May
5
 Roy C. Jones, CFRE As I boarded a plane a few weeks back, headed home to Los Angeles, I was going through my routine… stowing my lap top under the seat in front of me, neatly folding my jacket in the overhead bin, and most importantly, putting on my headset and dialing in my Ipod with my favorite blues artists for 4 hours music for the ride home… when suddenly I heard a familiar voice across the isle, “How are you doing Roy?”
It was Rusty, a former co-worker of mine, who had always been our top producing major gift officer. He had one of those deep voices you never forget and was nearly 6’5″ tall and nearly 300 pounds. This was a big man, who even by today’s standard could have gone toe to toe with almost anybody in the NFL.
It always blew my mind that Big Rusty could show up at a strangers door and before you know it, not only would he be invited in, but he usually left with a donation for the nonprofit organization we worked for. This big, mountain of a man, succeeded because his heart was bigger than his stature.
As we chitchatted about old friends and family, I finally asked him why he was headed to Los Angeles. Of course, the answer did not surprise me. One of his “friends” had been in an accident and broken his hip and Rusty was headed there to spend a few weeks with him to help out around the house while he recuperated. When he told me the man’s name, I knew that it was one of his assigned donors.
It struck me that Rusty did not call him “his donor” or “his prospect” or “his assignment”… It truly was his friend. When Rusty told me the man’s name, I recognized it immediately. He had already donated to the ministry a 7-figure gift and I knew that Rusty had helped him many years ago with his planned giving too.
Knowing Rusty and the donor, it did NOT strike me odd at all that instead of calling family or hiring a convalescent nurse, this donor simply called his friend Rusty. He trusted Rusty. He was a man who began their relationship as his “donation advisor”. Rusty was the man’s eyes and ears inside the ministry. When he made a gift, regardless of the amount, Rusty reported how every penny was spent. This dear man not only trusted Rusty with his money, now he truly trusted him with his life.
Rusty is a living example of lessons we had both learned the hard way over many years… if you want to receive large sums of money from people for your charity, your relationships should NOT be based upon the money. It sounds counter-intuitive, but if you want to raise large sums of money, your donor has to believe that your friendship is not about the money. It is just that simple.
As Rusty and I reminisced about his old friend it brought back so many memories and the types of things we would do to help our friends supporting the ministry. I remember meeting with donors and simply asking the question, “what are your plans today?” The next thing I knew I was taking Mrs. Smith to the grocery store or taking Mr. Johnson to the bank. I remember on two or three occasions my co-workers (fellow major gift officers) telling me they had even fixed a door hinge and rehung shutters. (Of course, with my mechanical and carpentry skills, this would not work for me. You have to know your limitations.)
Another story that always touched my heart was from another co-worker of mine and Rusty’s. When we called the major gift officer to check on how his visit went with the donor, a dear older lady answered the phone. She said that “her friend was helping her paint the front porch right now and could he call me back in an our our so?”
True major gift work is not about techniques and closing ratios. It is not just about how many people you talk to and how much you should ask for. Major gift development is about ministering to other people. It is the truest form of stewardship.
I met with the executive director of a charity in North Carolina a few weeks ago, who may have said it best: “I spend a third of my day loving on those our charity serves, the homeless. I spend a third of my day loving on our staff and volunteers. And I spend a third of my day loving on our donors…”
Who are you “loving on” today… make sure you spend time loving and caring for your donors. It is at the heart of every successful major gift fundraiser.
Apr
23
 It doesn’t matter whether you call it a pledge program, recurring gift program, monthly giving program, sustainer program or preauthorized gift program it is the same technique and they all add up to a huge additional revenue for your organization or charity.
The bottom line is when a donor gives you permission to systematically collect a specific amount money on an agreed upon date each month you are going to increase annual giving exponentially. Test after test has concluded that the long time value of donors who participate in preauthorized giving will increase from 100 to over 1000 percent.
Just do the math…. If you get just 100 people to give you $30 per month that is an additional $36,000 a year for your organization; 500 people would be an additional $180,000; and 1,000 monthly donors at $30 per month would be $360,000. You cannot afford to delay implementing a monthly giving program.
Preauthorized giving is so successful because it focuses on how the donor wishes to give. It is donor centric in its application. The offer therefore combines the convenience of giving with the savings to your charity. In addition, you emphasize that “time is money” and giving through this method has immediate impact on your charity or ministry.
Preauthorized giving programs make it easy for donors because they never have to make another decision whether to give. Preauthorized gifts can be collected in any form the donor deems as the easiest for them. Gifts can be collected by credit card; electronic funds transfer (EFT), or bank draft (ACH). Bank drafts (ACH) are different from EFT’s because the use the Federal Reserve’s Automated Clearing House (ACH) system. ACH transactions usually offer lower fees and no expiration dates. Of course, some donors like to send a physical check each month in the mail each month and in those cases your organization will want to do a monthly thank you and reminder letter to this group.
Just remember the most successful sustainer or preauthorized giving programs allow donors to give any way they want, whenever they want. The best programs are always integrated across all of the marketing channels with an emphasis on using the telephone to close the deal. Also, pay special attention to recruiting new donors to the organization to pledge monthly. You will have much greater success with new donors that with converting your existing multi-donors.
