Episode 122: Mid-Level Leadership: Annual Giving - Importance, Perspective, and Execution

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.

It's great to have you on board for another edition of "Around with Randall". Today we're going to discuss this interesting kind of nebulous, middle-of-the-road, not discussed concept, particularly as we talk through some of the facts about mid-level giving and why it's important, what you can do to make it effective for you, and how that actually will affect your nonprofit in some pretty positive ways.

Before we get there, why is it kind of a subject that we struggle with? Well, number one, there are some indisputable facts which we know of across our industry that are driving less discussion around this mid-level leadership gift-giving-level conversation. First and foremost, what we know is that the number of donors in the United States is diminishing. We're below 50 percent of households making a gift to a non-profit. On top of that, as we've looked at the numbers over the past 10 years or so, the, what I began with in my career, the predo principle, 80 percent of our dollars come from 20 percent of our people, really moved into a 95.5 model that 95 percent of our donors or dollars are coming from five percent of our donors. And so we're concentrating and pushing constantly on this thought process that we need to be concentrating on major gifts, principal gifts, planned gifts, because that's where the movement is in terms of overall dollars. Can't argue with those facts, but it fails to answer one of the questions that I spend a great deal of time talking about is where does the Next Generation down the road of major gift, planned gift, principal gift possibilities, prospects come from?

The answer is, most of our largest donors started at a much smaller level particularly in planned giving. So let's go back to something I said at the top. Less than 50 percent of the households in the United States are now making a charitable gift. What that tells us is that the competition for those donors is huge, and in particular if we just take a general range, let's say of $500 to $10,000 as our annual giving level, so-to-speak, what we know is that if we're not spending time with them they're likely going to give to some other places.

It's also important to recognize that it's much easier to maintain or keep a donor than it is to get a new one. Sometimes I don't hear that discussed a lot. It used to be a really prevalent conversation 10 years ago. Certainly if you're in the annual giving world is probably something you're more aware of. But from a leadership perspective, I don't hear that discussed. It is much harder to get a new donor than it is, and more costly to get a new donor, than it is to keep one you already have, and we'll use Stelter as an example. In the research that they do regarding planned gifts, what we know is our best planned giving prospects are the ones that are your most consistent donors, and not at the highest levels. they're your annual giving donors that give year after year after year because they love you, they love your mission, they love the organization. Then when you add to that the concept of what I call elevations, you might call them lifts, you might call them promotions or upgrades, a lot of different terminology all mean the same thing. But taking someone from $500 to $1,000 or a $1,000,- $2,500, those things are critically important and they really drive success.

I've also had some personal experiences that I find fascinating. In the last couple of years my wife and I have probably been a little bit more conscious deliberative about our charitable giving our philanthropic giving and we kind of fit into this mid-level where we are in our life, and the great fortune we have to help our nonprofits we believe in, in particular this last year. And so we made some mid-level gifts. I've heard from almost none of these charities, most of whom or good percentage of them were first-time donors, we are first-time donors, they're first-time gifts to that organization, and I don't expect the red carpet to be rolled out. I don't expect uh anything grand because that's not why we give and I don't think that's why most people give, but the lack of communication in receiving $2,500 or a $5,000 first-time, for a $5,000 first-time gift is astounding to me. They must have a lot of them, were coming into nearly two months of the year and all of them I got a tax receipt from, but only one or two did I get a phone call or hey we're really appreciative anything above what I would consider just standard legal requirements.

I also have a couple clients that are having these conversations, one of which has a huge opportunity in the mid-level gift area. I mean enormous. And they're beginning to invest in it. We're going to talk about that here in a few minutes. The other is local and somebody I've worked with as a professional and been on their board, and they're doing more and more conversations about mid-level giving. So all of this is bringing us to the fact of where does mid-level giving fit into this process and why should it be important? And tactically, what can you do about it?

