It used to be that all the average charity would have to do was simply ask and the donor would simply give, no questions asked, whether they be in the donor’s mind or in actuality.
All of that has changed, but this change has not dawned on many non-profits or major gift fundraisers. And this can be a major block to success for an MGO.
I’ve been reading some work on the subject of skepticism and advertising. A recent blog post from the magazine, The Economist (Schumpeter – “We Want to be Your Friend”), lays out a pretty realistic picture on how more and more consumers (read donors) are just not believing the same old stuff from the past. Let me share a few highlights from that post and then relate them to major gift fundraising:
- Advertisers are confronting a proliferation of new “channels” through which to pump their messages.
- Consumers are bombarded with brands wherever they look. The average Westerner sees a logo (sometimes the same one repeatedly) perhaps 3,000 times each day, and thus is becoming jaded.
- Consumers are increasingly familiar with the tricks of the marketing trade (read fundraising) and determined to cut through the clutter to get a bargain (read understanding if their giving is making a difference).
- Respect for traditional voices of authority — from priests to political leaders — has eroded.
- Faith in brands (read non-profits) has also eroded. Havas Media, a big marketing agency, says trust in brands has been declining for three decades. Last August it published the latest in a series of worldwide surveys in which 134,000 consumers in 23 countries were asked what they thought of 700 brands. A majority of those taking part would not care if 73% of them just vanished. In Europe and America 92% would not be missed.
The blog writer goes on to say that advertisers are combating this growing skepticism with a number of different strategies:
- An ad for FirstBank of Colorado, showed a new leather sofa and television in the middle of a square, with a large sign saying “Free.” People strolled by, ignoring the bounty. A voice-over asked, “What if ‘free’ really just meant ‘free’?”
- A second method is to drown the skepticism with humor: a depressing number of brands nowadays rely on chirpy talking animals.
- A third is to disarm it with honesty. In 2009 Dominos launched a campaign featuring consumers talking about how awful its pizzas had been for the past 50 years.
- Then there is do-goodery: innumerable brands argue that the best way to save the planet or help the poor is to buy their products.
- The holy grail of advertising is to make friends with the consumer. Companies used to do everything possible to convey authority and reliability. Now they are more interested in conveying chumminess.
Then there is the case of Charity:Water, the organization that guarantees donors that 100% of each donation goes straight to program and none of it is spent on overhead. They call this the “100% model,” basking in the belief that there is virtue in not paying for overhead.
Simon Scriver writes about this in his blog: “…the 100% Model is damaging to nearly every other charity because it gives the public unrealistic expectations. It implies that ‘100% to the field’ is desirable, truthful and even possible. It’s not.” You can read more of Scriver’s comments here: Why I Don’t Donate to Charity:Water.
The Charity:Water 100% Model is just one more gimmick that will cause donors to wonder what is really real. And I agree with Simon’s assertion that it hurts the non-profit community.
Here’s how all of this applies to your work in major gift fundraising:
- Like commercial advertising, fundraising faces a growing amount of skepticism about how the money is used and has donors asking “does my giving really make a difference?” Donors are wondering if the asks, offers and proposals are really true. They are wondering about all the strategies, messaging and promotional packaging – not in technical terms, but are they really real? And, yes, they are wondering about overhead as well. They know it’s needed, but how much is OK? (That’s another whole blog for me to write about.)
- More and more donors want to be involved in guiding how the non-profit actually operates, a trend that is frustrating to many non-profit managers who want donors to stay out of their business.
Here is what you can do about these real-life situations in fundraising and find ways to navigate these waters with your major donors:
- Jeff and I have consistently said, “Tell the truth!” Now, just these three simple words might imply that we believe non-profits are not telling the truth. No, we do not believe that. Most do tell the truth, but we can always do better. We can do better at spelling out what we are going to do with the donor’s money. We can do better at telling the donor specifically what we did with the money. And, we can do better at proving that the donor’s gift actually made a difference. Also, to comment on the “100% model,” I do not think there is either virtue or honesty in selling a donor a “no overhead” donation approach. It is just another gimmick.