There are huge advantages to implementing a preauthorized giving program. Target Analytics recently released a study highlighting just some of the advantages:
- Monthly sustainers tend to be younger than single gift donors
- Monthly sustainers give significantly more per year than single gift donors
- Monthly sustainers have higher retention rates than single gift donors.
- The majority of sustainers continue as sustainers when they renew each year.
- The higher retention rates from sustainers result in much higher loyalty over the long term. Compared to single gift donors, many more are still giving after three, four or five years.
- Monthly sustainers account for 10% of the donor population, contributing 21% of the total income.
- Multi-year sustainers give on average 9 gifts per year compared to a multi-year single gift donor that gives on average 1.6 gifts per year. Note: 9 gifts out of 12 per year equal a 75% fulfillment rate.
Harvey McKinnon in his book “Hidden Gold” says that preauthorized giving will become more prevalent as more Americans move to on line giving. He notes that 50% of Canadians now pay ALL of their bills through EFT or on line. He notes that 50% of Canadians, 85% of Europeans, and 95% of the Japanese use EFTs to pay bills and make all of their donations.
In addition to the HUGE spike in revenue, there are lots of advantages to not-for-profit organizations and charities using preauthorized gift programs. McKinnon outlines some of the biggies:
- Builds a better relationship with donors. Monthly giving helps donors feel special, elite and plugged in. Monthly givers should be your top prospects for wills, bequests and planned gifts.
- Keep donors giving longer. Preauthorized monthly giving dramatically extends the giving life of a donor over decades, not just a few years or months.
- A sustainer program lowers your overall costs of fundraising and improvesyour fundraising cost ratios.
- Sustainer income grows over time. Within a few years it is not unusual to see 5 to 7 percent of your entire 0-12 month file giving in a preauthorized program. This can essentially double your organizations overall income
HOW TO GET STARTED?
- Good Record Keeping. First and foremost you must have a database or system of accounting to track each member you sign up to ensure timely processing of the contribution every month. The worst mistake you can make is to launch a program, beginning signing up donors for monthly pledges and then not be able to track the donors giving. So make sure you have a system that works for sustainer donations. I am not suggesting you buy an expensive system for tracking monthly gifts. I have seen many outstanding programs managed on an Excel spreadsheet or simple ledger system. The most important thing is processing gifts on the same day for each donor each month. Donors often get frustrated if EFTs or credit card payments get deducted “willy-nilly” anytime of the month.
- Ask Every New Donor to Make a Monthly Pledge. Test after test has proven that the best time to get a donor to make a monthly commitment is immediately after getting involved in an organization. They are excited. They have made an initial investment and now, if you ask them that will have an annual plan through monthly giving some amount they are comfortable with to your organization.
- 90 Day Wonders. The best way to get monthly donors to “sign up” for a monthly pre-authorized gift is to track monthly giving from your regular donor program. Run a report monthly and identify those donors who have given 3 months in a row. Call them immediately after the third gift to thank them and ask them to join your monthly giving club.
- Segment and Target before a Special Appeal. Monthly preauthorized giving programs are not for every donor. Never, never, never mail your entire donor file a standalone appeal exclusively soliciting a monthly gift. Target and segment your prospects beginning with donors who have given three or more times in a calendar year to your organization. We often call these donors “multis” because they are donors who give multiple times in a calendar year. What you are looking for are “super multi” donors who can give 12 or more times a year. Remember, too that mail alone is not strong enough to prompt a monthly donor pledge. You must integrate the other channels of communcation with the ask. Email and telephone phone follow up to close the deal are critical.
- Suppress your major donors who give more than $1,000 a year. Although major donors often make three or more gifts a year, you do not want to give them the opportunity to reduce their annual giving by pledging 12 smaller gifts a year. Major donors are very sophisticated and they have money to donate because they can add. If you write a $1,000 major donor and ask her to pledge $50 a month, make no mistake about it, she will do it and you’ll end up with $600 a year instead of $1,000.
- Suppress your “super duper” multis. You will have some donors on your file who are already writing 10 or more checks a year. I have seen some donors who literally write a check every week, more than 50 checks a year. Leave these donors alone! If they are already giving that frequently you run the risk of suppressing overall giving anytime you lock them down to only making 12 donations a year.
A recurring donations program will dramatically increase the lifetime value of your donors while reducing your cost of fundraising. It takes time, patience and tenacity but get started and stick with it. In the end you may just double your net revenue each month.
Mar
25
 Roy C. Jones, CFRE Your board of directors can be your biggest asset. However, I have met with hundreds of presidents and executive directors of non-profit groups and the first thing they usually say is “my board is driving me crazy… what can I do?”
My answer is always the same, “Put Them To Work.”
Are your board members currently involved in major gift fundraising? If you are like most charities, your board members do not lift a finger to increase income, they only know how to do one thing, tighten the belt.
They make recommendations for saving money: changing suppliers; firing employees; cutting expenses, terminating programs. They are the types of moves people make when they do not understand the art of fundraising. This is the trap a board falls into. Board members want to demonstrate value without knowing how to increase revenues. So often, the solution is to just move the pieces around the chess board, without knowing how to raise any new money.
