Episode 206: Kenny Rogers Was Right - Hold Them or Fold Them - Should you make that year-end ask?
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'm so appreciative that you would take a few moments of your day to join me Randall, on this edition with Around with Randall. Believe it or not, Randall and you are going to take a quick journey into historic country music and the great words of Kenny Rogers. In his famous song, The Gambler, you have to know when to hold them and you have to know when to fold them.
And today we want to talk about year end giving and whether or not you should be pressing for the kind of gifts that I think we all hope for that we tend to see come more often at year end. One of the great questions I'm dealing with with a lot of clients is whether or not they should consider pushing into gift conversations more forcefully as we come in towards the end of the year, which brought me to think a little bit about what would be the criteria for figuring out when it's the best way or reason or rationale to do that and when to hold back and maybe a middle ground that we should consider.
So our problem today of the bigger issue is you've got a donor or a series of donors and you're trying to figure out should I be asking them. So let me put one proviso out there. I'm not talking about $50 gifts or $100 gifts by gosh go ask even up to $1,000 or $2,500. Those decisions by most people are a yes no decision. You need to go ask and we'll talk about several different criteria today about when and when maybe not to push and some of those will fit into here, but it what we really want to focus on is the major gift conversations.
The ones that you've been hoping for that are going to help you maybe with your metrics, the organization's metrics in the major gift plan, gift principle, gift categories. So I lead off with the comment if you are in the position where somebody's usually made a $500 gift, you need to call them and ask them for $500 between now and the end of the year. And ask $50,000 gift versus a $500,000 gift, $25,000 gift versus a million dollar gift. When do you push? When do you pull or as Kenny Rogers said, hold them or fold them.
So when we think about the relationships that we should have, what we're really talking about today is getting into a better space and understanding where our donors are at and what we should be thinking about. So we want to review and just talk about for a moment the reasons why you should ask and maybe some reasons that you shouldn't ask. And then this moves right into that tactical piece, really the conversation around what we should be thinking about in those discussions to figure that out.
So let's start with why you should be making those ask. What are the rationale that donors have for making this decision in this moment? So the first is that this is more a traditional one. It maximizes tax consequences or benefits that we all know, have we've done this for 30 seconds in this industry or you've been a philanthropist and made gifts that December 31 is kind of a magical day. That's when you can write off your gifts from the year previous or the year that inside of December 31.
Here's the thing about this. There used to be a much better conversation before the 2017 tax changes in those changes. The increase of the standard deduction, which was dramatic and is in being an increasing diminishes for a huge population of people, their tax implications, which really speaks to what I talk about what I hear industry leaders talk about people. I respect to talk about we need to worry less about tax implications and more about connection about implications of value that people want to invest their money in your nonprofit.
So in some ways, this actually reaffirms this diminishment of tax benefit, something that many of us have been talking about. Let's worry much worry less about taxes and more about connection and value. There is something to be said with the minimum required distributions that may or may not come from a year end for those people who are over 70 years old little more than that.
There are times when they have to make those determinations and that's a different conversation because that's not a tax implication that is a regulatory requirement that people with qualified funds have to take at certain ages or after certain age, a certain percentage of their investments if it's in a 401(k) or if it was in an IRA, something of that nature.
Well, if they're up against 731 then having this discussion is very meaningful. And actually I've had three of those conversations just in the last week with clients and their donors they've asked me to kind of work with to help them better understand what possibilities are out there. So know that the tax implications, regulatory implications aren't as great. They may still exist depending on the circumstances.
Number two, it aligns with why people should be giving or thinking about giving or maybe you want to push a little bit. Most of the donations in the United States come in the month of December and that's because it aligns with the holiday season, the holiday spirit. People are shown in studies that they are much more generous during the holidays and that it aligns with a sense of gratefulness, gratitude that they are happier, that they are doing things that they like that align with this idea or mentality of helping others or using gratitude as an impetus to be willing to help others.
It's also a happier timeframe just in general. So a lot of decisions are made then. So pushing into this conversation isn't very natural in the month of December, no matter the religious or non-religious background.
Number three reason is the idea of what I might call surplus funds. People are looking at their tax situation and looking at their financial situation. We've talked about the tax reduced amount a few moments ago, but there's also the implications of surplus. This may fit a little bit more into the corporate side. Individually, most people know how much money they can give or there's an assessment. I'm a good example. So for my wife's and my charitable giving, we do that through the corporation because that's advantageous to us.
