Jeff Schreifels
Welcome everyone. Thanks for joining me. Today, we're going to talk about how your development team should be structured properly. And I see so many organizations that for one reason or another, their development department is not aligned properly to the donor pipeline. In short, it's a mess. And I can think of no better person to help us understand what is going on and how to fix it, than my friend, former business partner and founder of Veritus Group, Richard Perry.

Richard has over 45 years of non-profit experience from leading his own development team for a large international relief and development organization to owning multiple fundraising agencies. And today, he's the founder of a new company called Giving Pathways, which is all about helping non-profits align the structure of their development team with the donor pipeline.

So let's bring Richard in as it's time for some real talk.

Hey Richard, so glad to have you on. ⁓ This is like old times. I love it. Just about every week, yeah. All right, I already told our audience what we're gonna be talking about today and about Giving Pathways, but I want to first go back and get more history.

Richard Perry
Hey, how you doing?

It is. I mean, we used to do this, what, every week or every other week?

Jeff Schreifels
I want you to tell the origin story about Veritus and then why you thought it was important at that time and what the vision was for Veritus when you first thought of it.

Richard Perry
Well, I mean, you and I have been together since the mid 90s, right? Doing all kinds of work. ⁓ And that work was done at the Domain Group, which is a direct marketing firm. And we served all kinds of non-profits, but doing basically the front end of the pipeline acquisition cultivation. And we did it with a lot of organizations in US, Canada, Europe, head offices in all those places.

But that was a direct marketing agency. And what I realized about that was that mid, major, and planned giving is the highest net revenue generator of a non-profit. And I'm not sure everybody knows that, like, really in terms of their planning. And then what I realized is like, we're doing the front end acquisition and cultivation, but there's not much help out in the marketplace, or at least at that time, not much help in the mid-major and planned giving. And it's not understood.

And so that's why I started it and brought you... I started in 2005 and then brought you in in 2009. And you were the guy that was instrumental in helping brand it, the Veritus Group. And then we went on from there. And what we've seen, and what you're now seeing as you continue the work of Veritus Group, is that it indeed is a very, very needed area.

So bottom line, mid-major and planned is the major revenue generator of a non-profit. It was underserved and we needed to fill in that gap. So that was the rationale.

Jeff Schreifels
Yeah. And it started just the two of us. And then, you know, when we rebranded it Veritus and it just grown and now we're all over the place. We're in Europe and, with the Veritus Group Academy, we're training up thousands of people around the world. So amazing how you had this thought about, God, this is really underserved.

Richard Perry
It is.

Jeff Schreifels
This area is underserved. We need to do something. And you had all this experience as the head of the development for the International Relief and Development organization you worked with. So you put that together and really took that discipline of direct response and created what we can now call the Veritus Way. And it's just been amazing what's happened.

Richard Perry
Well, and the most satisfying thing, Jeff, and you continue to be satisfied with it because you're kind of in the trench and leading the whole thing, but it's like there's way more net revenue for really good causes all around the world because of the work that you're doing and that the two of us did when I was there. I mean, it's just like, that's the most satisfying thing to see that happen.

Jeff Schreifels
Yeah. Okay, so now you've started a new company. You're 77. So why did you feel you needed to launch Giving Pathways? And in other words, why did you feel this was needed in the non-profit space?

Richard Perry
Well, it's interesting, Jeff. First of all, I'm a restless guy, and I don't think I'm ever going to stop. ⁓ And one of my life philosophies is to always have purpose, and it's like, so I just needed to keep going. Plus, here's what the Veritus journey taught me. It taught me three things.

The first thing was there's not a solid understanding of how the pipeline works, and that it fuels mid, major, and planned giving area. Now, people listening right now might say, wow, that's not true, Richard. I mean, we do all understand it. Well, it doesn't work itself out in terms of investments and structure and all that other stuff.

The second thing is that I realized that donors need to be considered by non-profits and the leadership and the staff as partners versus sources of cash. And we've talked about that and that's one of our mantras in Veritus.

And then the third thing was that this philosophy, there's a different philosophy that needs to be embedded in every non-profit. And it's basically the philosophy that there are two objectives of a non-profit:

1. To address societal need.
2. To fulfill the passions and interests of donors, institutional and individual donors, who have joined them to meet that societal need.

And what I've discovered is that unless that philosophy is actually in place, the giving pathways for donors will be broken and then you're in trouble financially.

Jeff Schreifels
Yeah.

Richard Perry
And how many of those donor file analysis do you think that Veritus has done over the years? I mean, it's thousands.

Jeff Schreifels
I think so, yeah.

Richard Perry
And what do we see all the time?

Jeff Schreifels
All the time. There's always, well, there's high donor and donor value attrition. That's huge. So donors either stop giving or they give less year over year. We see a lot of clogs in that pipeline. You know, like different areas, usually around that mid-level area, all of a sudden you'll just see the number of donors and the value just go way down. And you'll see trickles going into the major gift area.