As the chief development officer you must empower your board with the knowledge for how to raise funds (even if they think they already know it all). You must create an environment that is focused on creating new revenue, instead of simply cutting the budget. Don’t get me wrong, I am not saying that you should never make cuts. What I am saying is that your focus has to be on creating new revenue and increasing overall giving.
What are the challenges?
Putting your board to work raising money is easier said than done. According to a recent survey by Boardsource.com, 68 percent of nonprofit organizations have a policy requiring board members to make a personal contribution on an annual basis. Boards average 74 percent participation in giving; however, on the average only 46 percent of boards had a 100 percent participation rate. In the arts and cultural organizations it is more common to find required annual contributions. [i]
You will never crack the code of board involvement by just requiring it. Board members have to see the need and the importance of their participation. You must ask yourself whether you really know what your board of directors believes about their position and responsibilities?
Board member giving is natural and necessary. Here are some other things that Boardsource.com says your board should consider. First of all, board members will raise more money personally if they are vested themselves in the organization. An appeal is particularly convincing if a board member uses him or herself as an exemplary donor. Your board should begin by writing a policy that requires all directors to participate in fundraising.
The board is responsible for providing a sound financial basis for the organization. By personally contributing, a board member recognizes this responsibility and demonstrates a commitment. Nearly 90 percent of American households contribute to charities. A board member should designate his or her own organization as one of the main recipients of his or her generosity.
Board participation can impact large gifts as well as annual fund gifts. Many foundations only contribute to organizations where every board member is a contributor. It is probably not a good idea to ask each board member to make an equal contribution. Some board candidates might find the amount too high; therefore the policy would eliminate valuable prospects from joining the board. Others may have considered contributing more but a lower suggested amount could change their minds. The policy could set a range, suggest a minimum amount and/or encourage each member to give generously according to his or her means. One set of guidelines may not be appropriate for every board.
You should encourage your board to draft a fundraising and personal giving policy. Your should recruit a leader on the board to drive the decision-making process. It does not need to be the board chair, but a sensitive peer who is in a good position to make the case and gain a consensus among board members. As the decision affects each board member individually, it is necessary to create a policy that can be enforced. To avoid any misunderstandings and false expectations, every board candidate should be familiar with these policies.
Once the policy has been adopted dedicate a portion of every meeting to discussing program on personal fundraising by the board. Board members need to be encouraged to build relationship with major donor prospects and piers who may one day make great board members. Their personal contribution to fundraising should not only be from their personal check book. It should also be from their activity in soliciting donations from piers and major donor prospects in the community.
Some boards ask their members to pledge a certain amount for the year or have them sign a letter of intent. The board chair or the chair of the development committee keeps track of the contributions and contacts any member who seems to have forgotten the pledge. Vigilant board chairs share the track records of individual board members with the rest of the board, thus increasing the ‘public’ pressure. When 100 percent of the board members have fulfilled their promises, the entire board celebrates. As long as there is a policy in place, there must be a method of making it work.
I encourage all not-for-profit boards to have an annual fundraising retreat or workshop for both senior staff and board members. The goal of this annual event is to make sure board members are equipped for the process of cultivating donor relationships. In addition, the directors should spend time reviewing prospect lists and identifying “ask ranges” for each opportunity. Most importantly, your event should culminate with every board member making two commitments: (1) the amount of money they will raise or donate personally in the upcoming year and (2) the number of individual meetings they will commit to attend with major donor prospects.
Nothing is more important that determining how many individual meetings your board and senior staff can do together. Remember, major gift development is not something that is done with mass marketing techniques. Building real relationships with donors will not happen on Facebook or by email or by a direct mail letter. Friendships are built only one way. They happen one-on-one, face to face.
The only way to expand your major gift program is to put more people on the job. Your board must make a commitment to meeting with your top major gift prospects. The question that your organization has to determine is “how many meetings can we do?” How many individual meetings can you do a year, a month or each business day?
The 50-10-3 Rule. I have written and spoken many times on the “50-10-3 Rule”. Remember, that you have to account for the time it takes to reach the donor by phone, mail or email in order to schedule a meeting. While this is a very broad generalization, I have always planned on talking to 10 people in order to schedule 2 to 3 visits. The real question then is what does it take to actually talk to ten people. In today’s market, dialing the phone over 50 times and leave about 20 voice mail messages is not unprecedented. Twenty voice mails (to 20 households) will result in reaching about half of them. If you talk to 10 people, only three will likely be able to meet the following week.
That’s right 50 phone calls in order to talk to 10 and meet with 3. It takes a lot of work. If you are like most not for profit executives you will now click back to your Facebook page and go back to your normal routine. However, if you are ready to roll up your sleeves and go to work… pick up the phone and start pounding out those phone calls. Your board of directors need to have a clear understanding of the 50-10-3 rule for scheduling visits with top prospects.
[i] March 2012, A Guide to Fund-Raising for Nonprofit Board Members. www.boardsource.org
Mar
16
Roy C. Jones, CFRE Beware of the major gift guru who says he has the secret black book with the list of his major donor friends who will fund your charity. Outside lists of major donors to other charities (assuming your “guru” is telling the truth) are not the best place for you to prospect for major donors. Just because a wealthy donor writes a big check to another charity does not mean that they will write a big check to you.
