Episode 164: The Importance of Upgrades Elevations - Taking Donors to a New Level

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. I welcome you to this edition of around with Randall and also happy New Year. As we enter into 2024 I think one of the things that will become more and more evident is the continuation of challenges regarding the number of donors that are out there.

In the first edition in 2024 of this podcast we talked about inflation and really how that's eating away at our donor base. So what are we going to do about that? Well I hinted at some of these things but we're going to talk a lot more today around the idea of what I call elevations, upgrades, things of that nature. Why are they so important? What can you do, tactically, to really ensure that you are meeting the challenges of today with today's process, today's techniques, today's systems, that we're going to keep running into where we have less people making gifts? And so this concept of elevation, really in depth, begins with one of the key elements of the moves management process. If we know that there are less donors out there and that inflation is eating into, potentially, more and more who are either giving less or not giving at all. That stewardship becomes a quintessential element as we've discussed before. If you're not actively stewarding donors, then what you're doing is you're just allowing people to come into your universe, make a gift, and leave.

And this gets into what we keep talking about, and I probably sound like a broken record, and for that I apologize, no I really don't. We have to get off the transactional giving process. We have to get to transformational, and I, but I really need to hammer this home every time I use it, transformational doesn't mean a dollar level, dollar figure, number of zeros. It's when someone invests in your organization and it becomes almost spiritual, emotional, they view your mission, their gift, as a way to accomplish what both of you are trying to through your strategic plan, through your mission, trying to accomplish. That only happens if we have relationships, and that only happens if we steward.

So what are some of the common things? And it's going to sound elemental, but doggone it, I just got done with annual, my my wife and I, our annual giving process of what we choose to give to. And these common things are like amongst larger organizations like check marks on some of the donations. I'm getting tired of it, and some of our gifts are large enough that somebody should at least be paying a little attention. So what are some of the common things that stewardship we see failure in?

Number one is no thank you's. If you're not calling donors over certain dollar figures, particularly at year-end, I have to question what the heck you're doing. If you're taking a ton of time off at year-end, I know it's the holidays, I know it's family, but we made a gift and we increased the gift, and for the second year in a row we got a phone call from someone who literally wasn't in the office and I happen to ask this individual, you know, I know you're not there why are you doing this and he said because this is the right thing to do. I'm on the beach. My wife knows this. I take an hour I get the report through the computer system. I don't have to be sitting at my desk and I literally just make five or 10 phone calls a day and all I'm doing is saying can't thank you enough, I really appreciate you. Not an email, not a smoke signal, not an Instagram message, a phone call. Thank you. If you're not not just in this time frame, but over the course of time, talking about impact, what is the gift going to do, why is it important that you give as a donor, if you were the nonprofit or if I'm the nonprofit speaking why is important that you give to us, and here's the value of that gift, then you're going to lead people out. People give to things that move them. They get moved, not because of your organization's mission statement but because of what happens, what they believe in.

If you have no plan of what to do next, which we're going to talk about here in a moment, if you don't have an ability to figure out how am I going to move people forward then you're leaving opportunity just to go right out the door. And finally, if you don't get people to understand why their gift not just impact, connect to them. Why am I giving to you? There are a lot of organizations that do similar things. I mean, if I look at, let's take the world of animal protection, animal sheltering. There's a lot of really quality organizations that do that. If my bent, emotionally, is to help animals, why your organization over this organization. And it can't be just about impact. It certainly should be, but it has to be about what connects me to you, to what you do that's unique. And if you can't articulate that, what you end up with are people who give, and go, well I, there are a lot of good organizations out there.

I want to come back and talk about the four things that I think are quintessential in this concept of figuring out how are we going to elevate, and that's once those gifts are made. Four things: you need to engage; you need to create a sense of resonance, a connection of reassurance really is a better way of putting it; you need to inspire; and you need to reward. You need to engage donors by reporting and thanking, to thanking them. What is the gift going to do? Why is it important, and why they're important on a personal level. It needs to be reassurance that the money's used the way it was intended so people have faith and trust, not only in the organization but the gift officer. That it's inspiring. That it makes a difference. And sometimes you have to ask them, do you understand the value of what you've done? And lastly, create a sense of reward. For donors there's only one way that happens, that's stories. Let me tell you what you and a lot of other people did to meet the needs of X, whatever that is. So, as you think about this in upgrades, engage, reassure, inspire, reward, which gets us to the why on the upgrades.