But December 31 is an important date because once I roll past that, my expenses from the previous year are over. And so I have to make those declarations beforehand, which means they're not really surplus because I account for them, but those decisions are going to be made. So if you're not asking, then how would you know where they're at in those kinds of conversations? This is aligning with kind of this year-end budgeting process or the year's budget, whether it's personal or professional, corporate or individual. We probably need to be more aware of when these decisions are made and why they're made from a financial fiscal perspective.
This one may fall more, as I mentioned, in the corporate side than the individual, but I think it's important to mention. Number four is that for some, there is a mental cycle that occurs from January 1 to December 31, and that's seen a lot in our recognition. If you have the habit or an institutional priority of listing donors, it could be by category of how much they gave or it could be just they gave. We tend to do that a lot of the time, depending on circumstances within a calendar year, we've reinforced this.
Now, some of you are like, wait a minute, my fiscal year end for our organization is June 30. Well, then that changes it, but it's when you create this cutoff. And so be aware that there is a mental cycle that occurs in philanthropy that for most people, they kind of think about it from January 1 to December 31. And so if you have a cycle of someone's mentality, we're like, well, I give every year, you want to make sure that you're giving them that opportunity.
And lastly, December 31 presents us with something I talk about in closing and trainings with the concept of a deadline that it kind of puts a hard date down, which can be helpful. Helps us kind of think about how do we push full control, work with, talk with someone and say that date's coming. Could we talk about this? That can be advantageous.
Reasons not to make these gifts. So I'm going to save the big one for last because that's really the big takeaway here is that there's so much going on in the holidays. I just think about my life in December and I'm a little tiny company with a very small family who I love what I do and my family is my world. But there's chaos from kids' Christmas pageants to events my wife likes taking the family to, to Christmas parties, to the amount of solicitations and mail I get to the business I got to kind of conclude by year-end to make sure everything's kind of aligned.
There's a lot of chaos and it is for everybody else and that doesn't include losing this year almost a week and a half if not you with Christmas and New Year's falling on Wednesdays of just time because people are not going to be in the office, be long going to be focused hopefully on family. All this is to say is that we can get holiday overload. Sometimes things get missed.
That's why on the annual giving side I'm really pushing into people as we see a continuing reduction of the number of households and people making charitable gifts not to just do it via mail or email, pick up the phone and call somebody, tell them how pushed of you are that they give every year, tell them that they're really important, that their gift added with others makes a tremendous difference, and ask them to be involved again this year. That goes back to where I started those are more annual giving thought processes major gift principle gift plan gifts.
Sometimes hard to make a lot of family or bigger decisions in the holidays. There are another reasons to do so. Number two is that depending on somebody's choices and giving, maybe they can give you a little more in a new budget cycle and this falls back on the corporate side if they've allocated a lot of resources, are you better off talking with them in the next cycle when they have more resources? Not sure the answers yes or no, but it's something I think about. It means that there's a new budgetary process that they're going to use potentially.
If you're not on the right side of the ledger so to speak on that particular conversation, waiting for next year might be worthwhile. I think the other thing that comes is the year-end is sometimes a little unpredictable when it comes to finances. We read all the time the amount of debt that goes or will if you pay attention the amount of debt that is accumulated during the holidays and philanthropy for the most comes out of disposable income if we're not talking about playing gifts.
So would you have more of an opportunity if they have more corporate expenses, personal expenses in December? It's an interesting question. If we posit if we know if we believe and you should that many people's philanthropic gifts in December come from disposable income and that personal side being pressed. Particularly as we've lived in two, three, four years' worth of inflation. How does that affect those decisions?
Number four reason maybe to wait and not push is that maybe the fresh vision or the fresh idea of impact aligns with someone's new year's goals, resolutions, or thoughts. Maybe they're looking to be more generous. I know every year that we live and we're a little bit older parents as I tend to talk about, but we're talking more and more about how much, excuse me, crap we seem to get at the holidays that we don't need. And the fact that we are the blessed of the blessed and that those blessings don't start with things.
They start with people and love and a connection and an affection and health and joy. Every year we tend to talk about doing less at the holidays to do more for others. Are there others that come out of the holidays thinking that, which might lift gift opportunities?
Number five: Many times, some of our largest gifts that we read about don’t actually come in December because of all the things we’re talking about here. Number one, we have less tax implications because of the changes in the 2017 tax laws. And number two, all the things we just talked about—from overload to budget cycles to clarity to goals—and then the big one to come here in a moment, indicate that pushing someone might not be a very good idea.