- Make it a habit to be authentic in all of your communication. This could be a sub-set of telling the truth, but I choose to list it separately because this encompasses dealing with problems, complaints and “situations” in a disclosing and open manner. I have been a part of too many meetings where “insiders” were trying to construct a narrative for a donor about what happened in a given situation. Instead of just telling it like it is, a lot of time was spent constructing a story. One meeting I sat in on illustrates this point well. A donor had given $2 million for a project that was not managed well and did not work. Instead of just simply coming out and saying, “It didn’t work, we screwed up,” the room was filled with a plethora of mirrors and smoke so suffocating I almost had to leave. I finally said, “Why don’t you just tell them what happened? Tell them the unvarnished, unedited story and be done with it.” And they did and the donor appreciated the fresh honest approach.
- Avoid and ignore the voices that say that taking the donor to the need, i.e., the use of emotions in words and pictures, is wrong. We have written about this extensively. When the need is so compelling there is no better way to communicate – no more motivating way – than to just tell it like it is. But there are folks who would want you to tone it down, soften it up and package it “nicely.” I think that approach is gimmicky. Just tell it like it is and allow the donors to experience the situation as if they were actually there. I have a very deep conviction on this point, born from personal experience. I have taken scores of donors to the “scene” where they personally interact with a starving child, a women who has been abused, a father whose son has taken his life in a drug overdose, a homeless person who has wandered for years without a place of his own, a refugee who has escaped a horrible situation, an animal that has been mistreated, a forest that has been brutally decimated. I have watched the donor’s reaction. You cannot be human and not feel it. And that’s why Jeff and I counsel you, again and again, not to sugar-coat need. Just tell it like it is.
- Let donors be involved. I know it’s hard to do, but let them sit at the table. They will contribute a great deal and, yes, you can say “no” to them and re-direct their ideas.
I believe that if you continue to do these four things: telling the truth, remaining authentic, telling it like it is and allowing the donor be involved, you will continue to provide your good donors with an experience that is real, honest, open and authentic – the very things that are the only means to combating skepticism.
Guys, you’ve missed half the argument! They have a 100% fund AND an operations fund. Simple: two simultaneous campaigns at once. This way the “bottom pyramid” donors can give knowing their gifts are going 100% to the cause, while the major donors, angel investors, grants, and other legs of the stool fund operations, allowing the burden to be taken off of the smaller gifts and empowering their major donors. The gifts truly are 100%, by the way.
Pretty revolutionary if you ask me….
And those are some well educated major donors….
Disclosure: I work in development in a top 10 INGO (depends who you’re asking, I suppose).
I’m surprised at the direct attack you’ve made against an organization that does a great deal of good. Any nonprofit for that matter. Remember, we’re driven by mission, not necessarily bottom line and the people who read your blogs may feel similarly.
Hey, Jason. Great comments. Thanks for writing. And we do understand the two funds concept, one for program – another for operations. Here’s the problem. While the idea is bold, fresh and “nice”, in that it helps some donors get over their unwarranted aversion to overhead, the practice actually affirms that overhead does not belong in the charity business model and THAT is what hurts other non-profits. We all know that part of delivering life saving planet changing assistance to our hurting world involves a system that essentially has two parts: (1) The front line delivery of the service, and (2) The infrastructure needed to deliver the service. It is this second item that, for as long as I can remember, has been devalued, demeaned and packaged as if it had less of a place in the whole system. So, taking an action to actually accentuate that devaluing is gimmicky and wrong, in our opinion. Our sector needs to help donors understand that, just like the commercial world, there is a legitimate cost to doing business. Can you imagine Apple coming out with a new phone and saying: “While the real price for this phone is $200, we got someone to cover the development, sales and admin/operations cost related to it so you can buy it for $140.” That would be a nice deal. But it is not realistic, sustainable or even necessary. In the commercial world, the cost of a product is more than the literal cost of the item; it also includes overhead costs. Overhead costs include sales, marketing, administration and may include fixed costs like rent and variable costs like shipping or stocking fees. These must be included in an estimate of the real cost of the product. The same is true in the non-profit world. The REAL cost of delivering assistance is what is important. And donors should be asked, in our opinion, to support the whole thing not just one part. As usual, Jeff and I enjoy processing these thoughts and concepts openly, so any additional comments you may have are welcome.
