Everything You Need to Know About the Latest Fundraising Effectiveness Project Report

Jeff Schreifels

When a report shows that major giving revenue is down nationally, it’s tempting to accept defeat and say, “Oh, well at least we’re all in the same boat.” But our client’s data shows something completely different. Veritus clients are seeing increases across the board. And today we’re sharing the methods that helped our clients achieve major gift revenue growth of +22% on average in 2022, even while overall major gift revenues declined across the country. We hope this encourages you that with the right strategy and system, it’s possible to succeed in fundraising despite the current economic climate.

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 got Richard Perry with me. And unless you’ve been living under a rock…

Richard Perry

A huge rock, a big one.

Jeff Schreifels

You’ve probably heard about the recent Fundraising Effectiveness Project Report. There’s a number of interesting insights, including the concerning trend about the state of fundraising. And even more so that major gifts revenue was down -4% for the first time since 2013. This report is all anyone can talk about right now, which is why Richard and I wanted to take a moment to share some of the key highlights we noticed in the report and give you some encouragement and insight on what to do with this information.

Richard Perry

I know Jeff. I mean, there is a ton of commotion and concern around the sector right now.

Jeff Schreifels

Everyone is blogging about this; I just saw one this morning. Tom Ahern just wrote about it. I mean, everyone’s talking about this stuff.

Richard Perry

Yep. I mean, and here are some of the things that stood out for me. I mean, there’s a lot of details in it. But some of the things that stood out for me are organizations, you know, struggling to acquire new donors. And what’s interesting about that topic is it’s like, when you go out and you look at some of the offers that people are putting out there to acquire donors, they’re talking more about themselves and about the problems that the donor can solve. So there’s not really a good donor offer out there for them. And the other thing that was interesting to me was the whole trouble of retaining, you know, donors and giving from 2021 the year before.

Richard Perry

Yeah, another -18% drop or something like that.

Richard Perry 

I know. And it’s, I mean, you and I’ve talked about this over and over and over again, about if you don’t tell the donor that they’ve made a difference, how is it that you’re going to expect the donor to in their, in the core of their being, say to themselves, like, “Yeah, this is really worth it.” And this is why they don’t give.

Jeff Schreifels

Oh I know, and you know, these… though, so the whole acquisition and cultivation problem, that’s been going on for years, right? Because it continues to decline. So I’m not actually surprised by that, because it seems like every year that’s been going down. Like organizations are not figuring out this offer thing. They’re not talking about impact. So of course, all of those lower-dollar donors are going to be not retaining as well. But the big surprise was on the major gift end; the mid and major gifts. So they tracked the $500, the $4,999, the $5,000 above, and the $25,000 above. Each one of those cumulative amounts that they’ve been tracking all gave less this year than the previous year. And that’s a first in this report.

Richard Perry

I know. Since 2013, right?

Jeff Schreifels

Yeah. So it’s, I mean, a lot of people are thinking, you know, could that just be the COVID thing? What do you think?

Richard Perry

Well, I mean, partially, but that’s a little too easy. But I think actually, ultimately, no, because we’re seeing the opposite with many of the clients that we work with. Overall, nationally, non-profits are down -4% in major gift revenue, whereas we, in our clients, are up +22%. So, I mean, it’s not COVID. It’s that the donors are really not connecting to the mission. And fundraisers are increasingly disconnected from the organization and relationships are really not being built. And so that’s, I mean, I think that’s the core of the thing. Like I said earlier, if all an organization does is just talk about themselves and their cool system and how they do things and all of these things, and not actually deal with the donor on the level of what their interests and passions are, and appeal to that, of course these donors are not going to give as much.

Jeff Schreifels

I’m actually surprised this is like, one of the first years that the revenue for major gifts is down, because I feel like maybe, you know, some of these major, you know, these mega donors who have been giving like millions and millions have masked the behavior of what’s going on underneath – the lower-level major gift donors – because we’ve seen it in our assessments we do for clients, right, where, you know, year-over-year, they’re just not retaining donors; their revenue is either flat or going down. So it’s like, this could be a wake up call.

