Episode 17: New Major Gift Officers - ROI Plus Expectations

Welcome to another edition of ‘Around with Randall,” your weekly ten-to-12 minute podcast about making your non-profit more effective for your community. And here's your host, the CEO and Founder of Hallett Philanthropy, Randall Hallett. 

Another great week here on “Around with Randall.” Thank you for your time and your interest today.

I want to spend a few minutes talking about new gift officers and the process in which one might go as the gift officer or as the leader to effectively integrate them into a pattern of long-term success with your organization. A question on this particular subject came from Gail, which I appreciate greatly. So in thinking about this question, I came to the tactical pieces fairly quickly.

Some things that, as a gift officer, you should be looking for. As the leader, you need to be engaged to help them as they come into the organization and grow successfully. But I also was struck by the thought of why this is so important. So, what's the data telling us. So we'll get to the tactical as we always do near the end but just some interesting thoughts.

I think many of us who have been around this industry for a number of years readily understand and agree that there is a troubling trend that the turnover of major gift officers is problematic. But there's actually data out there to support why or what the outcomes of that problematic challenge is. So, what we know is depending on the part of the industry - and philanthropy education versus healthcare versus social service - the average tenure is about 18-to-24 months. And, we know 51 percent of gift officers in  in a survey done here recently really look at it from the perspective of …they’re going to be leaving soon. They're already mentally maybe moving outside the door. The cost of that is about $127,000 in terms of what it might indirectly and directly cost the organization. That does not include lost opportunity dollars that if the gift officer had re-developed great relationships that would be lost in a future gift activity.

So, there's some data to support that turnover is very painful, in some ways helping leaders understand that particularly if they don't come from philanthropy you may have to draw some parallels. So, in healthcare, if a physician leaves or a group leaves, that’s very costly to rebuild those relationships in that referral pipeline that comes from the partnership that you might have with a physician's group.

Or in education, if you lose the wrong series of teachers sometimes they draw immense revenue from grants, or they are attracting PhD students because of their research. So, there's parallels out there that indicate that taking care of really good people internally is really important.

The number one reason why gift officers leave, so they tell us, is this idea of unrealistic expectations. In a study done by Compass Post and the Haas Jr. Foundation, one-third of all gift officers say off the top that the goals or expectations presented to them are unrealistic. If you have certain responsibilities or goals that are just right off the top felt as if they're unrealistic leading to the 51% who were saying they want to leave very fairly quickly.

If the goals were unrealistic, at some point you're going to go somewhere else. Also, the definition of unrealistic needs to be discussed for a moment. Unrealistic may be defined differently. The organization may think “X” but the gift officer might think “Y.” We’re going to talk about process here in a second which is probably my favorite topic. Because if you handle this with the right process you eliminate a lot of those challenges. 

The other thing gift officers tell us in in several surveys is that about a third of all gift officers that were surveyed said they actually had 75 percent of their time dedicated to philanthropy or fundraising major gift activity which is telling you that two-thirds are saying wait a minute I'm supposed to meet these goals for major gift officer. But my challenge is I'm spending 70 percent, 60 percent, 50 percent, 40 percent of my time on non-major gift work, whether that's administrative  or internal meetings. And so, gift officers are indicating that even the ones that want to make the goal, they’re being asked to do other things that aren't major gift -level work. So, what does all this bring us to?

Well, we know that the cost of losing a major gift officer is not only hard cost and the study said $127,000 of lost opportunity. We know that the reasons gift officers are tending to leave is not for necessarily more money but expectations, number one, and number two, this idea of having enough time to meet reach their goals.

So, what are the tactical pieces that an organization or a leader or if you're the gift officer you should be aiming at to ensure that you have the ability to be successful? So, let me start with kind of the beginning.  Gift officer tenure -  and this is now running into the tactical. So, these are maybe seven things that you can think about as a leader to implement or to execute or if you're a gift officer to be looking for.

So, the first is real, realistic expectations for ROI for your the gift officer's activity. What I always like to use, and I found it to be fairly effective, is kind of a four-year building process that in year one, the total cost of the employee or the gift officer salary benefits added up to something and it doesn't have to be to the penny but generally, the goal should be a one-to-one ratio. If you're paying a gift officer a $100,000 in salary and then we'd say take a random 25% for benefits. So, $125000 in year one they should raise about $125,000. In year two that ratio should jump to three to one. So that's when you're heading into the $375,000 to $400,000 range by year three, that ratio increases to five to one.