Why is this so important? Well, there's five things that we have to know. They're just factual, and I don't think we want to talk about them most of time because I think people are apprehensive about what's going on. The first is, we discuss there's lower, lesser reduced number of donors, overall. I talk about it all the time the Predo principle 80-20 rule. It's used in all kinds of different things, but in our world where we used to think 20% of our donors made up 80% of the dollars I've been saying for four or five years I think it's 95- 5% make up 95% of the dollars 5% of people giving. I just had an email from someone who says I don't even think that's enough. I think it's 96% or 97% coming from 3% or 4%. So if you're not identifying those individuals, and we know those individuals at the very top of your gift pyramids are making the biggest impact, if you're not bringing them up through the pyramid you're not going to get to where you want to go, eventually.

Number two is that it, business principle, lost opportunity, people are giving. Some people can give more. Some people can give less. I love what Tony Kornheiser, one of one of the people I listen to and have read most of my life, says about his giving or charitable giving in general. If you give a penny we should applaud that it's your money. People are giving. Why are they giving to you is the question, or why should they.

Third is a simple principle but we just don't talk about it very often. People don't give unless they're asked. If you're not asking more of the people that you're closest to in the right way, why should they ever give you more. Seems so simplistic but yet it's true and powerful.

Number four is that our organizations need it right now. I'll be interested to see what 2024 does. If you listen to the prediction show that I did a few weeks ago, or if you're picking this up it'll be a few episodes ago picking up later is one of things I predict is organizations are going to continue to struggle. Healthcare, universities, Social Service. We're in this position where I think finances are becoming more challenging. Our organizations need those resources, not to pay people more money, although trust me I think we should pay people in the nonprofit world a little, a little better in terms of comparisons to the for-profit world for the work they do. But it's really to serve the the nonprofit mission of making the community a better place, and there's a certain point we can't cut anymore, just can't cut.

I've got a client who literally is, I mean their growth, they've double the amount of money they've raised. So proud of them, and they deserve all the credit. They've doubled the amount of money their cost, raise, dollar is moving towards under 15 cents on the dollar and all they can get out of the finance office is you got to cut. We just don't have the cash. And they're to a point where literally like if we cut, that's a half a million to 3/4 of a million dollars off the revenue line cuz have people and it's this odd scenario organizations need it.

The last thing is is that the cost to acquire new donors. We talked about this in kind of this inflation issue edition of the "Around with Randall" podcast last time, is it's just, it's seven, eight, 10 times more expensive and time consuming to find new donors. If you have a, if in the for-profit world if you have a regular customer most of the time unless they're just an enormous, enormous, and behemoth type corporation who doesn't understand what they're doing just, they just do process, you fight to keep those clients and customers because you know that they're interested. What you have, we need to be better at that in the nonprofit world.

So for our last eight, nine minutes together the question becomes how do we figure out this elevation, upgrade process. And so I want to start with two thoughts and then we're going to break it down into relational, what you can do, and programmatic what you should be doing. You can set a lot of the programmatic things up automatically so the idea is first and foremost, I just don't see this taught. It's something I spend a great deal of time talking about in my moves Management training processes in the stewardship component is the idea of re-qualification. The first thing is that you have have to re-qualify people at higher levels. You cannot assume that someone's giving you $5,000 for three years in a row is automatically going to go to $10k or $15k or $20,000. You have to go spend time re-qualifying them. And in the relational piece I'm going to cover some of the things you can do to do that. The second thing is is that re-qualification from inside the stewardship module of moves management can't take a lot of time. If you go back to the episodes where I do the kind of the four-part training of the moves management process, I think they're in the mid-30s. If you're looking for the episodes one of which is qualification, I talk about that qualification has to be fairly quick and we have to be okay with the concept of blessing and releasing, and in some ways we're paralleling that here because if it, if all you're doing is re-qualifying it's taking you six or eight meetings to figure it out what you're doing is bringing your whole process to a standstill, so speed is important. It's better to do it right than fast, but if you do it right and it takes you forever you're just going to close up all of the productivity and efficiency effectiveness that you need to get to where you need to go. So re-qualification. Number one you got to do it because you can't assume. Number two, it has to be done in a reasonable time frame.

