Do You Know the Hidden Potential in Your Donor File?

Jeff Schreifels 

Over the past two decades, we’ve analyzed hundreds of different non-profits’ data files. And it’s devastating to see the same trends in file after file that showed donors reducing their giving or going away entirely. The amount of opportunity and revenue that has been lost across the sector is truly astounding. What’s going on? What is this problem that seems impossible to solve?

 

Jeff Schreifels 

Well, the truth of the matter is, is that most organizations don’t fully understand how to analyze their data to find the hidden potential and missed opportunities that may exist within their donor files. So today, I’ve invited a couple of my team members to share a little bit about our process, and the approach we take in our free donor file assessments. We’ll talk about what indicators we use to forecast your fundraising performance, and how you can determine whether you have opportunities for growth. I hope you get a lot out of this conversation today. Thanks for tuning in.

 

Recorded 

Welcome to the Nothing But Major Gifts podcast from Veritus Group featuring Richard Perry and Jeff Schreifels. Twice a month, we bring you the latest and best thinking about major gift fundraising, so you can develop authentic relationships with your major donors. Here are your hosts, Richard and Jeff.

 

Jeff Schreifels 

Welcome to the podcast today. I’m Jeff Schreifels. And today, I’ve invited two incredible people from our team to discuss probably our most well-loved resource, our free donor file assessment. We hear all the time from organizations that they regularly assess their file, or they just did an assessment through their donor software. And while all of that is great, it’s not really giving you the right picture of the true potential and opportunities for relational giving in your donor file. This assessment that we do is so valuable, and I’m excited to be talking to you about it, because it’s a better way to analyze your file and find that hidden potential. But before we get into it, I’d like to have Theresa and Amy introduce themselves. Theresa, why don’t you start first?

 

Theresa Tapocsi 

Sure. Thanks, Jeff. My name is Theresa Taposci. I am a Client Experience Leader here at Veritus. And I’m also the Client Services Data Team Lead. So I have been working with our data team for about five years now to review value attrition analysis, analyses, and see how they look in terms of everyone’s performance.

 

Jeff Schreifels 

Awesome. How about you, Amy?

 

Amy Chapman 

Yeah, thanks Jeff. I’m Amy Chapman, and I’m Director of Client Engagement here at Veritus. And I’ve been here for about six years. And I have the privilege of being on the front lines of communication with organizations who are reaching out for this kind of analysis, who are interested in it, want to learn more. And then I get the opportunity to shepherd them through the whole process.

 

Jeff Schreifels 

That’s awesome. Yes, and you do an amazing job at that, by the way.

 

Amy Chapman 

Well, thank you.

 

Jeff Schreifels 

So thank you so much both for being here. I know you two are just as passionate about uncovering the kind of information we discover in our donor file assessments. So I’m really glad you’re here with me today. So, to kick things off, let me give all of our listeners a little bit of background on this assessment and why you need to be looking differently at your donor file.

 

Jeff Schreifels 

One of the big things this assessment does is help reveal value attrition. So all of us have heard about donor retention or donor attrition, right? And in our industry, we talk about this all the time. And really lament on why we have so much donor attrition going on. You know, we are not keeping our donors. And everyone talks about this. And, but what we don’t talk about is value attrition.

 

Jeff Schreifels 

So the difference is, donor attrition is simply a donor gives one year, and then the next year they stop giving. So they go away. So that’s donor attrition, year over year. Value attrition is essentially a donor gives $1,000 one year; the next year, they either stop giving or they give less. So if they gave $500 the next year, you lost 50% of their value, year over year. That is what value attrition is. And I really think that we don’t really grasp how bad that really is. Because, when we think about donor attrition, we’re talking usually percentages, right? “We’re retaining 50% of our donors,” or you know,”For those donors that have been with us three plus years, we’re retaining about 70% of them.”

 

Jeff Schreifels 

We don’t talk about, “Well, what does that 30% or 50% that we’re losing… what does that mean in dollars?” And that’s what value attrition basically exposes: the dollars that go away every year. And we don’t look at it because we’re not tracking it. Most non-profits don’t look at that. And one of the reasons for that is that we’re just essentially looking at bottom line revenue, year over year. For mid and major gift programs, what most development directors and executives are looking at is, “Okay, in year one here, last year, we brought in $5 million total. This year, we brought in $6 million, so we grew. Okay. We’re feeling good.” What they’re not looking at is the donors that gave that $5 million last year, what are the same donors giving this year? And that’s what we expose in this assessment.