Major gift “specialists” who peddle their “black book” are a dime a dozen. I call them butterflies and bumble-bees because they move from flower to flower (organization to organization) and sting a bunch of people along the way. They usually string the charity out over a couple of years by saying it takes 18 to 24 months to get a major gift. The charity in good faith pays them for a 18 months or more, but as they approach the end of the timeline the major gift guru takes their last paycheck, gathers up the “back book” and heads down the road to the next charity. Be careful…. Or should I say, “bee careful, don’t get stung!”
Major donors must possess two key characteristics to make them a top prospect to your organization: (1) they must be wealthy and have the financial capacity to make a large gift (but capacity alone is not enough); (2) the donor must have demonstrated an intent or affinity to support your organization. What is the best indicator of donative intent? Previous giving history! Have they written a check to you before? And if so, how many checks have they written and for how much. Donative intent is as important as wealth in identifying your best major gift prospects.
The best place to start in identifying prospects is YOUR regular donor file. You need to create several key reports in order to rank you donors each year from the most likely to the least likely to make a major gift. The fact is that these reports mirror the same strategies you may already be using with your regular direct response fundraising in the mail and on line. RFM is critical to major gift fundraising. It stands for recency, frequency and monetary amount.
You need to create an overlay using a battery of reports in order to place your prospect in order of priority. Ranking your prospects and regularly updating the list is critical to success. It truly become the radar screen that enables you to always focus on your best prospects first.
Personally, I like to create a simple excel spreadsheet with a row for each donor with their complete contact information and a column for each category of their giving. (Yes, this is an “old school” technique and I am probably dating my self with this approach) However, most CRM databased have a function to update and rank your database automatically. In addition, the modern “dashboard” I’ve seen created included will make your head spin with automated tracking and contact management functionality. The bottom line though that the best systems track donor activity by RFM.
Here is my simple process for identifying your top prospects for a major gift:
MONETARY. Your reporting needs to first help you analyze the dollar amounts of each donor on your file in order to rank your major gift prospects. The dollar amounts you should be looking for are HPC (highest previous contribution); MRC (most recent contribution); TAC (total annual contributions, I like have a separate column for each calendar year and normally include a minimum of the last 3 calendar years); and TLC (total lifetime contribution amount / total giving; of course, this is the actual life time value of each donor without averaging).
FREQUENCY. Secondly, your major donor prospect grid should look at frequency. This is the number of gifts (regardless of amount). Remember, no other factor is a better indicator of donative intent and affinity to your charity than the number of donations they have made to your organization. I recommending creating a column for the NLG (number of lifetime gifts); NAG (number of annual gifts). Once again, I would create a separate column for each calendar year and normally include a minimum of the last 3 calendar years.
The donors that write the most number of checks each year are usually better major gift prospect than your one-time a year givers. I am not saying to ignore your single gift annual donors. I am just stating the fact that your “multi-donors” are going to me more approachable. “Multi-donors” are more willing to talk to you on the phone and much quicker to take a meeting with you.
RECENCY. Lastly, and most importantly, you need to look at the MRC dates and track them closely (most recent contribution). Your best prospect for a major gift is always your recent donor. Tracking the dates of donations is critical and using those dates as a trigger to contact the donor is even more critical. The old adage that best describes the importance of recency may be “what have you done for me lately?” In my spreadsheet for ranking major donor prospect I usually create a minimum of four columns listing four most recent dates they made a contribution.
Acknowledging recent donations through a personalized letter, regardless of giving channel (on line, events or in the mail), is critical to getting the next gift. Remember, major donors do not make donations. They make investments. The bigger the gift the more attention you need to shower on the donor. It is critical to building relationships that produce bigger and bigger major gifts.
Mar
12
Roy C. Jones, CFRE Plan the work, then work your plan.
Your plan should outline the organizations goals for major gift fundraising and its role in your overall development program. Your plan should create a general strategy of opportunities for engaging the donor with the organization, but most importantly, your plan should include hundreds of individual plans with deadlines for cultivating each individual relationship.
If you build the relationship, the money will follow… if your contact with donors is only about money it will not succeed. Remember, your major gift program consists of hundreds of individual donor plans.
Yes, your program goals may be fairly obvious. Maybe you want to increase the number of major donors by 10% this year and increase overall giving by this group by 25%. What is not obvious is the work required to accomplish such tasks. Remember, major gift development is not something that is done with mass marketing techniques. Building real relationships with donors will not happen on Facebook or by email or by direct mail letter. Friendships are built only one way. They happen one-on-one, face to face.
In order to grow your major gift program it comes down to one message, “all hands on deck!” The only way to expand your major gift program is to put more people on the job. I am not saying that you need to hire a large major gift staff, although in some cases that may be the right thing to do. Every organization needs to look a their development team, senior staff, board of directors, key volunteers and major donors in order to determine who has the skills cultivate relationships and ask for support from others.
The question that your organization has to determine is “how many meetings can we do?” How many individual meetings can you do a year, a month or each business day?