So I'm going to start with the programmatic pieces. There are four things that I think you can do that I think will help you figure out who you should be re-qualifying, who you should be talking to. The number one is screening. It's not my favorite thing to be honest with you. If you're using artificial intelligence it's a much better predictor, but we're still behind the eight ball it was one of my predictions for 2024, more and more people are going to begin to accept it. But if you have someone who's giving you three gifts of $500, screen them and if they come back with information saying they should be giving you $10,000 or they have the ability to give $10,000 that's an elevation opportunity. The other thing is there's tools out there to elevate or to estimate, maybe it's a better way to put it, to estimate lifetime giving potential so that you can begin to figure out who are the people longterm that can give us the most if we engage them in the right way and they believe what we're doing.

So number one is some type of screening upon your current donors on a regular basis. Remember that's static information, so you can't just say we screened them two years ago. Two years ago in the screening world is like eons ago. You have to do it on a regular basis and look at the numbers. Number two is this idea of who are your most consistent donors. I give Larry Stelter, you know one of the legends of our of our industry and now Nate his son and and Stelter family who run Stelter, which deals with planned giving. They do all the research. And I think PG Cal and others do the same, Thompson, and and certainly Dave Smith and Smith who does a fantastic job, love working with Dave, they all tell us the same thing, that the most likely planned giving donor is the one who's the most consistent not the largest. So who are your most consistent donors? When they make five gifts in a row, somebody have a conversation with them. Why are they doing that?

Number three is giving more ways to give to see if you can figure out where people are at. Maybe that's going to people and saying you've made an annual gift would you consider doing something monthly, or you have special projects and say you've been giving here would you consider helping us over here instead because this is a really critical need. I've got a client who has a food pantry inside their hospital and they're seeing such increases in their community of people coming and accessing the food pantry inside this. I'll tell you it's a large Healthcare hospital, kind of unique, but they're seeing such pressure. I've been counseling them say go back to your regular donors and find out if they'll give to the Food Kitchen, even though, or the food pantry, excuse me, even though they aren't normally those type of donors. Can you begin to figure out, do they have other interests? How are they connected to you, events? And I'm not a big proponent of just doing events for events sake, but if you have an event can you get them to come? Can you engage them? Can you begin to figure out what their interests are? I would also say that third-party events, which I love, what a great way to bring other donors into that conversation and say are they interested in some of these things. You're just looking for openings, conversation starters.

The fourth is the most elemental, but I don't understand why this isn't the most discussed thing in the annual giving process is Lyons and Lyons and I use those terms and I get people inside the industry to go I don't know what that is I'm like man we're not teaching people very well. Lyon last year but unfortunately not this Syon some year not unfortunately this meaning they've given in the past either last year or some year they haven't given this year. And particularly those who have given several years and not given this year. Why I'd like to know that so the four programmatic things are screening consistent donors and identifying those giving up consistent donors, you know people that are really engaged with you higher levels of engagement in terms of more giving opportunities; and making sure you don't lose Lyons and Syons.

The second part of elevations and upgrading is about relational, and this is where the real work is. If you're not spending time in stewardship, a certain percentage, I would even argue as much as 15% on engaging your current donors and and getting them to do one of these four things or multiple of four things then you're losing out on opportunity. So the first is asking for feedback, either about what they think about the organization, a plan, a strategy, what they think about how their money is being used, what they think about the organization in the community, and the reputation it has. What do their friends, what do they hear from their friends? I talk about this all the time is kind of one of my favorite internal sayings, if you ask somebody for money you'll get advice, but if you ask for advice you'll get their money. We have to spend a little bit more time if we want to elevate asking people what are your thoughts on what's going on. How do you think we fit into that? Do you think that we're doing the things that are going to make a difference? Do you feel like we're making a difference from the money you're giving? Asking their opinions and getting their feedback is critical, could be as simple as hey can you read this, view this a one-page case statement. I'm interested in other people's thoughts. People love to give their advice, and you will get them to be more aligned with what you're trying to do.