Now the big reveal: year-end giving is a transactional issue. If you’re going to lose a gift completely because of December 31 for any one of the myriad of reasons I started with on the front side, those five reasons to make a gift or to ask, like the gift—but if we want to reach transformational conversations, there’s no time deadline; that’s an emotional deadline. What are we doing to elevate someone’s emotional connection to what we’re trying to accomplish to get to those higher-level gifts?
A couple episodes ago, I did a podcast about changing your moves management meeting to talk about passion. This is what I’m talking about. Too many times, and I’m having more and more of these discussions with gift officers, we’re using December 31 as an excuse to just get a gift, instead of saying maybe, as Kenny Rogers said, we should hold onto that gift proposal instead of just putting something in front of them.
If we think about the biggest gifts that we hear about or read about, they are not tied to a calendar year. They’re tied to the moment when the donor feels the impact, knows the implications, and can be elevated to understand the value that that gift has. That isn’t 365 days a year; that’s when it’s right for them because of the work you’ve done, the work we’ve done as nonprofit leaders.
I would also advocate that there are what I would call additional factors to weigh in all of this that help us better understand this. I think that over the next month and a half—whenever you’re listening to this—the election is going to cause some uncertainty. Not because of who we’re electing (because I don’t know as I record this, you might be listening and we’ve already elected a president), but it doesn’t make any difference. It’s going to be change because we’re going to have a new president. I would tell you that economic and market conditions may not be the same in December or January, which means pushing on that gift right now may or may not be a positive.
Number two is that people make choices in their own time frames. It’s their giving patterns. Now, for me, I’ve talked about this many different times in many different ways. I’m making decisions because of business. December 31 is important. But if I’m making a state intention, I’m not making it because of December 31. I’m making it because I value that nonprofit, what they do, and what that means to me.
There’s also a fallback position in all of this. It’s not an “or,” it’s an “and.” If you’re working with someone and you’re in the middle of a conversation about a $50,000, $100,000, $150,000, or $250,000 gift, it’s transformational—not because of the number of zeros, but because of the emotional connection—then why can’t you ask them for an annual fund gift to be recognized in 2024 and say, “But I’d love to continue the conversation about where we’re at to make sure you feel great about the gift that we’re talking about, would it be okay if it came in 2025?”
All of this is to say, this really isn’t about what is good for us. Even though I gave you five great reasons why maybe it’s good to make that gift push, that’s all based on a lot of extraneous factors. The answer to this question is simple: ask them. We’re in the middle of a conversation. We have a month, two months, or three months left in the year. Is December 31 something that’s going to impact this decision?
If the answer is yes, you’ve got to move. If the answer is no, particularly if it’s a larger gift opportunity (and I tend to believe it will be no), then don’t push on it. Maximize, elevate, and make people feel so great about their philanthropy that they’ll never stop giving to you. And that only happens if we center on what they want and what they need—not what we want and what we need. That’s the takeaway.
All the tactics I talked about—from maybe asking for an annual gift now to later, maybe having a bigger gift conversation, the market conditions, the reasons why and the reasons why not—all pale in comparison to just asking and putting them at the forefront of your thoughts, making them the priority. Because at the end of the day, that’s how we get to transformation at year-end or any other time.
So, I encourage you to use today as a way to contemplate each one of your donors in different ways and to make sure you’re strategizing to maximize their intent to make a difference in your organization. Don’t forget to check out the blogs at Halifelianthropy—just two or three a week, things I read and see, give you something about 90 seconds each. Halifelianthropy.com.
If you would like to reach out to me, it’s podcast@halifelianthropy.com. We’re getting close to year-end, and I think that gratitude becomes really important. I want to say, and I probably don’t do this enough, how grateful I am to you. Odd times people catch me and say, “I listen to your podcast,” and I always make the joke, “Oh, my one listener.” And I know there’s more than one; then I know there’s more than one, but I’m never taking for granted that even one would find this a value. So thank you. You make a difference, not only to the organization you serve, but you make one to me by spending some time with me each week.
And in that vein, also, thank you for what you do for your communities and for your organization, because you are making a difference. Remember, some people make things happen, some people watch things happen, and then there are those who wonder what happened. We are people in search of other people like us who want to make things happen for the people and the things in our community that are wondering what happened.
The hole between government and corporation, individual, corporations, and economic philanthropy fills the hole that others can’t, and that’s what you do every day. If you’re a board member, a CEO, a gift officer, a chief development officer, staff member, volunteer, or whatever, thank you for what you do to make your community through the organizations you believe in better because it is a difference-maker for many.
I look forward to seeing you the next time, right back here on the next edition of A Round with Randall. Don’t forget, make it a great day.