Episode 196: The Journey of Philanthropy - And That Enormous Gift Alone Not Being the Holy Grail
Welcome to another edition of Around with Randall, your weekly podcast for making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett.
I can't thank you enough for a little bit of your time today on this edition of Around with Randall. I found something that really sat with me for a couple of weeks that finally featured into this particular podcast. It was really about an article that was in the Chronicle of Philanthropy back on July 30th, and it was from an anonymous source. We’ll get to that in just a second, but I want to set this up in a way that hopefully makes some sense.
So, some just bigger thoughts as general reminders. If you've listened to this podcast, you've heard me say a few of these things repeatedly. We live in a 95-5 world when it comes to philanthropy and giving—that is, 5% of our donors make up 95% of the dollars. I always talk about and make a joke about my gray hair, but when I began this career of mine 28 years ago, or 27 years ago, around the concept of philanthropy and about engaging donors, we lived in an 80-20 world, where 80% of our dollars came from 20% of our donors. That was based on the Pareto Principle, which was posited by an Italian economist who talked about 80% of your output really only comes from 20% of your input.
But that principle doesn't exist anymore, with the reduction in the number of people making gifts overall to any nonprofit, and certainly the fact that we've seen mega-gifts really driving the years that we've had increases in. The last year or two have been actually decreases in total philanthropy, particularly when you juxtapose or add inflation into those equations. We're seeing a changing world of philanthropy.
What that's doing, though, is also changing our tactics. You've heard me talk about this a lot, where we're putting more eggs in more limited baskets. Our campaigns, which are getting bigger, are being driven by the issue, but by the need from a smaller group of people who are making a bigger difference—the 5%—which means success and failure can depend on a very few series of discussions, conversations, and solicitations.
All of this brings us to the moment of this article. It was written by Anonymous, which is one of the things I didn’t like about it, but I understand why they did it. The article was a kind of personal story through the eyes of the individual, and I think the nonprofit, about an opportunity to engage with and possibly receive money from Mackenzie Scott. The article starts, in terms of timeline and the story, back in 2022, when they received an email saying, “We're interested in some information.” It goes through the process that the nonprofit and the individual went through to give them the type of information they requested. In the end, the article indicates, or the story goes, that they didn’t get the gift, and they don’t know why. The term is that they were ghosted.
The author also indicates that they’ve left that nonprofit and almost left nonprofit work entirely, and that this ghosting has been haunting them. That was part of the reason they chose to get out of that particular nonprofit and out of that profession. I found the article fascinating at the time I read it, which would have been a few days after it was first published. I’ve also been interested in some of the responses to the anonymous op-ed. A lot of people have various opinions.
I’ve been so bothered by the article, and bothered may be too strong a word, but it stuck with me in many ways—more so than most do. I read and try to just consume as much information as I can. I love data, love stories, and love figuring out the nuances of different things, how they're interconnected—from the philanthropic world that we deal with every day to how that affects, and is affected by, politics, to the economics that we deal with in the United States. I find these interactions really interesting, but a lot of times I take the overall realization of what I’m thinking more so than the actual inputs that I read as I went along. This one, however, has stuck with me for a lot longer than normal.
The question I’m asking myself is, what should we be learning from this? If this is my 20-minute classroom, the goal is to provide something to listeners that will be helpful in terms of their ability to deal with these kinds of scenarios. Take Mackenzie Scott’s name out of this, which I will get to in a moment and will probably be the last time I mention it specifically. We all are in more of these scenarios where our efforts are being, and our successes or failures are being, driven by a very small group of people, and we’re struggling with this idea.
What I really want to do today is give some tactical thoughts and support on what you can do to better understand how you put together a plan—annually, campaign over a couple of years, individual portfolio, and gift officer. The organization as a whole, we’re all in these particular situations. The only difference is the number of zeros. And leadership annual giving professionals, some of whom I work with, are having this issue. It’s just that they don’t have gifts of $25,000 or $500,000. They’re dealing with $5,000, $10,000 at the most, and more likely $5,000 to $1,000. And there are just fewer people giving that amount. Numbers nationally back that up.
All the way to the principal gift officer, who maybe makes six or eight asks in a year, but their asks are in the range of $5 million to $7 million or $10 million, and their pool of people is maybe not as deep. All this is to say, what can we do to put ourselves in a better position for success? What do we learn from this particular article? What do we learn from this experience?
Before I get into the tactical, I’m going to give a little bit of an opinion. I tend not to do these things, but I think it’s important. And this is not meant as a negative to this particular author, who I don’t know, as they were anonymous, or to anyone else. But I think it’s a mindset. And I think it’s been applicable to me, not only professionally for the 27-28 years I’ve been doing this, but also from the perspective of a personal point of view.
Mackenzie Scott, because of her engagement and involvement and obviously her marriage to Jeff Bezos and Amazon’s success, has provided her with a great deal of wealth. I never want to lose sight of the fact that it is her money. She can choose to do whatever she wants with it. I do find it fascinating, and sometimes actually a little depressing, that there are so many people who have an opinion about what she should do with her money. It’s her money. And we should always try to keep this in mind, not just with Mackenzie Scott, but with everybody we deal with. People don’t have to make charitable gifts.