Number two is asking life questions. What is important to you? Where does our nonprofit fit into your thought process and planning priorities? Maybe you ask them to be in some type of feasibility study, and I've got a client that I'm doing some great work with. I'm, it's really fascinating. It's not even about a campaign. They're just asking their donors what is it you like about us, and what is it you don't and then I give feedback back to the organization that says you have some holes here. This hole, this, and it's, we're finding when we do. And these are multi-million dollar. This is like they're trying to take major major gifts into ultimate principal gift opportunities. The same answers are coming up every time, and I'm, they're, they're beginning to strategize about, okay how do we change what we do to meet those consistent issues. They weren't willing to ask, they wouldn't know. So number two is ask questions, life-based questions.

Number three is get them closer service. Can they serve on a committee, Advisory Group? You know, when I was at the medical center the chancellor of the University, Dr. Hal Moore had a what he called his kitchen cabinet. They just came once a month or whatever it was and just had coffee and bagels and donuts and said hey, here's what we're thinking, and he'd say well here's what I'm thinking. It doesn't have to be formal. They don't have to do a lot. But your highly, people want to feel engaged and it's got to be with Part B of getting closer, higher level people than than you are, than I am, the CEO, the Deans, the chancellors, the doctors, people that are really from the external perspective. The image of the organization, now that's going to put a lot of pressure and I come back to my book, Vibrant Vulnerability, a lot of pressure on CEOs. Say you got to give us more time but if you can get them to do that and they engage you'd be surprised on the magic that happens when leader gets in front of another community leader. Your leader in front of their leader, your hospital, your university, your social service, whatever your leader in front of a community leader what magic happens much more so than we can deliver, as fundraisers.

Number four, kind of like I think of number four on the programmatic side, pretty basic but not done very often, ask if they have other interests in your organization. Ask what else moves.

Number one was asking about feedback where, where do we fit in; and number two about life changes, how do what priority we what are the things do you want to do, what are you trying to accomplish in life. At 53 I'm kind of beginning the process of kind of figuring out what the last you know 50-40 years of my life's going to be part of that's work, that's also most importantly being a son, a husband, and a father, mother, and what I think now is different than it was four or five years ago. And if the right people ask the right questions they might find there's some alignment, so ask them what their interests are, and do, you do things that align with those interests. And what you'll find, I think, is a greater deeper relationship. Once you do these relational and programmatic things, the programmatic to kind of identify; the relational to figure out the details, you begin that re-qualification process. Could we talk about how you can be more involved or, you know, you've given to us five years in a row? We generally don't ask very well but this is important to you. Have you ever thought about leaving us in your estate? We're doing some incredible things in this area. Could we talk about a little bit larger gift that might be pledged over a number of years? That really could make a difference. It sounds like this is really important to you. We've got some initiatives that are going to require further investment to even make more of a difference. Would you be interested in that conversation? Sounds a lot like basic qualification. We're just putting a re in front of it. The organizations that invest in this re-qualification process are the ones that are going to see the greatest success.

As we see a tightening of the economy, particularly at the lower end for those who are maybe not the uber wealthy, but even at the top and by the way over the next 10 years there's going to be some hard conversations governmentally around the deficit around Medicaid, Medicare, social services, and there may be even more pressure on those with resources through taxes as my guess is that there may be a tightening of their charity. If you're not bringing people closer and identifying who they are, you will regret it one day and that's why re-qualification, elevations, upgrades, whatever you want to call it is quintessential because it's going to take the people that have the most ability who are the most interested to get them closer to you to help you reach your mission, and that's really what this is all about.

Don't forget to check out the blogs at Hallett Philanthropy. Two week hallettphilanthropy.com. Just go hit on blogs, 90 second reads. If you'd like to get ahold of me that's podcast@hallettphilanthropy.com. 2024 will be interesting. I think there's some ups and downs coming, but it's going to mean that philanthropy, and particularly nonprofits, are going to be more important in our community in filling the holes, and that's really what the value of nonprofit work is. How do we make a difference? How do we help those people in those things that need it, the most which brings me to my all-time favorite saying how I end every podcast and pretty much every presentation I give. Some people make things happen, some people watch things happen, then there are those who wondered what happened. We're in the business of making things happen for the people and the things in our community that are wondering what happened. I don't know a better way to spend a life. I hope you feel the same. Even if it's not perfect, it's pretty darn cool when you when you're able to be a part of the solution. I'll look forward to seeing you next time right back here on another edition of around with Randall. Don't forget, make it a great day.