The State of Relational Fundraising: What We’re Seeing Across the Sector!

Jeff Schreifels

Throughout the year, we've talked a lot about the importance of relational fundraising. Whether you're in mid-level, major gifts, or planned giving, being relationship focused means that you are prioritizing the long-term relationship with the donor over just getting the money. It's been our goal at Veritus to insert this model within the non-profit sector so more organizations can create thriving gift programs and connect more strategically with their donors. It's a tough but ultimately rewarding transition that many are making. Today, my colleague Karen Kendrick is joining me to share the trends and insights we've learned this year, and the ones we're anticipating in 2025, about relational fundraising and how non-profits can adopt it. Thanks for listening.

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 Karen Kendrick, our Senior Director of Client Engagement, for a conversation about the state of relational fundraising and the trends we're seeing in the sector. Now, before we get started, I wanted to define what we mean by relational fundraising. Relational fundraising, or relationship-focused fundraising, is specific to the upper part of the donor pipeline, where you, as a fundraiser, are engaging directly with the donors. We consider this range to include mid-level, major gifts, and planned giving. Being relationship focused means you are prioritizing the long-term relationship with that donor over just getting the money.

Karen Kendrick

Thank you, Jeff. It's good to be here with you today. So there's so many things we could include in this conversation. Many organizations have recapped the trends and reports and have great things to say. So what we're going to do is focus on... that's why it's kind of nice, focus on that relational piece. That'll be our lens, so that will be looking at trends from the lens of the relationship. So Jeff, why don't you outline those main trends that we're going to discuss today, and let's dig in.

Jeff Schreifels

Alright. Well, there's five of them that we're going to focus on today. And the first one is, we believe there's a major lack of investment and understanding of what relationship-focused fundraising is all about. But we do see that there's a growing interest in it, and it will become more prevalent in 2025 and beyond. So this is going to be a continued trend of figuring out, what is this relationship fundraising all about. That's the first one.

Jeff Schreifels

The second one is developing strategic and impactful donor offers, because that will continue as a major need, and it relates to trend number one. If we're going to have relationship-focused fundraising, we are going to need specific donor offers that are going to inspire those donors and match that up with those donors' passions and interests.

Jeff Schreifels

Trend number three. So, in our analysis, we're seeing that value attrition continues to be a significant issue because it's covered up by sustaining donors, annual donors, who are giving the same amount every year. But those organizations also need to evaluate the percentage of donors who are giving the same year over year and focus attention on increasing their engagement with those donors.

Jeff Schreifels

Now, trend number four is that organizations will continue to need to understand the right use for AI in their work, so we'll talk about that.

Jeff Schreifels

And then trend number five. Across the sector, we need to be thinking about our mission as a four-legged table: Program and those we serve, the internal team, staff, volunteers, and board, donors, and the larger community that we want to collaborate with. Which is really, you know, that part is really born from the community-based center, community centric, community-based fundraising that we've been looking at and working with and really trying to understand and help our clients see and grow it.

Karen Kendrick

I love that! How to be in relationship with all those different legs of the table. So there's a lot there. So let's start with the first trend, Jeff. What are we seeing across the sector, and expect to continue to see as a major focus moving into 2025.

Jeff Schreifels

Alright, so relationship-based fundraising really being focused there. So what we're seeing when we're looking at donor files, is that many orgs don't even have a mid-level donor program. And so we often see these clogs in the pipeline, where you can tell that donors who are giving significant amounts are... they're not moving up through that pipeline. And the reason for that is they're being treated like a $10, $25 donor. They're getting a lot of direct response fundraising, and it's working, but it's only working to a point. It's not engaging them in that level and building that relationship and helping them understand that they're real partners.

Karen Kendrick

You know, Jeff, I'll just jump in. I've been looking at assessments. What I see, a lot of organizations, the 1000 to 5999, or 4999, is where the clog happens. And it's like, they will have over 1000 donors and then go down to like 70 at the next level of giving. So, yeah, so it's like all these folks are giving that's significant, and then what's happening when they're not moving through the pipeline? Those that are interested in giving more and being more a part.