The 50-10-3 Rule. Remember, too, that you have to account for the time it takes to reach the donor by phone, mail or email in order to schedule a meeting. While this is a very broad generalization, I have always planned on talking to 10 people in order to schedule 2 to 3 visits. The real question then is what does it take to actually talk to ten people. In today’s market, dialing the phone over 50 times and leave about 20 voice mail messages is not unprecedented. Twenty voice mails (to 20 households) will result in reaching about half of them. If you talk to 10 people, only three will likely be able to meet the following week.
That’s right 50 phone calls in order to talk to 10 and meet with 3. It takes a lot of work. If you are like most not for profit executives you will now click back to your Facebook page and go back to your normal routine. However, if you are ready to roll up your sleeves and go to work… pick up the phone and start pounding out those phone calls. Don’t forget the 50-10-3 rule.
Feb
25
Roy C. Jones, CFRE As with any type of endeavor, major gift development will only succeed if you and your organization are committed to it. So often I have talked to organizations that are committed to the concept of major gifts; they are committed to the idea of major gifts, but they are not committed to “the work” of major gift development.
Don’t get me wrong. They are working. They are working hard, but not at the real work of major gift development. The executive director is doing what she thinks helps produce big gifts. The director of development is doing what he thinks generates major gifts. Board members are doing what they think raises money. Again, don’t get me wrong. They are all working and all working hard, but are failing because there is no central focus or coordination with the overall development program.
Major gifts do not happen because someone who is rich suddenly decides to write a check. Major gifts blossom only after focused cultivation and a moves management process. It can take a few months for donors who have previously made a large number of direct response donations in the mail or on the internet or it can take years for the prospect who has not made as many direct response donations. Remember, donors with capacity never just show up and start writing big checks. People with capacity begin by making small investments to a charity and depending upon how they are stewarded (cultivated) the donor begins upgrading their investment in the charity.
Major gift development requires a coordinated plan. Without it you will be doomed seeing your best donors walk away from your charity to support another. Just imagine, you are a donor with capacity (a.k.a. you’re loaded) over the last year you began supporting a charity with a gift of $100, then $1,000 and then $10,000. What happens? Your new charity cranks up the number of direct mail pieces you get from 12 a year to 18 appeals a year. You get the monthly newsletter (another 12 appeals). Then in a span of only 10 days something special happens:
- You start getting calls from a “salesman” at the charity, someone who calls himself a major gift officer.
- You get two calls and two different hand written notes from two members of the board of directors.
- The President calls and leaves you a voicemail.
- The director of development calls to invite you to a dinner with other major donors
- And then to top it off, the major gift officer knocks on your door unannounced to give you in person a thank you letter.
What happens? You guessed it! The donor says that is it… I have had enough. They ask to be removed from your mailing list and they stop giving to your charity. You pushed them out of the boat because you pushed them too hard in a short period of time. You used all the right techniques, but used them without a coordinated plan and timeline.
The lapsed rate among major donors can be as high as 40 to 60 percent if you are not plugging major donors into a coordinated plan. Allowing (or forcing) your biggest, best donors to walk away can have a dramatic on your charity’s bottom line.
Your plan should outline your goals of major gifts fundraising and its role in your overall development plan. Your plan should create a general strategy of opportunities for engaging the donor with the organization, and plan how to cultivate each individual relationship.
If you build the relationship, the money will follow…if your contact with the donor is only about money it will not succeed. You major gift program consists of hundreds of individual donor plans. Here is an example of an individual donor plan. Individual Donor Plan – Quadrant Analysis Template
Feb
8
Roy C. Jones, CFRE If you are raising money for a charity or not-for-profit in America today you have a real problem… you are not the only one. In fact there are over 2 million not-for-profit organizations in the United States. That’s roughly 1 non-profit for every 150 households.
In your community this could translate into something even more dramatic. With the rise of national organizations that have regional and local affiliates that number could be more like one non-profit group for every 100 families or even one out of 75. Of course, we all know that not every household donates a portion of their income to charity. So for those that do, the competition for their donated dollar becomes nothing short of intense.
The most recent studies document that the average household that contributes to charity gives to more than six different not-for-profit organizations.[i] The donors that give, in most cases, give to multiple charities. We call them multi-donors or “multis” in the fundraising industry. They are the cream of the crop that can yield much needed income to your organization.
As a fundraiser when you find a “multi” you bear down and focus your fundraising attention on “multi” households. You increase the frequency of appeals to these households using the mail, internet and telephone. You try to involve these prospective funders in your charity and encourage them to volunteer. You assign the biggest donors to senior staffers to ensure that they are thanked after every gift, large or small, and to begin a moves management process to upgrade giving from this family from one year to the next.
If you have figured out who the “multi” donors are in your community, guess who else has? That’s right, the five other charities that this family supports each year know it too. Do you want to guess what your competitors in the non-profit community are doing? The same thing you are doing, increasing the amount of contact with the donor. The amount of communications that multi-donors receive is nothing short of alarming.
Let’s say that your organization includes the newsletter, event invitations, volunteer opportunities and, of course, 14 appeals a year. If you total it all up, including receipt letters, you are mailing your multi-donors 24 times a year. If six other charities are doing the same thing that is 168 letters a year, not including emails, thank you calls, hand written thank you notes and cultivation calls. Out of 260 business days a year… that is a HUGE amount of contact.