 

Jeff Schreifels 

And it is extremely surprising to people, because most people are just looking at that bottom line. They’re not looking at the donors that gave three years ago. How are those donors doing today? Those same donors. And what we find over and over again is they’re losing between 40% to 60% of their value over that time period. And not only the percentage wise, but the revenue. So we’re talking, for some organizations, that’s hundreds of thousands… Millions of dollars for large organizations. Gosh, we’ve seen over $100 million they’ve lost over that time period. And they don’t even really know it. Because again, they’re just looking at bottom line revenue.

 

Jeff Schreifels 

The other thing we look at in the assessment is our pipeline analysis that shows by cume giving levels, how many donors do you have. For example, 0 to 25, or 25, to 50, 50 to 100, and so forth. We’re looking at how many donors and how much revenue from those donors that comes in. And what that really reveals, is a lot of clogs in that pipeline. And it’s really, it’s very revealing, because, especially in that mid-level area, we might see something like you have 1000 donors who are giving $1000 to $499. And then the next level, there’s like, 100. Like, it’s super stark. And so that is revealed in the assessment, and it really turns a lot of heads because like, “Oh, this is why we need like a mid-level program to start unclogging that pipeline.”

 

Jeff Schreifels 

And then another real amazing feature of the assessment is that we’re able to do a forecast: a five-year revenue forecast, that if you actually follow The Veritus Way, and all the things that come with it from, you know, qualifying your donor to setting up the structure, having a goal and revenue goals for donors, a plan for every donor, tiering your donors, having donor offers, that actually can inspire donors to give large gifts. All of those things that make up The Veritus Way. If you did that, where could you be in the next five years? We have a lot of history of previous clients, and tracking their giving to know how major gift programs can grow, if done right. And so one of the cool things about the forecast is, here’s where you are today. And knowing how these programs can grow, here’s where you could be in five years. And it’s amazing. It really is. People are blown away. Like, “I had no idea we could grow that far.”And a lot of times, they say “This seems way too high.” And we say, “Hey, this is actually conservative, based on what we know. This is a conservative estimate.” And in fact, when we have tracked actual results of other clients, it is fairly conservative. We actually blow those forecasts out the window, out the door, out the window, whatever.

 

Jeff Schreifels 

The other cool thing about the forecast is that it allows you to know, and it allows the data to tell you, how many frontline fundraisers do we actually need? How many MGOs? How many mid-level officers do we need? And it’s not based on what we feel. It’s based on the donor assets that you have. And so it’s pretty unlike anything that we’ve ever had or you would ever experience in the past.

 

Jeff Schreifels 

Theresa, I know you do a lot of work with our assessments and serve as our Data Team Lead, as you said. Why don’t you share more about what we analyze in this process? And why.

 

Theresa Tapocsi 

Yeah, absolutely. So when we go through this process, just to give all of our listeners some background, the first thing we do is we ask any potential clients and anyone who’s being assessed to provide us with some basic data. So we ask for cumulative giving totals for the last five years for every single donor in your file if they gave $1 or more. And then beyond that, we’re asking for other pieces of info like the donor ID, the donor type, zip code, lifetime giving, solicitor information (if you have gift officers already), who is assigned, and an indication if the donor is an automatic monthly giver. We don’t ask for any personal information. That’s really important to us. We also ask people to fill out a brief questionnaire that gives us a little more context and information about your organization: how your staffed, what you view as your current cume-giving thresholds for major gifts and mid-level. And all of that is just to make sure that the data team has all the right information to have a full understanding of your organization before we dive in and start making suggestions and looking at everything.