Richard, points taken. I think the industry as a whole is beginning to do a great job educating philanthropists at all levels about the importance of unrestricted giving, supporting the operations, and not solely focusing on “the Ratio,” and being proud of asking for the true costs of doing business. At the end of the day, Charity: Water is capitalizing on the idea of this 100% model, and quite frankly, its working for them. I suppose you can be insulted by this or their process, but at the end of the day, in this competitive market, they’ve found something that works and they are running with it. It behooves us to adapt and change (another blog post idea?). They’re thinking like the private sector and more and more, we are moving to this style of doing business.
Now, all that being said, I should have been more clear in what my issues were, and I apologize for not doing so. My issues with your blog post is that it 1) specifically calls out Charity: Water, and 2) does’t say anywhere in your post the full story about the two funds concept. Calling out a specific charity is inappropriate no matter how you slice it. Even if you came right up to saying ‘a charity out of NYC that supports clean drinking water for the African continent, etc,’ at least you’re taking the higher road. I suppose you can say, ‘well, its our blog, so we can do what we want,’ but I feel like that not a route you or Jeff would take. From an end user standpoint, or donor centric, it is simply not ever appropriate to speak negatively about another charity.
Look at the comments below. Now, its a a little bit of a trash talking event for Charity:Water. Hardly what you intended. My comment may have contributed and set the tone for the below comments, but regardless, they aren’t focused on the original message.
I really like Wes’ Idea, by the way. Won’t work for all charities, but for many its a great idea. That would also be great for research.
Yep. Good comments. Great ideas. And some learnings. Thanks for your contribution.
Regarding Charity: Water. I think its deceptive and insulting to other organizations to imply that no part of a donation goes to admin costs. There is a cost to processing a donation. Even if a major donor is paying for the book keeper, accountant, and auditor–there is still a cost.
One of this organizations big fundraisers is a gala. Talk about fundraising and admin costs! I’m sure this organization is doing important work. I lived in a place for 2 year that did not have safe water, so I understand the importance. Those in this sector know that organizations have one budget. A budget without administrative oversight, an annual audit, supervision of employees and volunteers, collaboration with partners, and strategic planning is not one that I would want to invest in as a donor. Why pick this as your competitive advantage rather that the important impact your organization is having in the community?
As a lowly “member of the public” in charity:water’s eyes, I actually feel belittled by their assumption that I’d be unwilling to help with covering admin/operations costs. It’s strange that I can’t seem to find anywhere on their website that even gives me the option to cover admin costs. You’ve basically got to be a connected “insider”, from what I can tell from their website.
Why not allow donors to decide for themselves how to allocate their contributions? Build a slider on your donation page, set it at 90% “program” as a default (or whatever your org’s % is) and then as people change their chosen % split, dynamic messaging pops up. Messages relating to “investing in growth, fund development, infrastructure” in one direction and “program expansion/improvements” in the other direction. There’s good case for support in both directions, IMO.
Wes, love the idea. I had lunch and thought about it. My only question (and I bet Richard or Jeff would come from this standpoint, too) is, how can you plan? Part of the reason you have the set percentage or fee is because it gives you an ability to plan for next fiscal year and that continuity is necessary for real growth and things like strategic and 5,10,15 year plans or even capital campaigns.
As it relates to your Charity:Water comment, yeah, you do have to be an “insider.” That’s exactly how they want it. they know their donors and their bottom pyramid folks. That profile isn’t the discerning philanthropist. Its people who want to do a walk or a concert, or give $5 or maybe $100 here and there. There exists that trust that we all love, “I’ll give it to the professionals and they’ll put it to use because I don’t know how to run an organization or anything about Africa and water, but I want to help.”
You and I want our donors to care about overhead, and many of them do (also, you and I are in the game, were biased). But for the bottom of the pyramid, who are we to tell them how to think? It’s working, by the way…. The other day, I purchased tickets off of ticketmaster and it asked me for $5 to Charity:Water. 5 years ago, these guys had a fraction of their infrastructure and were having a fraction of the impact.
This is today’s new Charity. Let’s adapt and think positively. It’s opportunity.
The organization would certainly need to be flexible and creative in its budget planning process. But I don’t think it would involve any more risk than relying on a small group of donors to cover 100% of the overhead, like the charity:water model.
I understand your passion for charity:water. It’s innovative and does great work. I’ve seen few organizations that do a better job of connecting donors with their impact on the world.
But I think this statement is a bit ironic: “But for the bottom of the pyramid, who are we to tell them how to think?” charity:water is doing just that. The organization is telling the bottom of the pyramid that they shouldn’t invest in overhead.