So now you're in the neighborhood of $600,000 and $700,000. And by year four and above, if you're a top performer ,if you are someone who's doing incredibly well, you're probably closer to eight to 10 to one. So now you're probably at a million or more. It takes time to develop these relationships. The challenge is that sometimes organizational leaders who don't understand philanthropy think, Well gosh, we’ll hire Randall.”

And in year one they should raise $750,000. And if there's a great portfolio with a great campaign, great case statements, and people are primed to be asked. And the problem was with the previous major gift officer they just wouldn't ask. I think that's great, but I think the organization leader and the gift officer all need to be on the same page as to what's realistic.

And in particular if there's not a great pipeline ,if there's not a great campaign, if there's not a lot of support asking a gift officer in year one to come in and close all those gifts for $750,000, or let's say an ROI of five, six, seven to one is not possible or realistic, and they might be lucky. But I would rather depend on the long-term connection with the gift officer to the organization and thus to the prospects and donors that they develop relationships with on their own to be the center point of what is successful. So, number one is building ROI over time for the gift officer expectations. 

Number two is using a running three-year average for metrics. There’s nothing worse to a gift officer, and let's say a calendar year-end is also fiscal year-end. So, they're made all these asks, they're doing all the right things, but the gifts don't close because a bunch of donors decided all for various reasons but they're going to make the gift next year, not this year. The three-year running average is a protection for the gift officer and for the organization because if the gift officer's doing everything they can and gifts not closing in December, but they closed in February or March of the next year.

Yes, I understand accounting. I understand fiscal year-end. But at the end of the day I also understand that we don't control when those decisions are made. We can influence them. We can make sure that they're well-prepared. We can make sure that the information that prospects have are tried and true and show value. But at the end of the day, donors make decisions on when to give gifts in their own timeframe. A three-year running average will allow the organization ,the gift officer, to see a clearer picture of success - expectations and outcomes - for that gift officer's productivity. 

The third is I use all the indicators as part of the evaluation process. In the beginning I talked about ROI and ratios of one-to-one, three to one, five to one. I also want to protect that gift officer by using what I have described in a previous podcast is leading and lagging indicators. I want the leading to be the most important. If the gift officer is making great phone calls, is making visits, is making solicitations, and there's a really strong effort to do it correctly, then if you use all the metrics supports the idea of the three-year running average. The three running averages for dollars but the activity that leads to those dollars can be done year-over-year. And if a gift officer's doing all the right things and logging it correctly then that's someone we want to invest in, which brings us to number four.

Number four - investing in them from a professional development perspective. The other thing that you get when you use all of the metrics, and again that podcast is on leading and lagging indicators, the leading indicators of calls, visits, building relationships, the beginning parts of leading us towards gift activity, is if you see an issue with conversion can you invest in that gift officer to help them with that problem. The challenge is that you need to get some additional help.

Part of being a leader is trying to anticipate and solve issues that others may not quite see or understand. And, by using metrics and those conversion rates, let's say from call to visit to solicitation or soft ask and, you see a hole. Can you help someone build confidence or expertise at getting better inside those smaller skillsets? Investing in your people, or getting investment for the holes is critically important.

Number five: I always like to start the year with what would be thought of as a campaign gift table for each gift officer and build an Excel spreadsheet. You could change the goal. But it didn't make any difference because then the spreadsheet formulas would change the giving levels. And so, you always had the right ratios of how many gifts do you need at the top versus how many at the bottom. The reason that chart is important is not for the numbers but can the gift officer put names into those lines to know that they need to make three asks to get to one gift at the top level, but that they actually have three names. This gives an investment or the gift officer in having input into the goals and being realistic and also anticipating for the future. If you have if a gift officer who has a great deal of very positive opportunities at the top, but maybe not as many at the bottom, then part of that year's goal process is probably about pipeline development.

Because as a leader I was always most concerned about the long term, I want to look at this year but what are we doing for next year and the year after? How do I help you build a pipeline so we can redo this gift table with names and a year from now - and some of these names are going to disappear because we asked them - but we need to replace those names. And that takes time to get someone to that $100,000, $200,000,  $500000 level. Normally it's not the first gift. So, a gift table and conversation about realistic expectations can drive a lot of process for the gift officer about what to concentrate on. 