 

Theresa Tapocsi 

So then when we look at the file, as Jeff said, there’s three real primary areas that we’re looking at: that donor pipeline, again, we’re looking at overall performance of every donor at any giving level. This is the only time we’re looking at the full-file dollar amounts. After that, it would get a little arduous. But we’re looking at, you know, which area. And as Jeff said, we see pipelines, I will tell you, the trends that we see when we’re looking at this, there’s always going to be a clog at $100. Always. I’ve never not seen a clog at the $100 level for the pipeline. And usually there’s one at either $500, $1000, maybe $2500. It depends on the client organization size, but we almost always see clogs at some of these areas. And we do a little chart. It’s very visual and obvious to see them.

 

Theresa Tapocsi 

So then past the pipeline, the rest of the document, we’re always looking at donors who are giving it a higher value. Usually, we typically start at $500 or $1,000, cumulative giving, so that would, say if a donor gave at least one year, at one of those giving thresholds, they would be assessed in terms of value attrition as well as put into the forecast.

 

Jeff Schreifels 

Right.

 

Theresa Tapocsi 

So for the value attrition, we’re then reviewing those donors by class year. So as Jeff said, for the same 1000 donors, how did they perform in terms of revenue for each of the calendar years? If they, in the first year, gave $1000, and then dropped to $500, that’s a 50%. So we’re taking the averages of all of those people in the class years. That’s how we look at it to make sure that the new money doesn’t cover up the old revenue loss. That’s how we make sure we actually have a more accurate picture of value attrition. And this part is really the historical assessment/performance assessment. We’re looking backwards. How has your organization been performing? Whereas when we talk about forecasting in a minute, that’s the forward. That’s when we’re looking forward at the future.

 

Theresa Tapocsi 

In terms of trends, of the hundreds of assessments I’ve seen, there are a few standard trends. I always notice, as Jeff said, the top one is the attrition rate tends to be between about 30% and 60%. This can be skewed. You might have had a banner year due to disaster response or a capital campaign or maybe some other milestone. And we do take all those things into account. That’s why we asked for the questionnaire. But outside of those special circumstances, if a client hasn’t been following The Veritus Way in the past, 9 times out of 10, that is where they are landing in terms of their value attrition averages. There may be some files on the lower end of that average, or maybe even doing better than the 30% to 60%. But oftentimes, in those cases, we see a ton of donors giving the same amount every single year, year over year. Mostly because no one’s ever asked them to give more. And that happens all the time in organizations that have strong monthly giving programs or strong membership programs, such as public media organizations or things like that. Their retention rate might be lower, but we still see so much missed opportunity there. There’s so much opportunity for growth, because these people are not being asked to give more.

 

Jeff Schreifels 

Yeah.

 

Theresa Tapocsi 

We do make it a point in these files to pull out what we call variant donors. So those will be a donor who maybe made a really large one time gift that’s not repeatable. We all know we all have those. And that can skew your averages either positively or negatively. So we try to take those out, just to make sure that we are getting a more accurate picture of what we are showing you on your file.

 

Theresa Tapocsi 

So then, when we look forward, we’re looking at the forecast. So we are using the current giving averages, the current number of donors on the file to show the full potential. As Jeff said, if you embrace The Veritus Way, it’s a directional forecast, not meant to be accurate as a budgeting forecast, because we will never know your donors or your numbers as well as you do. This is just, we’re just using estimates and averages. But as Jeff said, it’s really conservative. When we see people who fully embrace, they tend to blow these out of the water. So it’s really something we’d like to show you; just scratching the surface of the potential. The forecast really starts one year after all of the projected caseload donors are relationally qualified, because you need that time to start building the relationships before we start to see the bigger results. So we have year one, but it’s really year one and change, because we have to do the work of relationally qualifying the donors first.

 

Theresa Tapocsi 

In the forecast, we also account for transformational giving. Because we know that happens in the later years of The Veritus Way, when you have laid the groundwork, when you put all your underpinnings in place, and you have donor offers and all your donors are relationally qualified, then you really can start to get into transformational giving with some with the top group of your caseload donors. So we account for that in the forecast, in the later years of the forecast.

 

Theresa Tapocsi 

And really, the forecast is showing two different ways your programs can grow. The first is the number of donors you can introduce into the program, because we see from the pipeline and our calculations, the average number of new donors that are coming into the file every year. So we account for that, as well as the increase in average gift revenue that we can see happening when we are actually relationally qualifying and identifying passions and interests and, you know, connecting our donors with those passions and interests. So there’s a lot of stuff. It’s a big document. Amy, I’m sure can speak to that.