Now, are you ready for the curve ball? What happens when a multi-donor stops supporting a particular charity? In most cases, after the donor has been intensely targeted to be reactivated with special phone calls and hard hitting “why have you forgotten us” appeal letters, the charity simply hands over the name to their local list broker in order to continue generating some kind of income from the name. Under the guise of stewardship to the donors that remain with their organization, fundraisers will put the name on the list rental market along with their other lapsed donors. This way the charity can generate as much as $150 per thousand for the not-for-profit organization.
Now let’s see, the donor is already getting 168 letters a year. Let’s say that just three charities also put their name in the list rental hopper for some extra net revenue. Being conservative, let’s say that the list broker only rents the name twice a month for each organization. If the donor responds to just one rental appeal a month, the cultivation process for each new organization starts all over again. Guess what, you have easily taken this household from 168 letters a year to well over 500. Depending on the timing of appeals some multi-donors will receive as many as 6 to 10 appeals a day. That’s right, ten appeals a day!
I said early the competition for multi-donors by the 150 charities in your community was “intense”. Let me correct that… the competition in the mail box is ferocious!
Of course, I don’t want to forget the elephant in the room, the downturn in the U.S. economy! Make no mistake about it, people are hurting and giving less to charity because of it. In 2007 Americans gave nearly $310 billion to charity. That number plummeted to $280 million in 2009. Between 2010 and 2011 the number has slowly etched up to $293 billion, but we are still far away from returning to the record amount of giving in 2007.[ii]
Of the $293 million donated to charity in 2011 nearly 75% was donated by individuals. This surprises some, but businesses, corporations and foundations have never contributed the lion’s share of the gifts to charity.
If your goal is to boost the number of major gifts your charity receives the key thing to remember to start with the basics. If you want to develop a major gift fundraising program that produces sound financial results year in and year out, stick to the fundamentals. Your direct response funding strategies should be naturally upgrading donors from one giving level to the next. Ultimately, your program should guide those individuals with large giving capacity to increase their giving year after year.
Remember, the charity that gets the donation each day is the one that is “top of mail box”. Which letter each day will get the donors attention… and touch their heart? To quote a famous civil war general, “He who get’s there the firstest with the mostest wins…”
[i] April 2011, Heart of the Donor Study, Russ Reid, Pasadena, California
[ii] January 15, 2012; Giving USA 2011 Report. Giving USA Foundation; Center of Philanthropy at Indiana University, Indianapolis, Indiana
Jan
15
Roy C. Jones, CFRE I met this week with two different not-for-profit organizations who were confused about their major gift fundraising strategy. They did not know the difference between “direct response major giving” (DRMG) and traditional major gifts programs. If you fail to realize the differences and which type of major gift program your organization has in place, it could translate into huge losses in revenue in 2012.
Traditional major gift programs focus almost exclusively on community relationships and networking with locally known philanthropists, business leaders, community foundations and family foundations. The vast majority of the 2 million non-profit organizations in the United States use this type of strategy for procuring major gifts. While first time gifts can be very large, it can easily take 24 to 36 months to see a major gift come to fruition.
Direct response major giving (DRMG) may look similar to traditional major gifts programs. Both strategies use face-to-face meetings and relationship building to cultivate a major gift, but there are stark differences.
DRMG reaches out to donors who are already on your direct response donor file. Big donors begin giving to your charity via the Internet, on the phone or in the mail. Their first donation may have only been $25 to $100 but if you cultivate the relationship properly their giving can grow to $1,000, $10,000 and $100,000+.
I compare the DRMG process to “rungs on the ladder”. Once you identify an individual as a donor with capacity, moves management techniques are used to upgrade giving from the bottom rung of the ladder to the top. Donors are upgraded “one rung at a time” as needs are presented at that particular donation level. As donors climb the ladder by making 2 to 3 gifts each year at ascending levels they can be upgraded very quickly to a major donor status. Giving can be upgradedwithin just a few months of cultivation to the $1,000 and $5,000 levels. Then once they reach the $5,000 benchmark they can grow at much faster clips over the next year to $10,000, $25,000 and $50,000 levels.
While traditional major gift programs produce larger first time gifts by cold calling and networking, the trade off is TIME. It can take two or three years to get a major gift this way. Working with existing donors (DRMG) is a much quicker way to procure major gifts. Someone who has been writing you 2 or 3 checks a year for the last 4 or 5 years is much more likely to give you a 5-figure gift than someone who has never supported you before. It really is that simple.
Now for those that understand the differences between the two strategies, I am not saying you cannot do both. If your non-profit is big enough, you can certainly manage two different programs, but remember, they are two different techniques and must be measured seperately.
I work for a direct response fundraising company so my recommendations nearly always focused on harvesting major gifts from our clients’ donor files. I usually advise our clients to spend 80% of their time working on DRMG and only 20% of their time working on traditional major gift tactics. So out of 20 business days a month, never spend more than 4 of them on cold calling and networking. While it sounds obvious, you would be surprised how much time you can chew up cold calling, visiting business lobbies and attending local Rotary Club and Chamber of Commerce meetings. If you are not disciplined, you can go months or even years (if you are new to major gifts) without seeing a major gift.