Richard Perry

Oh, I know. I mean, it talks just more to the point of not having a disciplined approach to major gifts. So it’s a lot about just kind of getting the money and not actually dealing with the donor as the key part of the whole equation of getting the revenue.

Jeff Schreifels

I know, I know. So, you know, a lot of people are saying, “Okay, why are we seeing this decline?” I’ve had people calling me like, “What do you think’s going on? Why is this such a big deal and why is it so concerning?” And part of it is, well, first of all, this is the first time in this report that major gifts have been down. So that’s a big deal.

Richard Perry

Right, a big deal.

Jeff Schreifels

But it shows that most non-profits, for the most part, do not have a disciplined approach to major gifts. This exposes all those organizations. And this means that fundraisers are not actually building relationships with donors.

Richard Perry

So I mean, that’s an interesting point there, Jeff. Let’s just peel that one apart. Because when you say disciplined, what do you mean by a disciplined approach to major gifts?

Jeff Schreifels

A disciplined approach means one, you’re working with only 150 qualified donors in your portfolio. That’s number one. Qualified means there’s a two-way engagement. Donors have said to you that they want to be engaged with you and your organization. And so there’s a whole process for doing that. But that’s number one, you have qualified donors in your portfolio. With those qualified donors, you have a revenue goal attached to every donor; you have a strategic plan attached to every individual donor; that whole portfolio is tiered A, B, and C; and you have offers that you are bringing to the donors that are inspiring them to give that are connected to their passions and interests. How do you know their passions and interests? Because you’re building a relationship with those donors to find that out? Right, you’ve actually talked to them. You’re matching those passions and interests with those dynamic offers. And then finally, as the fundraiser, you’re being held accountable to those goals, to those plans. You have someone that helps keep you focused, and you’re meeting with someone regularly that’s saying, “Richard, did you do what you said you were going to do last week? Do you need some help? What are we doing next week? What donors are you focusing on? How are we going to build that relationship? What’s the…?” You have someone with you, coming alongside you, helping you make sure that you’re staying accountable to that plan. So that’s the structure.

Richard Perry

Okay, so that’s the disciplined structure.

Jeff Schreifels

That’s what we call the Veritus Way.

Richard Perry

Now, now. So what are we actually seeing out there? I mean, what we see most of the time is, well, if Joe or Betty gave $5,000, just throw them on the caseload. And so that’s where it starts to go bad because Joe and Betty do not want to talk to you. In fact, two out of every three donors that meet the metric, in other words the level of giving, don’t want to talk to you. How many caseloads have we seen Jeff, over the years, where two thirds of the caseload are people that don’t want to talk to the major gift officer?

Jeff Schreifels

Almost every one of the caseloads that we look at are full of donors that really haven’t been qualified at all. And it’s getting worse. And you know why it’s getting worse? Because more and more organizations seem to be relying on wealth indicators or modeling, and they’re just throwing them into portfolios if they meet some kind of wealth indicator. So it’s not even… how it used to be Richard, was, you know, they made a qualifying gift at least, right? Whether it was $1,000, $5,000, $10,000… whatever your threshold was for major gifts, and then they throw those donors in a portfolio and say, “Okay, now go and build a relationship with them.” Well, that was already a problem, because we only knew from that approach that only a third of those donors wanted a relationship.

Richard Perry

So they’ve taken the human element out of the whole thing. Let’s just look at the numbers and the wealth indicators.

Jeff Schreifels

So now, it’s not being built on, you know, the behavior of the donor giving you the gift. It’s what the potential of a donor could be, even if they’ve only given a $25 gift. And so they see this potential, and instead of trying to qualify them to find out if this is actually true, they put them in a caseload. And, you know, they give a donor or a major gift officer, maybe 200 of these donors and say, “Okay, get the money. Go get the money.” That’s even worse than, you know, the one in three.

Richard Perry

The collateral damage of all of that is that the frontline fundraiser gets discouraged. I mean, why would you want to work in an environment where you’re basically failing two thirds of the time? I mean, this whole disciplined approach is such a big, big deal. I mean, it’s not surprising to you and me that non-profits in general are down -4%. In fact, it’s like, well, okay, well, you and I, and all of our people, we know the reason why they are. It’s not like donors don’t want to give.