You can talk about it from the extreme of an estate that’s above the, you know, almost $13 million exemption level. If they pass, they can pay taxes on that, give it to an individual above the exemption level, and they don’t have to give any away. And if they do, they get to choose. I find it incredibly interesting how we sometimes assume that we have input more so than we do on the decisions that other people make. Can we influence? That is important. As in, here’s a great opportunity for you to make a difference—is this something you want to talk about? But I’m fascinated by people who say, “We deserve the money.” I’m like, but it’s not your money.
On the personal front, I’ve run into this over the last year, 15 months since we lost Dad. And Mom has just been amazing at working through, after 54 years of marriage, a very hard year. And on that point, I will keep things more private and confidential because they’re Mom’s, not mine. But in this process, she’s learning a lot of the financial aspects that Dad probably took a little more point on, generationally. That’s fine. He did a great job. He loved nobody more on this earth than Mom. But Mom’s beginning to figure this out, and I’m always appreciative when she asks my opinion. I’m always appreciative that she thinks I have something of value to her, to help her. But I always start with, “Mom, it’s not my money. It’s not my sister’s money. It’s your money. You can do whatever you want with it. All I want to know is that you’re safe and that you’re as happy as you can be.” And happiness and joy intermix in some ways because of the loss of Dad.
So, in my experience as a professional, it has led me to this concept of amazement at times where people think, “Well, you know, I can tell people what to do with their money.” It’s not your money. Now, on a personal side, I’m always conscious of the fact that I want to support that notion with my own mother. That’s my two and a half minutes of opinion. I think there’s a benefit in realizing that if we want to build better relationships, we need to realize it’s not our money. We shouldn’t assume we know what they want to do.
So, the tactical pieces today in this classroom setting of what are we going to do to overcome this issue of seeing fewer people making the bigger difference in our annual goals and our individual goals, our organizational goals—what can we do? The first thing is to think about the world in philanthropy and particular people’s gifts. And I know it’s an overused term, but I’m going to define it, and I think I define it maybe a little bit differently than most, as getting to more transformational conversations.
Transformation and transformational are not a number of zeros. They are an emotional state, from the way I’ve always viewed it. Is this the priority? Is this maximizing the person’s, the donor’s, or couple’s emotional status and view? Is this elevating it to the highest possible level where they are maximizing their philanthropy? I hear a lot of people say, “That transformational number is $10 million.” I’m like, but what happens if they have a billion? $10 million to them may be like $50 to me. Transformation and transformational gifts are an emotional perspective.
If you want more information on those and some of the things I talk about that are very specific to that issue, you can go back and look at episode 49, I believe, and 132 here and there are other podcasts where I deal with that. What are some of the tactical things you can do to get to transformational? Because we have a little bit wider subject matter, I'll let those other podcasts and things I've written in my blogs lead you there. But here are a couple of highlights:
Number one, we need deeper relationships. We need to figure out how to deepen the conversations we're having because transactional gifts are ones that we're glad to receive in a check and we don't worry about it going forward. Transformational gifts come from years of conversations about someone's values, what they want in this world. We need to get more into that discussion—not just about what the money will do for the organization, but what the gift will represent for the donor, the couple, or the family. Why is this an important connection? That will get you into more transformational gift conversations.
The other thing is that we need to begin spending more time talking about a donor's lifetime value. We know generically that the number of dollars transferring from a generational wealth perspective is somewhere between $60 and $85 trillion, depending on markets and other things. More and more of our transformational gifts, if they're truly emotional, will come from estate gifts because people may not want to liquidate their current financial status, their money, until they're gone and no longer need it. You can't get there until you think about donors as a lifetime relationship over time. Their value isn't just in a one-time gift but in a series of growing gifts, getting more into transformational depth.
Number two, we need to have a wider lens at the top, which dovetails beautifully into thinking about donors and our engagements in a lifetime scenario or over the course of time. If we stop worrying about the issues involving just the transactional gift for this year, for this year's metrics, then what we get is a longer view of what might be possible if the person's or couple's donors' values meet what we're trying to accomplish in our nonprofit mission.
This gets into a couple of things. First, you need smaller portfolios so you can maximize the time with the people who have the largest or most opportune lifetime value. In Episode 26, I talk about smaller portfolios. I also discuss it in the episode where I break down the moves management process. Smaller portfolios—somewhere between 42 and 50 or so—is an ideal mark for a major gift officer so that they can prioritize the people who are most likely to make the most investment of themselves into the organization over time.
Second, we're going to need more engagement from volunteer boards. Every data point, every statistic, every study says that people give to people. Yes, the professionalization of what we do is critical, but a part of that is how we get into these conversations. This is where volunteers, boards, campaign committees, campaign leaders—whoever is involved—need to open those doors to advocate for us when we're inside that door or moving into it. They need to be a resource for those donors, to say this is really important, and then give us appropriate feedback on what we're trying to accomplish and where the donor couple or individual is in the process.