Direct response major giving (DRMG) produces gifts and produces them quickly. Most charities do not have the time and resources to wait two or three years for a new major gift officer to produce a big gift, regardless of how much it is. Deploying DRMG techniques gets staff and board members producing major gifts much faster and at a much lower risk to the organization.
Of course, any time their are two different approaches, it can breed conflict if the organization does not have a clear process for managing both tracks.
I have seen some non-profits ban major gift officers from calling on people on the charity’s mailing list. If I had a nickle for every time I talked to a charity with a donor file lamenting their inability to find new potential major gift prospects when they are sitting on a donor file of 10,000 to 30,000 supporters. Even conservatively, organizations of this size will easily have 1,000 to 5,000 solid major donor prospects.
As I have audited charity fundraising programs I have been shocked to see the number of them that do not research their donor files and even go so far to prohibit major gift officers from soliciting direct mail donors for a major gift. (Yes, you read that correctly.) Not allowed. Banned from calling on the “low dollar” supporters for a potential major gift.
The problem usually stems from the structure of an organization and when responsibilities for fundraising are managed by two different departments. Annual Giving manages the organization’s direct mail program, special events, telemarketing, and online giving. They’re also responsible for managing the database of supporters. In most organizations, this department raises the lion’s share of the revenue for the organization.
My co-worker, Andrew Olsen, may have best defined the problem, “The Major Gifts department is tasked with identifying, cultivating and securing major gifts in support of the organization. When I say identifying, I literally mean identifying. Major gift officers are expected to essentially build their own major gift pipelines through personal networking efforts. But under no circumstances are they allowed to prospect from the Annual Giving donor file.”
Olsen says that the Annual Giving staffs have goals, and the Major Gift staffs have goals. Because these are two separate departments, their goals aren’t shared. So what happens is the Annual Giving team is reluctant to “give up donors” because they are counting on the gifts from those donors to hit their income line and help the meet their goals. At the same time, the Major Gifts team desires to move likely major gift donors from the direct response / annual giving program and into a personal cultivation stream in order to solicit a larger gift (which would hit the Major Gift departments’ bottom lines).
Every non-profit or charity needs to understand what type of major gift strategy they are deploying, but most importantly, they need to make sure that every department, every employee, every supporter knows that the donor file is the best place to begin your research for a major gift.
DRMG is the quickest way to procure a major gift if you know how to identify wealth, research propensity of giving and analyze current giving to target your top prospects.
If you are interested in launching, refining and retooling your major gift program I hope you will reach out and give me a call. You can email me at getroyjones@aol.com or call me on my direct line at 434-258-4416.
Go, go, go,
Coach Ro Jo
Jan
1
Roy C. Jones, CFRE Unlike most people who call themselves “fundraising counsel” I am not one who wastes a lot of time with grandiose vision papers and colorful case statements. Every January I encourage charities to spend more time on practical, actionable events rather than writing beautiful superfluous words about their organization and cause.
Yes, case statements are important, but what has been said has already been said. Do you really think that you will be more creative or more inspired than you were a year ago? Mission case statements do not come down from on high in a way that suddenly moves donors to give more. It just does not work that way.
Remember, donors do not give to case statements… they give to people. More specifically, they give to people who are listening to them and are able to identify needs that touch the donor’s heart.
Spend your time over the next few weeks outlining actionable steps you can take to know your donors better in 2012 than you did in 2011. Better relationships with your donors will always translate into more money for your charity or cause.
Set goals based upon your actual results from 2011. While we all hope that lighting will strike, you have to be realistic. Here are a few New Year’s guidelines for goal setting and planning that will make a HUGE difference on your bottom line in 2012:
- NEWSLETTER. Plan for increases of 3 to 5% – with 6 to 10 issues a year. First and foremost, make sure that everyone, regardless of suppression code, gets your newsletter. If you do not produce a newsletter, start one immediately! In addition, your newsletter should include a “lead letter” that focuses on a need presented in the newsletter and makes a “soft ask” for support. And yes, your newsletter package should have a reply device and reply envelope.
- DIRECT RESPONSE. Plan for increases of 7 to 10% – with 14 to 16 appeals a year. This would be for all of your direct response channels, such as direct mail, telemarketing and digital strategies using your website and social media, do not expect to see gains bigger than 10 percent. Of course, this is contingent upon your attrition rate and the amount you are spending on acquisition in these channels to offset attrition. If you do not do enough new donor acquisition spending, only one thing is certain in direct response fundraising… attrition.
- MIDDLE DONORS. Plan for increases of 10 to 12% – with 10 to 12 appeals a year. Middle donors are donors who began giving to your organization through direct response, but through systematic cultivation, volunteering and event participation have increased their giving past the $100 threshold. Middle donor definitions vary by industry but it can range anywhere from $100 to $5,000. Personally, I like targeting $100 to $999 as the middle donor sweet spot and begin treating any donor with a single gift of $1,000 or more as a major donor. It is critical that you begin encouraging middle donor giving through clubs or giving level recognition. While it is not a driver to get them to give more, it is a tool that keeps them from giving less and renewing more frequently. The communications needs to be different for your middle donors than your standard direct response donors. It should be consistent in the same style and tone from one month to the next. Do not go back and forth between regular donor communications and middle donor communications. Always have a “high value” copy version for your middle donors and major donor prospects.
