the websites there; blogs being posted all the time -- quick 90-second reads on things that might be important to you or be helpful. If you're interested in communicating with me here at “Around with Randall” that's podcast@hallettphilanthropy.com, or if you disagree with something, I say that's reeks@hallettphilanthropy.com, and we're getting more and more of those. We're going to start looking at them here pretty quickly. 

I appreciate what you do. I hope you appreciate the value you bring to your organization, to your community, and to your nonprofit. I always end in the same way. “Some people make things happen. Some people watch things happen. Then there are those who wondered what happened.” We live in a world where there's a lot of people who are wondering what happened and the work you do, and the work your non-profit does is the epitome of being people who are making things happen for just the type of people that need that assistance. Nonprofits fill gaps and fill holes in our community. You're a big part of that. I appreciate your time today. I'll look forward to seeing you on the next episode, when we talk a little bit about salaries and I can't thank you enough for your willingness to spend 20 minutes or so with me here on “Around with Randall”, make it a great day.