All of this is to say that we also need to organize ourselves, and I've done a couple of podcasts on this. We need to better understand why finance needs the money and educate them in the other direction. You want the $10,000 because it's all about cash. We're leaving hundreds of thousands of dollars of possibilities on the table. I know it's a hard conversation—I just had it this week with a client where the CFO was saying, "We've got to have the money, we've got to have the money." I understand what you're saying, but if our true job is to maximize the relationship, they told us that there are a series of opportunities in estate gifts that would be exponentially greater than any cash they can give us. But we cannot walk into those discussions just banging on them, telling them to give us cash. Because that's not what they want to do. It's a hard, yin-and-yang, give-and-take. We cannot shy from the responsibility of advocating for what's in the best interest of our donors, which, by the way, will actually increase philanthropic revenue over time.
Number three, when things don't go well—and I don't talk about this enough, i.e., when you make an ask that doesn't come to fruition, whatever it might be—trying to figure out why it didn't go well is really important. I work with a client going through a campaign, and everyone wants to succeed. Because of a lot of extraneous circumstances that have nothing to do with the philanthropy office, it's been affected. An enormous ask was made last year, and it didn't come back the way I thought it would or the way they thought it would. Certainly, there was disappointment on everyone's face when the news was shared. We really dove into why it didn't go well. We were circling around the couple, asking their financial advisor, trying to figure out what didn't make sense, and why we were off on this. What's happened because of that is we've had a lot of interesting conversations, and I give the client credit. I'm certainly in the discussion on the backside, but they were the ones who pushed into this because I recommended it, and they're really good at it. We found out that the positioning of how we looked—not the project, but the understanding of its value—wasn't handled the way we wanted. We're repitching it in a different way.
You need to find a strategy team. You need to be willing to ask the donors, if it's appropriate, if they have a support team—particularly on higher-level gifts, they most likely do. Lawyers, financial advisors, people like that. We just want to know how we can do this better in the future—maybe not even with them. What didn't make sense? What did we get wrong? What could we have done better? That constructive criticism can be incredibly powerful if we use it correctly to better understand how we can proceed, maybe with the same relationship in a different way or with new relationships or other relationships. Don't be afraid to ask.
The last is a little bit philosophical. It's based on the article in the op-ed that was written by the anonymous source in late July. The individual, he or she, commented that this gift would have been the holy grail, to quote, of the organization's hopes and dreams. Those are my words, but that's what the writer was saying. Some of the commentary was along the same lines as mine, or at least my thoughts. The holy grail—I'm not sure what I know what that means. What we do in our profession is best identified, to me, in the following saying: It's not the destination, it's the journey. If all we ever concentrate on is year-end gifts, year-end giving tools, output—I'm not saying they're unimportant, you've heard me talk about metrics and how they need to be done—but if our philosophical belief in philanthropy is that it's only about the destination, that $10 million gift, we're missing the point. Because there are a million small joyous victories that come every day if we're paying attention.
The best gift I ever received was a $20 gift 23 years ago from a mother who gave $5 out of her grocery money for four months in a row because the institution I worked for had given her son a full scholarship. She wanted to be involved in the parent campaign—$20. It's the best gift I ever saw because it was transformational. If you're not paying attention to all of it—I'm not saying don't go for the bigger gifts, and I'm not saying don't be disappointed—but I was taken aback when they talked about, or when he or she talked about, this holy grail. And that it's the hard work we do every day. It's the small victories from the philanthropy that we're so lucky to represent. It is the greater cause of what our organization does every day.
The challenge is that the problems we're trying to deal with are enormous, and our nonprofits aren't big enough to do it on their own. If you're trying to solve homelessness in a large city, that's an enormous problem. This organization has a critical role, but if you want to solve the whole thing, that makes you a great person and a philanthropic person in your own right. But no nonprofit can solve that on its own. I mean, even places like the Red Cross cannot solve an entire community's problems when a storm comes through. They are part of a larger operation effort.
All this is to say: Pay attention to the little victories. Pay attention to the good things that come every day, to the relationships we build, to the laughter that comes from the smiles that occur. Because at the end of the day, it's the journey that makes this profession so great. We do what we do not for money, but for the joy in making the world a better place. If we all had the money, we'd all give it. We don't, so we're on the other side of the equation. That's noble. The little victories make a difference. And when you don't get all the gifts you want, or maybe that big donor doesn't, you've got some tactical things to do. Also realize it was the journey in developing that relationship—if you did it right—that should be part of the joy you experience each and every day.
Don't forget to check out the blogs at Haliflephilanthropy through the two-week RSS feed, haliflephilanthropy.com. Go ahead and take a look—90 seconds. Just things I see, read, think are interesting, and might be worthy of a thought on your part. If you want to reach out to me, that's podcast@haliflephilanthropy.com.
I usually end my podcast with the thought process of my favorite saying: Some people make things happen, some people watch things happen, and then there are those who wonder what happened. You usually don't hear that until the very end of my podcast. But that gets into what we're talking about. Don't let that happen to you. Do your job well enough that you understand why your philanthropic revenues may be declining or why you're not getting the gifts you want. So be in the "make things happen" part of that equation.