 

Amy Chapman 

Oh yeah.

 

Jeff Schreifels 

Now, Amy, I know you talk a lot to organizations who have requested an assessment. What are some of the common questions that arise that our audience should consider, as they’re looking for best opportunities within their own data file?

 

Amy Chapman 

Sure. Goodness, it can run the gamut. And as I’m having these conversations every day, I find it really fascinating to learn every organization’s own story. Big shocker, I would say none of them come to me with things buttoned up, right? They have concerns. They have pain points. And they get really real and vulnerable with me, which I so appreciate in these conversations. They’re good at, you know, open dialogue: sharing the good, the bad, the ugly.

 

Amy Chapman 

But I would say, here are some common themes, common issues, that they may share with me at any time, varying of course, by organization. Their giving last year may be down but yet they’re being charged with higher goals, and they have no idea how they’re going to get there. So they are looking for guidance, for help, for any kind of resources they can have. They may already have a sense that their value attrition rates are high, but they don’t really have a great way to fully analyze that. And in fact, they know Veritus works in this arena all the time. And they want our take on it. They want to truly understand. And then to be able to share that with the team. They realize they may not be staffed properly or enough, or they may have too many officers in major gifts, none in mid-level. Different scenarios.

 

Amy Chapman 

And so as Jeff and Theresa both said, our assessment really can focus in on helping from our perspective to say, “Where are you best served here? Where should you put your resources throughout this mid-level and major gift area?” The organization may not have a healthy culture of philanthropy. We see a lot of siloing going on as over time, it’s probably through no one person’s fault, but it happens, and so there’s an awareness that that’s really impeding the growth in the path of donor qualification, all those things. There are clogs, as Theresa said, that are apparent. And so they want us to speak into that, too, to understand and try to help to shift that culture over time.

 

Amy Chapman 

Let’s see. They may be a real heavy event-based organization. Right? That’s been common to so many. And they’re all, I think I would say the majority, are looking to shift out of that. To diversify the donor engagement strategies they have and to get better ROI. And so our donor assessment will show them the kind of ROI they can expect, with a more heavy investment in mid-level and major and kind of balancing out events with other options for their donors.

 

Amy Chapman 

Let’s see, they’ve historically relied potentially on a membership program. We have a lot of organizations we work with who have great membership programs that are key for them, and good. However, they can keep giving flat. You know, the donors give at a certain level like clockwork every year. That’s a great base place to start. And I share about that. Gives them actually a prime audience from which to grow, right, to maximize the potential from all these donors. And so the donor assessment will review those kinds of opportunities.

 

Amy Chapman 

Often organizations are relying too heavily on prospecting, while ignoring their current donors. They don’t know enough about your donors, they don’t have a plan for every donor, they’re chasing the new next shiny object to new donors to make up for the lack of giving that they’ve seen over the past. And that is a very common issue. Frankly, that’s at the crux of our work: helping organizations connect with and grow those donor relationships much, much deeper. And that, in turn, gives your officers the ability to take the conversation from transactional to transformational. So that’s great.

 

Amy Chapman 

And I would say, in a good way, a lot of organizations come to me already really excited about Veritus. They’ve been followers of our system for a long time. It’s gratifying to hear all the good things they want to say about Veritus. They may have taken a Veritus Group Academy course; they’re investing, right? But the reality is, a lot of these officers, leaders, wear 10-20 hats, and to put it in place is really challenging for some. And so they’re getting that. They’re aware; they’re being vulnerable. And they’re saying, we want to understand how you guys can help us. And let’s put a plan together to understand; let’s build a case for this additional investment. And the donor assessment will give them that. It’s very powerful to share with leaders. Get everyone at the table. And that’s what I do. Once Theresa and her team have done this amazing work. And it is amazing. Putting these assessments together. I can then distill all the the high points of them, share with the team, invite all the decision makers into this presentation, usually done by zoom, or in person, whichever, and get dialogue flowing around what we’re seeing. And then sharing what our vision is for growth for each and every organization based on their data. So it’s super exciting.