So let's start with the what I'll call mid-level tactical. Why this is important? What do the numbers look like? Well, let's start with the dollars because at the end of the day that's budgets are tight. Think about hiring a $60,000 a year employee who all they're going to do is concentrate on, let's say donors from $500 - $10,000. What makes it a good investment? So the two organizations I mentioned, one is a huge opportunity. Number two is the one here that maybe a little more local for me and certainly I know really, really well, but they've, that $60,000 let's say that they can retain above what they normally do which is pretty low in terms of percentages $180,000 of their mid-level givers, you invest 60 percent and you get $180,000 back, that's a three to one return on investment, and that doesn't include any elevations or anything that came like, let's say, from a planned giving perspective. That's the conversation we need to have with finance to figure this out is, you have to invest money to get money. And we know who these people are. This is not a matter of like trying to create a phone book. These are the people that we don't spend enough time with that are giving to us and writing us a check every year.

In the one example, the one that's not close to me, what we're dealing with is we began to realize as we were working through some strategy that they are leaving maybe a half a million dollars on the table, and in their case it's extreme. And I mentioned that and they've become this effort to really hone in on those mid-level givers, and we'll talk about what those tactics look like here in just a moment, but the numbers we're looking at in their case is that $60,000 employee, she might generate a half a million dollars or more now. We're talking 8, 9, 10 times value ROI. What is that worth? That again doesn't include elevations or promotions or planned giving opportunities. The second thing to consider is that we have a lot of people in our industry, and this is more anecdotal, I don't have a lot of what I would call hardcore data but I'm hearing it more often, younger people that are looking for opportunity and in particular with higher inflation, we have some people that have chosen not to retire. And I do believe that there is kind of a cap in a lot of our nonprofits because we don't have as many opportunities and that's pushing some people to look for other jobs. What a great way of giving someone who's maybe a development coordinator who may not have been as active in the giving outreach, and opportunity to be able to increase their career, their skill sets, their knowledge, their experience. And doing so in an area where you actually have a tremendous need, that's exactly what happened in both cases of the two clients and non-profits that I know fairly well and work with. Where they found people internally and they said we're going to give you a shot. One did it full-time, that was the one that was particular. We realized there was probably at least a half a million dollars of lost opportunity. They moved that person full-time out of a development coordinator kind of support, learning, into a role where they were outreach to identified possibilities. The other did it as a part-time improvement, meaning 10 to 15 hours a week of the 40 would be transitioned from maybe the support mechanism into making phone calls and going to see people. And so you can do it in various ways. In both cases their portfolios were 250 or so because in a metrics perspective we're only talking about a couple of moves. If you're asking somebody for $1,000 they don't need five visits. Moves, you know, actions, whatever you want to call them, they need a phone call or two and that's where we're going to move into the tactics. What can you do with these people? How do you make people who are annual donors feel great about that gift and to retain it?

There are four things that I think I would recommend and I'm recommending with my clients. Number one is you have to make them feel appreciated. Back to me ,we made these gifts in December for year-end reasons for my company and for personal reasons and when I get a letter, or even worse, just an email for a let's say $2,500 gift, and by the way the organizations we gave to were not enormous, this wasn't the United Way where we were giving enough money for us for organizations that had total revenue of six, seven, eight, nine hundred thousand dollars in terms of all their philanthropic opportunities, you would think that would you know $2,500 from a new person might catch someone's attention. I don't feel appreciated at all. It doesn't mean I want the money back because I know it's going to be to good things, but how do you make someone appreciative or feel appreciated? how do you appreciate them? How about pick up the phone? How about this person that we talked about, this intermediate level gift officer has the job of calling every single donor between $500 and $10,000 and saying we just can't thank you enough and then prioritizing that person over the year of making two calls and sending two personal notes, thank you for what you do. I want you to know what value it's delivering. I want you to know that you and people say well what good was my $2,500? Why not say we have 10 donors just like you it totals $25,000 and that makes a major impact. Here's what we do with $25,000 to affect a person, a family, five families, things of that nature. Make people feel part of something bigger. So two calls, two notes personally written per year can make someone at that level feel like, gosh I have, I'm making a difference. You might even consider a special society, labeling them in some way. I've got another client who takes the $1,000 to $10,000 donors and they have a specific group for them. They have some special, which we'll talk about here in terms of communication, some special ways that they communicate. So you can label or or or put these people in a group.