- MAJOR DONORS. Plan for increases of 15 to 20% – with 6 to 10 appeals a year. All communications need to be in a “one-to-one” format. Nothing which appears to be mass produced (excluding the newsletter, of course) should be sent to these VIP’s. What does this mean? Real hand addressed letters, actual overnight letters by FedEx or UPS, box packages with appreciation gifts (sometimes called dimensional mail), hand addressed post notes, paper clips, and real photos – even framed. Yes, this is going to cost more per piece. These types of packages can run anywhere from $3 to $5 per piece, but the ROI is HUGE. We have seen response rates as high as 40% and average gifts of over $1,000. Treating your top 100 to 500 donors special is worth the investment. Remember, in researching your top prospects that you are looking for not only wealth, but philanthropic intent. Do they have a history of giving you large donations? Do they have a record of giving to other charities major gifts? Philanthropic intent the key to increasing major donor giving. Do your research. The information is available through wealth overlays and donation recognition to identify and rank you donors from 1 to 100, 250, or 500+. Rank you donors and begin meeting with your best prospects first. Finally, have a moves management plan for each individual target. I encourage folks to have a plan with timeline for each individual donor. Here is a sample of what I have used: Individual Donor Plan – Quadrant Analysis Template. Don’t be afraid to personalize it to your preference, but use it in 2012.
- PLANNED GIFTS. Plan for increases of 20 to 25% – with 2 to 4 appeals a year. Fund raisers should seize the opportunity in 2012 to talk to donors who are probably losing faith in their financial advisers. Trust me when I tell you that estate planning support from not-for-profits is going to explode this year! Donors will work with charities they trust. I suggest a lead generation campaign that takes advantage of when tax savings are top of mind for donors: March – April and Nov – December. A letter or two during these windows will generate a lot of interest. A simple reply device to request a “free” retirement planning information will produce great results. Remember, you are targeting people who are between the ages of 60 to 80. The sweet spot is around 70 years old. If you have not done an age append on your donor file, do it. Finally, remember you are looking for people who have written the most number of checks. Frequency of giving is critical to determining the likelihood that the donor will make a planned gift or name you in their will. You are not looking for BIG check writers or major donors. You are looking for people who are likely between 65 and 75 years of age who have written 10, 25 or 50 or more checks.
Dec
16
 Roy C. Jones, CFRE Congress is examining potential ways to cap, decrease or completely eliminate the tax deduction for charitable giving. This deduction, which has been in place since 1917, allows individuals to receive a deduction in their taxable income for the money they donate to charitable organizations.
These donations are vital to the work of every nonprofit organization in America. I am part of a team that helps raise more than $50 million to organizations helping the homeless and the working poor in metropolitan areas throughout the United States. Theses funds allow us to provide shelter, clothing, meals, rehabilitation and treatment, job training, and other services. Citizens give to charities and receive the deduction. Not-for-profit groups receive the donations and provide the services. As a result, the government doesn’t have to pay for these services.
Everyone wins!
The system works for all. In fact, in a recent poll 70% of individuals opposed the elimination of the charitable deduction, including 62% of people who did not even claim the deduction last year.
The charitable tax deduction is a proven, time-tested incentive that encourages giving. If the current charitable tax deduction is lowered, it’s estimated that the nonprofit sector will lose approximately $4 billion annually in private giving. If the deduction is eliminated, the loss to the nonprofit sector is even higher.
You might assume that people with the most money give away the most money — and you would be correct. Higher income earners account for the majority of individual giving. It is also true that high-income earners are more sensitive to changes in tax incentives.
Many people give to charities because they have big hearts. They’re generous. They believe that giving is “the right thing to do.” Many other people give because they also enjoy the tax incentive of giving. And, of course, many people fall into both camps.
What is important is that they are giving… period.
These are tough times. A record number of Americans are unemployed. The number of people in poverty — many of them children — is at an all- time high. People need help. Nonprofits serving the poor exist to provide that help.
So why are our federally elected officials thinking about cutting or eliminating the charitable tax deduction? They need the money. They need the tax revenue.
The President and the Congress have put themselves between a rock and a hard place by over-spending. But what’s the benefit of shifting resources away from private nonprofits to the federal government? I can’t think of any. Can you?
Does the federal government know best how people should spend their money? Is the federal government more efficient and effective in caring for the needy than charitable organizations? Can the federal government ever do the work of a local social service agency?
Humbly, I think not. Tens of millions of Americans agree. That’s why we give private donations. That’s why we live in the most generous nation in the world.
Even the famous miser Ebenezer Scrooge came to know the goodness of generosity. As Charles Dickens wrote, “Scrooge was better than his word.. He became as good a friend, as good a man as the good old City knew, or any other good old city, town, or borough in the good old world.”
Before the President and Congress send nonprofits a lump of coal, they would do well to remember the lesson of Scrooge and preserve the charitable tax deduction.
|