Jeff Schreifels

That's right. And so organizations look at this mid-level area, and many are not investing in people to help them, you know, like a mid-level officer to start connecting with these donors, because they're thinking is, "Well, you know, this is great ROI for us. We're spending just on direct response fundraising, and we're getting, you know, pretty significant gifts. And you know, that's working well for us. So if we hire people, that's going to cost more, and we have to deal with that." Yes. But then they're also the same people who are saying, "We need more major donors." Well, those donors are in your donor file, but you're not connecting with them, and that's where mid-level can really change the game for you, as far as moving those donors through the pipeline and unclogging those clogs that we see.

Karen Kendrick

Yeah, because even though they're not moving up, they're not moving up, and many of them are going away and giving less. That's that donor value attrition. Because they're not being managed. And so there's like millions of dollars just sliding out the back door because we're not in relationship with them.

Jeff Schreifels

And it's not just small organizations that don't have mid-level programs. I was just at a conference with very large organizations, and I did a whole session on mid-level, and they're not... there's a lot of organizations that really don't have it figured out. They know they need to do something, but they haven't really done it. And it was amazing to me, because I thought, "Well, these organizations will be... they're well resourced," you know, "They know they have the money to invest in it." But no one's actually started to figure that out yet. And I was surprised, but there is a hunger for it. That's why... it was the last session of the day, Karen, and I thought, "Oh, no one's going to show up for this." But it was packed. So there is a hunger for this. It's just that they haven't yet pulled the trigger on it. Doing it.

Karen Kendrick

Like you said, I think organizations that have membership programs, event-based, they're seeing the trend that that more transactional fundraising approach, it's been great. It's a great tool to get donors in the door. It's a great part of the pipeline, but it's diminishing. And so what can they do to really build something that's going to be successful into the future, and the mid-level is an important part of that pipeline.

Jeff Schreifels

Exactly.

Karen Kendrick

All right, so there's a strong desire for authentic human connection, love that. So one other piece is how to be relationship focused and to really tune into donors, learn their passions and interests, you know, start to really build those partnerships. And I think donors have a desire to have that authentic connection with organizations, but they, many of them, have never, ever had it, and don't even know it's a possibility. So when we have mid-level officers, major gift officers, reaching out and really listening, finding out who people are, where their hearts are, donors, many times, respond with such gratitude, like, "Wow, that is the best conversation I ever had with an organization." Because before, it's all just been transactional, right? "It's time of year for your gift. Would you like to give again?" So that they understand that there's really more to this. We want to be in an authentic partnership. So a big part of our ability to connect with donors is to learn and listen to their interest and passions. So let's talk about that next trend, Jeff.

Jeff Schreifels

Yeah, so learning that donor's passions and interests. Yes, that's one big part of your job as a frontline fundraiser. But then the other side of it is having strong donor offers, or understanding everything you're doing and understanding what that costs so that you can inspire donors with and bring it together. And oftentimes, organizations are focused on, okay, yes, get to know the donor. That's great. But then they fall short with the offer side. And they expect the fundraiser to inspire that donor with just a general operating fund kind of offer.

Jeff Schreifels

And I'll tell you, donors that want to make six, seven, eight figure gifts are not going to be satisfied with just saying, general operations. They have passions and interests very specific that are related to all the things that you do. Your job is to figure that out and then bring those specific offers to them. And so what we're finding is, I would say, in the last couple of years, Karen, almost every organization that we start to work with also wants to figure out their donor offer thing, because they realize the only way we're going to move a donor up in their giving is by having something specific that they are actually passionate about. And you know, they might have a donor that is always giving $10,000 a year because they love the overall organization. But there are aspects within your organization that they really, really love. We need to bring those kinds of offers to them. And what we've seen is, when you do, their giving goes way up.