Number two is communication. And I don't mean communicate like you do with everyone else. In some ways you have to create some special level of communication, which is difficult because we all have too much to do and not enough resources to do it. So let me define that. I'm not saying change, create a second annual report, or anything, but can you create some specific emails that talk about impact and send them out just to that group of people that you might have a leadership, annual giving person working with, or can they have specific outreach calls in July if you're running, let's say, calendar year-end, calling and just saying hey I just want you to let you know what we're doing right now. Anything that creates a sense of connectivity on a personal level is of great value.

Number three is invite. Can you invite them into things that give them a unique perspective of your nonprofit? Unique ways maybe they can volunteer, to see it firsthand? Maybe it's special tours so that it doesn't take too much time, or maybe special videos. I think one of the things the pandemic did, at least to me, is that for the manner in which we look at videos, authenticity is more important than, you know, looking like Steven Spielberg directed it. What can you do with an iPhone that makes someone else feel like they're a part of what you're trying to accomplish? If it's a food kitchen, why not go to a two-minute interview with someone who's willing to do it about why they, this is really important to them, or a homeless shelter, someone who says I want to tell you the difference this place makes in my life, or in healthcare with a clinician who says your support makes us to be able to do this kind of research, or have this kind of facility, or this equipment. It doesn't have to be, as mentioned, Steven Spielberg quality. The authenticity, the emotion is what's most important. So there's lots of different things you can do to get people to be more engaged at a higher level.

The last, the fourth is you gotta ask these people in terms of what we think of as live button, cyber, last year. But unfortunately not this side, but some year, but unfortunately not this. The people that we don't want to lose particularly from. That, let's say $500 to $10,000 level, maybe $5,000 for you $500 to $5,000. He's, you got to ask him personally. It requires a phone call. It requires maybe a quick cup of coffee, particularly if they're, you know, say on that spectrum $500 to $10,000. They're given $7,500. Doesn't it seem like somebody should go have a cup of coffee with these people? And that's exactly what this position might be able to do. And you ask them, personally, we talk about or I talk about that moves management for major gifts particularly $10,000 - $50,000, maybe five moves. This may be to a phone call and a cup of coffee with a few emails or videos in between, simple, easy. You can do the metrics for this person just like you would a major gift officer, principal gift officer, planned giving, up planned giving, gift officer. It's just... they're going to have more people in their portfolio and more people to work with, but they may not have any more moves in totality because we know those are limited in terms of time. They may be doing moves with 150 people of two a piece rather than 50 donors and five a piece. It's all about perspective. But if you don't ask them personally, how valued do they feel? If I make a $5,000 gift and Ollie gets a letter that says hey would you give again, how much do you really need my money? And maybe the question you need to ask yourself is how do they view?How you ask them? Do they know that you're, that they're needed? That they're going to make a difference? So we can talk about the value, the three to one return. If you do it correctly, possibly, we can talk about how we have a smaller group of people who are in this category across the United States. We need to really prioritize them. We can talk about the math and the value that comes from this, and why it's easier and more cost effective to keep rather than retain. And the tactical, the bottom line about making them feel appreciated, communicating with them in unique ways that don't take a whole lot of effort or time but have value, that you invite them in and a little closer to you, and that you ask them personally. All of those are reasons that it's probably a good conversation to have about where we're at with our mid-level leadership, annual giving process, and are we dedicating resources a person to be in contact, in communication with them that can have long-term effects, not only for the instant dollars that you don't lose but for the pipeline that comes into the major gift, planned giving, and principal gift down the road.

Don't forget, check out the blogs at Hallettphilanthropy.com. 90-second reads, not about anything I'm doing but about what's going on in the world, particularly in philanthropy and how it affects us. Let me get you to think a little bit also. If you would like to communicate with me, go ahead and email me at podcast@hallettphilanthropy.com. We're in some interesting times. I, a lot of indecision as to what's going on economically in the country. There's obviously some foreign relations challenges. All of this creates a little bit of chaos in our world. When there's chaos nonprofits, philanthropy can be great solutions for the localized needs of your community. Don't forget my favorite saying, some people make things happen, some people watch things happen, then there are those who wondered what happened. And at the end of the day that's what's great about this profession. We are people who make things happen for the things and the people who are wondering what happened, and I hope you realize the value you bring every day to making a difference for people and the things that are most important in your community. I'll look forward to seeing you next time right back here on "Around with Randall". And don't forget make it a great day.