Jeff Schreifels

Exactly. I mean, and you know, what’s going to happen is non-profit leaders are going to see that report, and managers are going to see that report, and say, “Well, you know, this is why everyone’s down. So at least, I don’t feel bad that we’re down because everyone else is down.” But that’s just not true. Because we know it’s not true, because our clients overall are up +20-some percent, 22 to 21. And the reason for that is because they do have that disciplined approach that we just talked about. So we know that if an organization has that disciplined approach to mid, major, and planned giving, and they’re building authentic relationships with donors, their revenue is going to keep increasing year-over-year.

Richard Perry

Well, it’s logical, Jeff, you and I both know, both from personal experience, as well as our professional experience at Veritus, that when you find a donor’s passions and interests, and you serve that passion and interest outrageously, and then you report back to the donor about the great difference that has been made… the satisfaction in the heart and the mind of the donor is so great, that they not only stay with you, but they give again. And if they’re able to, they give more. We’ve been doing this for so many years, it’s like a no brainer to us. I think the sad part to me, Jeff, is that the whole thing has kind of moved over into a money kind of situation versus actually satisfying the donor. And you and I, we’ve talked about this for years, when you’re going after that money, you dehumanize the whole process. You take the humanity out of it. And when you do that, there’s a strong sense on the part of the donor of “Oh, they actually don’t care about me, they just want my money.” Which then causes them to turn and leave. And that’s what’s going on.

Jeff Schreifels

I just hope that these non-profit leaders that see this report are not going to put more pressure on their fundraisers to just get the money than they ever have. That’s the fear, is that they could. We’ve seen that happen.

Richard Perry

Oh, yeah.

Jeff Schreifels

It’s like, you have a bad year, it’s like “We really have to bring it in. The board is expecting it. I’m expected… this is, you know, this is on me.” This is the CEO saying, “This is reflective of me… if we don’t keep bringing in the money.” The pressure all goes down to the frontline fundraiser. And so they’re sweating it out. They’re not being able to build those relationships. They’re trying to find anyone they can to… like, who could give that big gift? The fundraisers are going to be full of anxiety and stress, and that’s why they’re leaving in even greater amounts now.

Richard Perry

You know, what’s interesting about this whole dynamic, and it’s a different view of what I just said earlier is, you know what it feels like to be around a taker, you know, what you call a taker, someone that’s always taking, never giving? Right? They’re taking, taking, taking from you. It feels really bad. You and I know that. And so it’s changing that whole thing around to becoming a giver. Give the donor the pathway to actually express their passions and interests, and then prove that it actually happened. And it was a good experience.

Richard Perry

Well, here’s the question, what can leaders and managers actually do to turn this around? Let’s talk about that.

Jeff Schreifels

Well, honestly, it’s really to adopt, I would say, the Veritus Way of major gifts. Now, we don’t have to be the ones that help you do this.

Richard Perry

No.

Jeff Schreifels

But what we’re really saying is, you need that structure. You need that accountability. You need to start building authentic relationships with your donors. And that structure, by the way, gives you the time to do that. And that management and accountability piece is the thing that kind of binds it all, holds it all together. And so if you’re a manager or a leader, and you’re trying to figure out, “What are we going to do?” That’s what you need to do. Because that will help you focus on the relationships. And we know, Richard, because we’ve been doing this for decades – decades, yes – that when you build a relationship, the money will follow.

Richard Perry

Yep. It’s a result. The money is the result of all of that. It’s so interesting to me that the onus is really on the leaders and managers, not the frontline fundraiser, because if the leader and manager has a philosophy of getting the money, then obviously the frontline fundraiser has to switch more towards like, “Well, let’s ignore the relationship and try to get the money.” Whereas if the leader and manager goes to the whole idea of helping donors fulfill their passions and interests, then the accountability structure that’s set in and the expectation from the leader and manager is one of, “Hey Bill or Ann, frontline fundraiser, get to know these people; find out who they are and what the matches are between what they care about on the planet and what we’re doing. And then foster that relationship. And by the way, don’t forget to be very, very, quick to say how their gift made a difference along the way.” It changes the whole thing; it changes the whole thing. And so back to what we’re seeing with our clients, Jeff, I mean, it bears repeating again, like what specifically is that?