Karen Kendrick

You don't want donors coming up with programs that they're passionate about, right? Which has happened in the past. "Oh, I'll give you a million dollars if you know..." And that's not really what you should be doing. What we want to do is, "This is our mission. This is what we're... this is what we need to be doing. This is what we're learning is most important and valued from those we serve. And how do we plug you in to really grow that program?"

Jeff Schreifels

That's right. And, you know, we've also been seeing some other interesting trends come out of our free donor file assessments. Karen, why don't you talk about that?

Karen Kendrick

Yeah, so, you know, it's interesting. So donor value attrition is that revenue that's sliding out the back door. You did all this work to get donors in the family. And basically, you never have them over for Thanksgiving. You never talk to them. And after a while they're like, "I think I'll go somewhere else," or "I'm not really engaged to continue to give," and so you have to keep working really hard to get new donors in the door to make up that difference.

Karen Kendrick

So many times, we don't see that that's happening because new donors are giving to us. We reached our goal. Every year, we're doing better, 10% increase, and we're not noticing that that's happening. So imagine you could have all that increase, plus, you know, another... A number of organizations, I've looked at their assessments, it's millions that just went out the back door. So that's one trend.

Karen Kendrick

The other one is that organizations that have some sort of affinity group, sort of clubs, sort of membership level, donors come in, and it's amazing. Their value attrition is not bad, because donors are giving $10,000 every year, or $5,000 every year, or $1,000 every year for 5-10 years, and it's sustaining, and it's exciting, but yet there's so much lost opportunity, right? Because you haven't sat down and said, "Wow, you have been doing this $10,000 for five years. Why are you still here? What's your passion? What's been exciting to you? What's meaningful? And then you know, asking, "Would you be interested in being connected in other ways and contributing to other programs?" And there's so much opportunity for donors who would love and get joy out of giving more than that certain amount every year.

Jeff Schreifels

I would even go further, Karen, and say that organizations... if you have these kinds of donors that are giving the same every year, we have an obligation to reach out to them and really start to understand who they are. Because obviously, they're very loyal. There's something about your organization and what you do that they're willing to give every year and significant amounts. But they could, they might possibly want to do way more. They just are not asked.

Jeff Schreifels

And as an organization, we have this mindset of, "Well, they're, we don't want to upset the apple cart. We don't want to, you know, if we start talking about what they're giving, then all of a sudden they'll want to leave, or something." That's our fear about these donors. And so it's like, set it and forget it kind of thing. I believe if we really want to help donors give to their heart's content, we have an obligation as an organization to start talking to those people, and that's where we need to start challenging them to give more. Because our goal is to help donors find joy in their giving and they're going to do that through your mission. And so give them that opportunity.

Karen Kendrick

Yeah, it's like, I think about how all the work and focus gets too on the affinity group or the membership program or the sweatshirts they get. Like all the work is headed toward this thing versus the human interaction. And so donors don't go away. If you ask them questions about what they care about and see if they want to give more, actually, they'll get more engaged and more excited. And then you'll get clear who, what, who's happy in this lane, and then who wants to be in a different lane, and then I can focus really on building out those individual plans and goals and really understanding who they are. And that's really meeting donors where they are in relationship.

Karen Kendrick

So diversifying that pipeline build, and that happens through relationships, through understanding where people want to be on that pipeline. Do their passions align, and what opportunities are there to plug them in in new ways?

Karen Kendrick

So let's see, a couple other trends we see in our assessments, is that organizations can set the bar too high for major gifts.

Jeff Schreifels

Yeah.

Karen Kendrick

Look at all of your donors, let's say giving $500 and above in the last four years, and you look at like, how many of them gave over $10,000? Sometimes it can be like 50 donors. Well, if only one in three really wants a relationship to be qualified for major gifts, that doesn't really, for 150 on a caseload, that's not really enough for even one major gift officer. So you want to look at your list and see where do the numbers fall in giving? And think about, you know, how many staff do we really want to have to really, to have mid-level and major gifts and have that pipeline happening?

