While it has always been important to build a culture of philanthropy, the pandemic has illuminated the need for institutions to have a sustainable fundraising model that is focused on individual donors. After all, individual donors account for the majority of giving; they accounted for nearly 69% of giving last year (not including bequests), according to The Giving Institute’s “Giving USA 2021: The Annual Report on Philanthropy for the Year 2020.”
That means that several types of institutions have found they need to adjust their approaches, including those with event-based and corporate-focused models, as well as those with little to no advancement program in place. Having worked with many clients to navigate this type of shift, I understand that this type of shift can be difficult. Yet I also know that short-term pain is often necessary to position an institution for long-term success.
Identify the need for change
The pandemic was a wakeup call to many organizations. It forced institutions to pivot away from fundraising events. In making that shift, some realized that events require significant spending and hidden costs and that they can generate a significantly higher return on their investment by moving to a major gifts-focused model.
Other institutions recognized that corporate-based fundraising is far less reliable than individual-based giving models. For example, corporate-based giving fell 6.1% last year, according to Giving USA, which was the third time in the last five years that it had a year-over-year decline. Still, other organizations may have realized that they lacked a sufficient endowment or funding to support them in the wake of a challenging time.
Once my clients internalize the need for change, I typically drive them to do a wealth screening analysis of their donor base using a tool such as GG+A’s DonorScape that enables them to prioritize their efforts. The wealth screening enables them to fish where the fish are. For example, I’ve found that some of my clients found they were devoting resources on $1,000 donors who were at their capacity and failing to focus on $100 donors with the capacity to significantly increase their giving.
The crucial role of boards
Not every institution has a deep pool of prospects to turn to for support. Those that don’t have those resources need to rely on their boards to open doors for them to have initial discussions around cultivation.
I recognize that an institution may not have recruited its board members as fundraisers, but that’s the role they need to play within an individual-based fundraising model. Below I’ve presented a visual that outlines what volunteers and staff should expect from the shift:
I know that some board members may not feel comfortable with the shift. But that is exactly why institutions need to be transparent with what it takes to help with fundraising, and why they need to train board members on their roles. Fundraising doesn’t need to be, nor should it be, scary. The training should help board members understand that they don’t need to ask their friends for money, but they should talk about why their involvement is important to them. It can also break fundraising down to the relationship level and use tactics such as roleplaying to practice different responses, as well as arm them with simple conversation starters such as “I want to share with you why I volunteer my time on the board of XXX because I think it may be of interest to you…”
The training should also provide board members with talking points that help them communicate how donations make a quantifiable impact. That information is incredibly important. I was recently speaking with one of my client’s board members who told me that he couldn’t say what made the institution’s work unique. That told me that my client’s training failed to provide (or inculcate in its board members) a clear elevator speech that communicates what makes it special.
That messaging doesn’t have to be complex or original. It can pull language from a case from support, campaign materials, or other content. Regardless of where that language comes from, board members need to feel comfortable communicating a message that discusses their commitment, a set of talking points tied to the institution, and then pivot to the next step such as “Can I introduce you to our CEO?” or “Can I bring you onto campus to see the work that’s being done?”
Remember, change takes time
Change doesn’t happen overnight. A strategic shift that involves refocusing and retraining staff can take anywhere from six and 12 months. And, as I previously mentioned, it also requires an institution to educate its board on the reasons that board members need to shift from selling a table at an event to cultivating and identifying prospects.
What’s clear is that the pandemic has sped that process along given that institutions could not host a gala and needed to raise money. I’ve previously written about how after canceling its gala, the Florida Aquarium quickly shifted its approach to raise 25 $25,000 gifts in honor of its 25th anniversary.
Change may also require restructuring, which starts by justifying the need for that to happen. For example, calculating the return on investment from events can be particularly telling once an institution includes the effort and cost required to raise X dollars and compares that cost to hiring of/retraining for a leadership annual giving officer. Of course, it also requires a shift in mindset from a transaction based model—I’m giving X amount to attend this event—to a philanthropy-based model that’s focused on funding a need.
As part of that shift, institutions should examine their stewardship matrix to ensure their approach is line with donors’ gifts. That can ensure that they don’t “over-thank” leadership annual giving donors with tickets, tours, apparel, and other staff-intensive activities. One simple way to gauge how donors feel about the organization scaling back its approach as part of a broader strategic shift is to survey them.
Once an institution understands how donors feel about it and its mission, it can seek to match the donor’s priorities with the organization’s mission. That’s why discovery is so important. This is an area where volunteers can help by vetting prospects. That said, cultivation work takes time as it starts with a connection with someone they admire/invited on site to see how the organization works or attend an event or a behind the scenes tour. Then they can meet more people, see programs, and get a sense of where the organization has specific needs. Then, within 24 to 36 months, they should be ready to make a major gift.
While there’s still a role for events and corporate giving, institutions need to ensure they’re on proper footing as they move ahead.
If you need help developing a culture of philanthropy at your organization, contact Bob Ramin at RRamin@grenzglier.com.