Jeff Schreifels

So our report that we just recently published, twenty-seven of our major gift clients, shows that they’re up overall +22%. Mid-level is up +7%, which is also a big number, because mid-level doesn’t usually have such a big lift. But +7% is really significant; on mid-level it is huge. But the other thing on mid-level is that we’re finding that 3% to 3.5% of those donors in mid-level are moving into major gifts. That’s a big deal. That’s a huge, significant increase over what we see from organizations that don’t have a mid-level program where they see .2% to 1.2% of donors moving up on their own. Huge, huge difference. That’s a big, big difference. And so that’s significant. You know, if I were a CEO, or a development manager, and I saw that revenue numbers increase, that would make me take notice, like, “What are they doing?” Right? But it’s crazy to me sometimes how they continue to make the same mistakes. And, you know, part of it, Richard, I think could be just the overall culture of the organization; one where they don’t have the patience to let you build relationships with donors. The pressure is so much on just getting the money, that leaders and managers are not allowing frontline fundraisers to take the time it takes to create those relationships that result in the revenue. That can take twelve to twenty-four months of building relationships.

Richard Perry

Isn’t that an interesting dynamic? Because, you and I would empathize with the leader and manager about getting the money bit because you’ve got to reach budget. So it’s sort of counterintuitive that you’re going to wait and, “We’re going to take our time.” But it’s true about any relationship. Any relationship, any personal relationship, takes an investment of time to actually have it turn into something that has some meaning and value.

Jeff Schreifels

Exactly. But here’s the thing. You’ve got to start at some point, right? If you start now, yes, it will take time to build those relationships. But if you have that ethos in your organization, that means that you’re going to see the fruits of that, while all the new people coming in will start to experience that and it will generate revenue year-over-year, you know, but you’ve got to start it. Otherwise, you’re never going to get there. It’s like, it’s kind of like what we talk about in planned giving, you know, a lot of leaders say, “Well, it takes ten to fifteen years to actually see the results of this.” Right, right. Okay, I get it. But if you don’t start it, you’re never gonna see it come. Once you do start it, then once that revenue starts coming in ten or fifteen years from now, every year, you’re going to see it afterwards.

Richard Perry

Yes. It’s about building a culture. I mean, you and I both know, like even at Veritus, in our company, we actually, you and I, have taken proactive steps to build a certain culture. It has a certain tone, it has a certain value system, right? It has certain objectives, and so on. And it takes time to do that. But it bears a certain fruit too. Same thing in a non-profit. So what we’re saying to leaders and managers is like, okay, adopt… and I like how you said that earlier. I mean, we call it the Veritus Way, but you don’t have to hire Veritus to do it. Just do it this way. Because it’s going to actually have an incredible result for you and your organization, and retaining employees.

Jeff Schreifels

Well thank you, Richard, for this great conversation. This has been fun. And I hope this has helped you better understand the report, some of the key insights, and what you can do with this information. Now, if you’d like to start learning about the opportunities your organization has for major gifts, obviously, we’d love to help you. The best first step is to complete our free Donor File Assessment. This assessment is unlike any other on the market. And we will give you valuable information that you can use to advocate for a new and improved major gift strategy.

Richard Perry

And it doesn’t cost anything. Not a penny.

Jeff Schreifels

You can find that on the link in the show notes. And you know, the other thing I’ll say is, we have a ton of white papers. Like we were saying, you don’t have to hire us to do this work. We want you to do it because we know this is the right way to honor donors. And we know it will show – over the years, you’ll be getting more revenue. We have white papers that take you through every step to this. If you want, grab one of our books, “It’s Not Just About the Money.” That is a step by step approach for how you do this work. Read that, and it will help you figure out what to do with your organization. Well, thank you. And we’ll see you next time.

Richard Perry

We’ll see you. Thank you.

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.