Karen Kendrick

One thing that's exciting to me also, like we mentioned earlier, that organizations have been traditionally more transactional, and that's not saying that that's a bad thing, because having events, having membership programs, having runs, having workplace giving, all those things. They're great. People enjoy them. They're connecting the community. They're building, but they're more transactional. They're more a moment in time, that they're realizing those trends of giving are going down. And so I'm seeing some amazing leaders stepping in, like we just had a meeting yesterday with three United Way leaders from large and small ones who are stepping in and saying, "We have to have, we have to work collaboratively across our organization, with all our different... we cannot work in silos. We're going to have a new CRM. We can all, all really build relationships, and all be tracking for donors to move up the pipeline. We need to have part of our expectations that not only you reach your own goal, but you help your colleagues reach their goals. Let's be a community who are saying, you know, we must build out relational fundraising, we must invest in it, and because it's our long-term, for us, our sustainability, for us to be here in the future, this is what we have to do."

Karen Kendrick

So that's exciting, those leaders who are ripping off the band aid and saying, "This is our program. If you don't like it, this is not the place for you. And really moving into that new way of being in relationship and making sure there's staff, like you said, those four legs of the table, the team members are not being paid pennies, right? The staff, you know, the board is not running the whole show, but they are part as partners. We've got people we're serving and working with and program who are feeding in with their wisdom and guidance and the greater community. How do we work more in collaboration to really find solutions? So it's exciting to see the amazing leaders out there doing that.

Karen Kendrick

So our next trend is something on everyone's mind these days, and we've had some interesting conversations about it. AI! It can be used in an interesting way, and it can also maybe probably be problematic. So Jeff, neither of us are experts in this, but we have been talking to folks, and what do we know?

Jeff Schreifels

Well, you know, recently, I was talking to some of my direct response friends and agencies, and there's now an agency out there that is using AI as major gift officers. So and that's troubling to me, replacing a human being with AI. Someone could go on on a website and have a conversation, asking questions about the organization, and that person is acting as a person, even talking to them over the phone, using AI as a major gift officer. That, to me, is problematic. However, on the other side, AI could be, it really could be a great tool, especially for fundraisers who are doing research on donors, instead of having to Google all kinds of stuff. Being able to use AI to get a deeper dive into who your donors are. We've already seen, and I've used it myself, I've seen how it can really be a great tool for that.

Jeff Schreifels

It also can be a great tool, depending on how well you prompt AI, on how to develop, it could be a phone script or an email that you could create, a template, or even proposals around a dynamic offer that you have. AI is really good at developing those now. Again, it really depends on the prompts that you're giving. And what I found is the more you use AI and it starts to get to know you and know where you're going, it actually gets better and better. But those are some areas that fundraisers who are bogged down and trying to create, you know, big proposals and everything, can use AI to help them kind of set the baseline proposal and then start editing from there.

Jeff Schreifels

So I really look at AI as a real enhancement and help; it can help us to know our donors better, how to talk to them better. But it doesn't take the place of that connection that you need, because I really believe if you're going to ask a donor for a significant gift, they want to see you. They want to be able to know that they can trust someone behind that offer. And so that connection is key, because you're building that trust, and that's what donors need to be able to do that. So I think AI can be a really good tool for that relationship fundraiser to help enhance what they're doing. It could you know also help you develop your strategic plan for your donor for the year, for all your donors. Again, it depends on the prompts that you're putting in, but if you see that as an overwhelming task, if you're putting in your prompts correctly, especially for that first time, you can create a 12-month strategic plan for your donors and tier them and all of those using AI. So again, that's a tool to help you be more efficient. But in the end, what it's doing is giving you the time to build those relationships. And so that's I think the benefit of AI in all of this, for the relationship-focused fundraiser.

Jeff Schreifels

Now, what -

Karen Kendrick

So it's here.