Richard Perry
Yeah. I know. I remember that one file where we had, it was like 157,000 donors way up at the top at the $25 range. And the mid and major area was starved to death. Now, I would venture to say that those good people would say, well, yeah, they understand the donor pipeline. No, you don't. No, you don't. Not if that's what's going on. Way too much investment and effort up in acquisition.

Jeff Schreifels
Yeah. Well, why do you think most non-profit development teams are not organized or structured properly?

Richard Perry
I honestly think it's because they approach the vetting and staffing of talent for development and for marketing and communications in a very kind of vertical way. In other words, well, we got to hire a donor acquisition manager. We got to hire a cultivation manager. We got to hire an events manager. We got to hire a major gift person.

And by the way, separate from that, we're going to hire a planned giving person. And then separate from all of that, we're going to hire a marketing and communications person. And usually those people aren't really fundraisers. They're more general brand enhancement promotion people.

Vertical, a vertical philosophy of staffing versus the way the donor pipeline works is horizontal — that there's a donor that comes in and journeys with you. And so the organization structure doesn't match with the reality of the pipeline. I mean, that's essentially what's going on.

Jeff Schreifels
Yeah. So I also see this a lot and I know you do too, but a lot of times organizations grow up and they give responsibility to people because they're really good at this. And so then they give them something else and then they keep, and all of a sudden their territory of the development team is huge.

And they might not, it doesn't make sense. You'll see the head of direct response also in charge of major gifts. Yeah, but because they've like, this person was good at this, let's give them this responsibility. So they organize the structure around personalities versus the way it should flow efficiently.

Richard Perry
Yes, which doesn't make sense. Yeah, every time, I mean, I would say that if every time you were going to hire somebody, you zero-base the thing and go back to the pipeline and say, and actually look at the data, I mean, if you were just to look at the pipeline analysis that Veritus does, and you were to say, here's where we're missing it, and by the way, this section here in the middle is where all the net revenue comes from...

Jeff Schreifels
Yeah.

Richard Perry
...then you make your hiring decision and placement decision and your organizational decision.

Jeff Schreifels
But no one does that.

Richard Perry
They don't. Like you say, it's oftentimes a very emotional decision, very subjective, and it's personality driven. And we've seen that happen so many times. And actually, the budgets are decided by personalities and subjectivity versus the performance of the pipeline. It's a major problem. It really is.

Jeff Schreifels
I mean, I've seen you when you do your whole overall analysis of an organization and you look at the structure and then you realize, oh, Rachel over here has been in this position for 20 years and she's completely the wrong person for this. And somehow though, you got to convey to the leadership, hey, this is not working, but we also have to work with Rachel and figure out what her thing is so that we can make this flow right, make this department the way it should be.

And so you often have to play counselor and all kinds of things to make that work. It's not easy.

Richard Perry
It is. And one thing that I do have, and you know this about me, is it's like people that are in the wrong place are not bad people. They've just gotten into the wrong place. And oftentimes there's not somebody that sponsors them to the right place. And you know that one of my central motivations with people is to help them be in the right place.

And so in the case of Rachel, let's just not approach this and say, well, let's just get rid of her. No, let's find the right place for her. And then let's do the right thing by the organization. There's two things we got to do, not just the organizational thing. Very important.

Jeff Schreifels
Yeah. So this dysfunction on the development team that's not organized or structured properly, how does that actually affect the donor pipeline or the donor journey? How do you see that affecting it?

Richard Perry
Well, first of all, like you said earlier, there's high donor and value attrition. And so that means donors are going away in record numbers. And then the value attrition is that thing that we've always talked about is that hidden leak in the tub where you've just got money flowing out of the organization.

And some of the amounts of money we've seen, Jeff, over the years, I mean, in the hundreds of millions of dollars, it's just mind blowing. That's the big one. But then the other one that is so interesting to me is that there's poor and wrong budget investments.

When you take the fundraising budget, or the communications budget, or the MARCOM budget, in other words, the whole thing, and the investments in acquisition versus mid or major versus planned versus cultivation are not consistent with the state of the donor pipeline, which means it doesn't operate.

It's sort of like investing in — you're taking your car in for service and you invest in one section of it, the electronics, when in fact the whole gear thing is all messed up. It's like, how's the car going to run? It's not. But boy, you just got to get those electronics like buffered up and you miss it. And that's what happens.

There's a lot of wasted budget on non-value added strategies like events, auctions, raffles, non-cause oriented activities, which as you and I know, brings in low value donors, if they bring in donors at all. Departments are competing with each other. You've seen that. There's low tenure of employees, huge turnover. The brand promotion is way off. So those are some of the things that I look for and I find are symptomatic of the giving pathways being broken.

Jeff Schreifels
Well, OK, so you identify what's broken. And then your job is to go in and really set them up correctly at the best structure. Why don't you outline what that structure would look like? What's the best structure for optimal efficiency and success for development teams?