 

Jeff Schreifels 

Awesome stuff, Amy. Really good. Thank you for sharing all of that. You know, Theresa, what do you see as some of the common challenges that arise for organizations in our assessment process? Do you have any tips for anyone looking to start analyzing their data in this way?

 

Theresa Tapocsi 

Yeah, I mean, I think, Amy, you’re gonna laugh. The first and hardest challenge, I think, is just getting the data. It’s a big challenge. We all know that our databases can sometimes not be the most cooperative. And in order to pull things, we always want to make sure we get as many years as possible. Because if we only have two or three years of cumulative giving data, we don’t have a really strong accurate average of attrition value; we’re only looking at one or two years of performance. So the more years we can get, the better.

 

Theresa Tapocsi 

I will say that a really specific data poll challenge is dealing with soft credits. So we typically will ask an organization to include soft credits when we request data. But we do find through our looking at their information that sometimes organizations have a lot of donors giving through something like a donor advised fund. And that can lead to some duplication of revenue. So if you’re looking to do this on your own, you really want to think on how does your organization code soft credits. And it may be simpler for you as an organization to omit them from this process, because they might be over-inflating your totals. We’ve seen that several times. So that’s a conversation that we will go back and forth with with people who are getting an assessment through us and that’s something to look into.

 

Theresa Tapocsi 

You know, a big thing I would say if you’re embarking on this is make sure you are really reviewing your database on class year. You want to separate your donors into those classes and only measure their performance and take the average on the specific class. That’s what’s going to give you the more accurate picture. I know, full story, prior to me joining the Veritus team, I tried to do this all by myself once and I did not understand the concept of doing it by class year. I went back to the book later and reread it and understood it. But by separating that… I didn’t have a better picture. I didn’t have a more accurate representation. So I would say, if you’re going to do this, make sure that you focus on that part. Because that’s where you’re going to see the loss.

 

Theresa Tapocsi 

A big thing is, let the data lead the conversation. Don’t try to make the data fit into what you want it to say, which is an easy and human response for all of us. You know, as Jeff mentioned earlier, we will find organizations that we need to talk to them about their staffing size, or we might have an organization, we often have organizations, that come in and say, “My major gifts threshold is $10,000 and above,” and we see that the data doesn’t support that. You can end up leaving money on the table or hampering your success if you don’t let the data inform your decisions.

 

Theresa Tapocsi 

And I have a really wonderful side story I need to share here. I had a former client, that was just that situation. They came in to the assessment telling us their major gifts program was at $5,000 and above. And their data didn’t support it. They had a huge clog in the pipeline at $1,000. They didn’t have a lot of $5,000 plus donors. So we made the recommendation to lower their threshold and they listened and fully embraced The Veritus Way. And one of the gift officers had one donor that had been consistently giving between $1,000 and $2,000 every year with no one ever reaching out to them. After the initial qualification phone call, that donor, about a week later, sent in a $10,000 check.

 

Jeff Schreifels 

Yeah.

 

Theresa Tapocsi 

By the end of the first year of engagement with the gift officer, that donor had grown to $90,000.

 

Theresa Tapocsi 

Wow.

 

Theresa Tapocsi 

And they were just sitting in the file. Never touched, because they didn’t lower their threshold. So there is a fun side story on letting the data tell you what makes the most sense.

 

Jeff Schreifels 

But you know, that’s so funny, because I feel like we’ve heard that story over and over again.

 

Theresa Tapocsi 

We do.

 

Jeff Schreifels 

It’s like, “Oh, yeah, our major gift is $10,000 above,” but then you look at it and you’re like, “No, it’s not. It’s really $5,000 or $2,500.” And, you know, they may have or like we get into the situation where “Well our major gift is this.” And they already have 12 major gift officers. And when we get into it, we’re like, “You really only need six, you know, the rest of them should go down to mid-level and you could be saving money and be more efficient.” And you really, whatever the reason, they’re growing their major gift thing, but not having the donors to support it and the value of the caseload is being very low. Like you’re not being effective here.

 

Jeff Schreifels 

Good stuff.