Jeff Schreifels

It's here, yeah, but it's only going to get better and better. So I really encourage everyone to start using it and testing it and figuring out how it best works for you and makes you more efficient. That's really the bottom line.

Karen Kendrick

Oh, and be cautious about donor information.

Karen Kendrick

Yeah, absolutely. Yes.

Karen Kendrick

Pulling information that's public, yes, but not... be very, very, very cautious about any of that.

Jeff Schreifels

Good point. Now our last trend is one that's been on our minds a lot this year, and it's about thinking differently about your mission. So my gosh, Karen, I feel like most organizations think about their mission as the program side, what they do, you know, what they're doing out in the world, and everything's about the program. And then everything around it is just to support this thing. But I think we need to think much bigger. And we were talking about looking at the mission as your table. You know, this is, you know, this is what the mission really is. It's, it is about program, but it's also about the people that are actually carrying out that mission, whether it's your staff, volunteers, the board. And it's also about the donors who are funding this mission. They're part of the mission. And it's about the larger community that's collaborating with you in that mission. Those four legs are all part of this.

Jeff Schreifels

And I feel like most non-profits don't understand that. And so, as we said before, they treat their people terribly. You know, they're trying to get as many hours out of them as they can. That's why you see all this burnout in the non-profit sector, both in the fundraising side and program side, people are not getting paid well. For some reason we think, "Well, because they're a non-profit, these people shouldn't be paid well." That's not really looking at your people as part of your mission.

Jeff Schreifels

And then obviously we look at donors. How do we treat donors? And you know, do you treat them like an ATM machine? Do you see them as a means to an end only, or do you actually see them as partners and people that you're trying to help find joy in their giving?

Jeff Schreifels

And then you look at the community, those that are collaborating with you in your mission, those who are affected, those who are recipients of... how do you view all of that? Are they partners in this? Do they have a seat at the table? Our community-based fundraising friends have really challenged us all to think about that in a new way, and we haven't done a great job at that. But how different would our organizations be if we could view our mission holistically like that? We would treat our donors well. We would report on impact. We thank them well, you know, serve them well and see them as real partners in everything that we're doing.

Karen Kendrick

Yeah. So interesting, community-centric fundraising has helped me think about, how have I not seen how in our sector, we do harm in the name of doing good? Doing harm might be to treat those we serve as less than. That we're here to save, as saviorism. It might be, like you just said, with staff, it might be giving donors too much power, or treating them like ATM machines, and it's so interesting. And then the community may be something like, am I collaborating to solve a problem, or am I a big non-profit taking all the funding? And there's smaller local non-profits who are run by those we're serving, that population, and they're not getting the funding, because we're getting it all. Like, are we thinking about the bigger community in working together to solve the problem?

Karen Kendrick

So, you know, we start, we work in a charity. We're there because we want to do good, and so it's important to step back a minute and say, it has to be, we all are human. How do we treat each other in a human, in a way that's human and partnership and connecting and honoring and respecting? And it's not easy. No, it's not easy to do all that, right? And so I, you know, I love that what we've been learning and thinking about a little differently, in how we do our work.

Jeff Schreifels

Karen, thank you so much for joining me today. And I hope each of you listening were inspired by some of the trends and opportunities we discussed today. If you'd like to learn more about how to strengthen your relationship fundraising efforts, I highly recommend that you apply for a free donor file assessment. In this assessment, we're going to be able to figure out what your donor value attrition rates are that Karen talked about earlier. We're going to talk about your pipeline; are there clogs in that pipeline? And we're going to be able to give you a revenue forecast over the next five years to show you what is possible if you put it all together and you have that structured, disciplined fundraising, relationship-fundraising program, and where you could be in the next five years. It's amazing. And every time we've done one of those assessments, those organizations are literally blown away by what we have been able to find in their data. So I highly recommend that you do that. So thanks for joining us today, 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.com Please join us again next time.