Richard Perry
Well, I go beyond the development team because the development team resides in the organization. And so I'm looking at the whole thing and basically trying to mirror the pipeline horizontally versus vertically, make sure it's horizontally integrated.

And in development, that there's one manager managing that whole function, which is a very controversial thing because sometimes you've got situations where you want the acquisition and cultivation manager, and then the major gift manager, and they're all peers, and then the marketing communications manager all reporting up into the CEO, the operational, or the COO. And that's just asking for trouble because the whole thing is not integrated.

But then even beyond that is basically making sure that the organization itself is oriented to donors. So it's back to those two objectives: meeting societal needs and making sure that the whole organization, the finance people, the HR people, the operations people, the program people, are all serving the needs of the donor as well as meeting the societal need.

There's a lot of problems in that area outside of the development area because there's a lack of understanding of how that need needs to be met.

So for instance, in program, if you don't have an understanding in the program area, then you're not supplying impact reports and you-made-a-difference reports and all that kind of stuff, which then makes the donor say, well, I'm not making a difference. Bye bye. So it's that whole thing, mirroring the pipeline and then putting in place a philosophy, culture of philanthropy.

Jeff Schreifels
Right. So when you're going into those organizations and they want to do the right thing, but when you actually have to implement a new structure for them, how easy has it been for them to adopt it? In other words, they have to go through kind of change and how easy do you see organizations do that?

Richard Perry
It's mixed, Jeff. It's really mixed. Because it always depends on the leader. You and I, I mean, we've been together for so many years that we know that when something needs to change, we do it with compassion, we do it with care, but we make sure that we get to the change that needs to happen. Not all leadership is prepared to do that.

So I find that there's difficulty in making those changes. Then there's always the situation where there's compromise that happens where it's like, well, I don't really need to make that change. Maybe I'll do this for Susie or Bill. And then you pay for it six months later.

So it turns into like a walking with the client, being empathetic, which is very important, not judgmental, helping, because it is difficult to make these changes because it involves precious human beings who we care about. And so you've got to change things and it's difficult.

Jeff Schreifels
Well, speaking of leadership, so if you're sitting with a young executive director and they're looking for advice on what could help them be more successful, what advice would you give them?

Richard Perry
Well, I start off by going into a fairly long monologue and then interaction on adopting the two objectives philosophy. Remember that your objective is to meet a societal need. That's why you're joining this organization. That's what it is. Keep that in mind. That's very central.

The next thing is you've got to fulfill the passion and interest of the donors, institutional and individual donors, that help you do that. And then I usually talk about how commercial companies do that, the successful commercial companies.

I mean, like if Apple didn't give a rip about its customers, and the iPhone users, the Mac users, or if an airline didn't care, or whatever. I mean, the customer is central to the whole operation.

The donor is central to the whole. And I find that if they can get them to understand that and get it in their heart and in their spirit, it's a good thing.

Second thing is in everything you do, mirror the pipeline. All the way from program through operations and development. The whole thing. And then we go through all the strategies and tactics to how to do that. And then invest properly in acquisition, cultivation, in other words, do your pipeline analysis and say, well, I'm weak in this area. I've got to invest here or I've got an outflow of people leaving the organization that's greater than the inflow of acquisition. We've got to correct that.

And it's through the whole thing: value the donors. Those are my four points. Now they're very complex and very difficult to manage, which is why I like to stay with a client and help them manage all of that through the thing.

You can email me at richard@givingpathways.com. Richard@givingpathways.com and I'd be glad to talk to you about that.

Jeff Schreifels
That's awesome. So you're still having fun at 77.

Richard Perry
It is. I'm going to keep going.

Jeff Schreifels
I know you're going to be doing this to like 90. I'll get a call. Richard was at a client and he keeled over. He was 95.

Richard Perry
Yeah, it's gonna be good. It's good. Well, there's so much good to do and as you and I have shared over the years, Jeff, the thing that gets us up in the morning is not only the professional thing, but I think the central thing is helping good causes do even more and have more resource to do good on the planet. That's the central thing. And maybe there's nothing better for me anyways, and you, I think, than to have that feeling when we get up in the morning.

Jeff Schreifels

Yeah. No, there's nothing. Exactly. Well, thanks for joining me today. This was fun. We'll do it. We have to do this again because I miss our almost weekly old podcast. And we'll just keep it going.

All right. Well, thanks, everyone, for joining us. Please get your structure right because everything, if you don't have that right, everything else is a mess as well. So you get that right, your people will be right, your donors will be served. It makes for a much better organization. So thank you for joining us and we'll see you next time.

Richard Perry
Great, thank you, Jeff.

Jeff Schreifels
Everything else is a mess as well. So you get that right, your people will be right, your donors will be served. It makes for a much better organization. So thank you for joining us and we'll see you next time.