Number six. Give that gift officer - or that gift officer should be asking for  - the tools whether that's technology, connections, or access to the database. But I think more importantly, flexibility. I had a tremendous gift officer for many years.  her name was Judy and Judy was a performer. She just got the job done. And I sat down with her one year and I said is there anything I can do? And she goes,  “Yeah you know my husband and I live on the way outskirts of town, and frankly trying to get in here by 8:15 or 8:30  every morning  - I’m right in the middle of rush hour. I'm just losing a bunch of time. Is there a possibility we could flex my schedule a little bit? I'll work just as hard, perform just as well, but it would save me an immense amount of time in just sitting in traffic in rush hour.”

I'm interested in performance. My comment was, “Good for you. What do you want to do?” So, she made us come in at 9:15 but she'd stay till 6:30 or 7. She didn't have kids at home anymore. They had more flexibility. She thought it was the greatest thing in the world. It costs me nothing but made a gift officer who performed incredibly happy. What is it you can do that doesn't change the structure of your office or what you believe in but provides flexibility to reward and incentivize great behavior and outcomes? A simple solution, but it was worth every penny to her. 

And to me the last is that all of these things should be discussed in the interview process. There really can be nothing worse than someone taking a job, and all of a sudden, they're surprised by this process. Like, “Where'd all this stuff come from?” I always suggest, after you got through the first couple layers of interviews would be really diving deep into what their experiences with some of these types of activities that I've discussed as the tactical outcomes from today's podcast.

But I also would lay it out after the conversation and say here's how I handle my leadership role. And here's where I think gift officers fit into it. And I wanted them to interview me as much as I wanted to interview them. If it's not a fit - if they don't want to do these things, then I don't want them in my office because we're going to lead to a problem.

I'd rather find the right people than just find people. And so, laying all this out in the interview process is incredibly important. So, your seven tactical steps. Pretty easy. Number one is understanding of building ROI as new gift officers start. Number two is using three-year running averages to make sure that it balances depending on when donors make gifts. Number three is to use all of the metrics in evaluations and goal setting particularly the leading ones and check out that podcast earlier done a few episodes ago about leading lagging indicators. Number four is building some professional development and assessment into this process. So, you're helping gift officers grow.

Number five, use a gift table on an annual basis to make sure that the balance is correct. Six, give those tools and flexibility to really high performers so they feel good about the investment you're making in them or that they feel as if their organization is treating them with the respect that's due.

And number seven discuss all of this in the interview process. Don't make it a surprise for the organization the leader or the gift officer. 

A couple of reminders as we end this week's podcast. Number one please. If this is helpful subscribe to this podcast. I kind of always hate to say that but I if I don't say it, I get a little chastised by some of the people in my organization - and share it with five or six people. This is a non-paid part of our contribution how Hallett Philanthropy is contributing to the industry to help it be better. And at the end of the day if this is helpful to you share it with three or four other people say "Hey you might give this guy a listen, he might have something valuable.”

Also check out the blogs. We're posting one to three a week on various parts of things that we see in the industry and what's going on. And maybe that could be helpful to you as well. And lastly, I want to make sure if you have a question like today we had from Gail, email podcast@hallettphilanthropy.com. Hallett Philanthropy.com two L's two T's.

Or if you completely disagree with me, I've been let's leave it up there. Reeks R E E K S@hallettphilanthropy.com. If you just disagree with something I've said I want to hear about it. I'll review it. And I want to learn I can learn as much from you as maybe you can learn from me. 

As I do each week. Let me conclude with this. This is a great profession. You're doing great work. If you're representing your organization and wanting to make a difference, then I can't imagine a better place to serve a professional career. You're changing people's lives by the work that you do. Philanthropy has the power to connect people who. Are trying to make and give back to their community make it better.

We're the conduit to the organizations that actually can do that which brings me into my all time favorite saying: Some people make things happen. Some people watch things happen. Then there are those who wondered what happened. We're people - we’re organizations that make things happen for people who are wondering what happened.

And as I say every week, I've said it for most of my career and I'll say it going forward, can you imagine a better way to spend a professional life than being a difference maker and loving what you do? I can't and I'm looking I get up every day out of bed. Get my day started knowing that I'm a small, small small part of that effort.

Appreciate your time this week. We'll see you next week on around and don't forget make it a great day.