 

Theresa Tapocsi 

Exactly. We see files where they have 500 donors on a caseload. But only 50 of them have ever given above the cume threshold. Amy said their prospecting… all of those kinds of issues. So all that to say, the data needs to drive the decisions. I will also say even for our current consulting clients, we will often suggest that they, from time to time, come back to the data team and reassess their data. Because we want to look through, do we need to rethink your thresholds? Do we need to consider hiring more staff or we, you know, retooling how we’re staffed? So that’s something that we are constantly keeping an eye on.

 

Theresa Tapocsi 

I’d also say don’t let yourself get offended. If you are seeing bad attrition rates. It’s a knee jerk reaction to like, get offended, get upset, try to validate it for yourself. You’re not alone. Most people are falling into this place. And if you’re taking the time to do this assessment, you’re at least on the right track to start and look at how you can make change. So.

 

Jeff Schreifels 

That’s a great point. Very good point. Amy, I gotta ask you, like, tell me some of the biggest “aha moments.” Because when you’re presenting the data, they’re seeing it for the first time. What are some of the things that you see in here?

 

Amy Chapman 

Well that’s a good question. I would say, you know, as I said earlier, I do a lot of these over Zoom. So I’m video conferencing here. But I’ll say this, the shock can be almost palpable, when people first see numbers in their donor value attrition. And you’re not alone. This happens a lot. But it’s very sobering, especially if you’ve had some decent year over year growth, bottom line growth, for an organization now to see firsthand from their data, the rates of donor value attrition that they’re experiencing. And we look back four years because we want to go far enough to get that kind of a trend. This unvarnished look is really key and necessary to gain a baseline understanding from which a path forward may be carved. And that’s such a positive.

 

Amy Chapman 

So there’s the shock and awe of the donor value attrition. However, moving right into the hopeful feel of what comes next because we do have a path. We have such a deep understanding of what’s going on here. Our results are strong. We work with hundreds of organizations currently and officers. And Theresa is one of our wonderful Client Experience Leaders who meet regularly with you all to do this. But we can speak with confidence about the growth we see that is possible: working through that five-year revenue projection. It’s conservative, it’s based on the results of the work we’ve done with hundreds of other organizations, and how they’ve tracked. And this helps these organizations to kind of get that sense of “Ah, okay, okay, there’s a way through this, you know, I know this is hard, but we will get there, if we dig in, have the right support, and work through it.”

 

Amy Chapman 

And getting back to what you guys were just talking about. I think one of the things that often is an “aha moment” for organizations if they haven’t yet been qualifying donors into caseload and our revenue projections are very clear and conservative, and that we only say that one in three donors who were in a certain giving threshold would end up being qualified. So that really shrinks down the number that they should be looking at. Truly, that will go into caseload and I think they get that. “Oh, okay.” Here we have all these donors who are sitting on caseload, we have no idea if they’re qualified. They have, like you said, Jeff, maybe even one or two too many officers, because they have thrown them all in there. I’m trying to do this work, but we say, start with qualification. Be consistent. Be disciplined about this. We’ll help you through that. And I think that’s an “aha moment.” “Oh, this makes sense. Okay. Okay.”

 

Amy Chapman 

So then, you know, after we talk through the data, and we let the results speak into a real, workable, attainable plan, I think, overall, folks are really hopeful and encouraged. There’s a light at the end of the tunnel for them if they really want to invest in building a thriving mid-level, major gift program. And we’re that partner. They might want to consider using, because of what, you know, our emphasis there, the results we’ve had, the experience over, gosh, 15 to 20 years. We are now, Jeff. But it really is a win-win-win for the donor with the officers and your organization. So we are right there with you in all of this.

 

Jeff Schreifels 

Well, thank you for joining me, Theresa and Amy. And we hope this has given you a lot to think about regarding how to analyze your donor file. Now, you can absolutely do all of this on your own. But if you’d like to partner with us to learn this important information about your donor file, and where you have hidden potential, we’d love for you to connect. You can head to the show notes or our website to start the process to apply for a free donor assessment and you get to talk to Amy right away.

 

Amy Chapman 

Right.

 

Jeff Schreifels 

So that’s a bonus, really. And so we just want to thank you for joining us and take care. And we’ll see you next time.

 

Recorded 

Thank you for joining us for the Nothing But Major Gifts podcast from Veritus Group. Richard and Jeff also write an ongoing blog that you can subscribe to for free at veritusgroup.net. Please join us again next time.