Fund Raisers Focus on the Economy and Fighting Turnover

The economy’s slow recovery was a key topic as 3,000 fund raisers gathered here last week for the annual meeting of the Association of Fundraising Professionals.

A poll released by the association found record lows in the number of charities reporting strong fund-raising returns in the past year, and four in five fund raisers said the economy was their biggest concern in 2010, followed by other worries exacerbated by the nation’s long recession: trouble attracting new donors (46.4 percent), declining corporate support and sponsorships (35.9 percent), and a falloff in foundation grants (30.4 percent).

While economic forecasts suggest that fund raisers will face a long struggle to increase returns, they can take many steps now to ensure their organizations will be strong over the next five years, said Susan Raymond, an economist and executive vice president of research at the consulting group Changing Our World.

Despite the gloom, she said the “nonprofit sector has the opportunity of a generation.” Bad economies often breed innovation, and charity officials now have a chance to develop new approaches and diversify their sources of revenue, she said.

Among other trends she said fund raisers should focus on:

Female donors. Women haven’t been hit as hard by the recession as men, Ms. Raymond said. Fund raisers need to think hard about how to engage woman donors, who tend to be more conservative financially and philanthropically than men.

Corporate giving. “Pure philanthropy is going to be in decline,” she said. “You’re going to see more and more cause-related marketing.”

A “depression-memory of a recession.” Ms. Raymond said the biggest challenge that nonprofit groups face is the psychological effect of the downturn on donors. Even though the downturn wasn’t a depression, it felt like it to many people, she said.

“That’s a communications problem for you,” she told attendees. “It’s a fund-raising problem. It’s a trust issue.”

Keeping Top People on the Job

Fund raisers at the meeting focused not only on techniques that would attract more donations, but also on ways to increase the productivity and performance of their staff members.

Turnover among fund raisers has slowed in the downturn, but will undoubtedly pick up again when the economy improves, said Penelope Burk, a fund-raising consultant and head of Cygnus Applied Research, in Chicago.

But, she said, charities can avoid the damage of high turnover by taking several concrete steps now.

Ms. Burk based her suggestions on preliminary findings from her forthcoming research involving more than 8,000 nonprofit officials and board members—including 1,200 fund raisers.

It costs charities 65 to 83 percent of a fund raiser’s annual salary to replace that person, Ms. Burk said.

Given that cost, she said, nonprofit organizations could make the argument to provide a top-performing fund raiser with a 15-percent annual increase—or they could increase pay by a gradually higher amount every year a fund raiser remains on the job.

Ms. Burk said that 37 percent of fund raisers left their last job for a higher salary and 48 percent said they would leave their current job for increased pay.

The fund raisers she surveyed, said Ms. Burk, do not appear unhappy with how much they are currently paid; they leave simply because they can get more money elsewhere.

Among the other suggestions that stem from her research:

Find ways to give fund raisers more management responsibilities. Twenty-nine percent of fund raisers said they left their last job because they were offered a more senior position, while more than a third of fund raisers said they would leave their current job for that reason.

With a shortage of senior positions, Ms. Burk said, more charities should reconfigure jobs so that fund raisers, particularly those in nonmanagement roles, are in “stepped positions,” with progressively more responsibility for each year the fund raiser stays on the job.

Create succession plans. Only 22 percent of senior fund raisers who manage their organization’s development efforts said they were grooming a replacement, and another 57 percent said that there was no one on their staffs who was qualified to assume their roles, she said. Yet that may not necessarily be the case: More than two-thirds of development officers in lower-level positions said that they felt qualified to step into their boss’s job.

Give workers more flexibility and other low-cost benefits. Even if they cannot offer higher pay or more responsibility, charities would do well to offer fund raisers other benefits, Ms. Burk said.

The non-monetary benefits rated most desirable among fund raisers are working from home (52 percent), flexible hours (51 percent), more vacation time (42 percent), and an employer-provided cell phone (32 percent).

Fund raisers are also looking for certain qualities in the people who manage them, said Ms. Burk.

Asked to describe the characteristics of the best boss they had worked with in the course of their career, fund raisers said that person allowed them to work independently (55 percent), asked for and valued their input (53 percent), encouraged them to ask questions (49 percent), and gave them credit for their ideas (48 percent).

Upgrading Skills in Big-Gift Appeals

Rice University improved its fund raising by ensuring better collaboration between the people who solicit big gifts and those who conduct research on affluent donors.

Susan C. Martz, the university’s chief fund raiser, and Kelly Quin, head of donor research at the Houston institution, described how they have worked together as the university seeks to meet a $1-billion capital-campaign goal.

Soon after Ms. Martz took the top fund-raising job two years ago, she devised a written profile of an imaginary donor, identical to the ones the university’s prospect researchers create. But the imaginary donor, she says, was modeled on her own personal and professional life with some added embellishments, such as a family foundation.

She then distributed the research profile to the fund raisers and invited each one to her office for a one-hour role play. During the hour, the fund raisers demonstrated how they would find out more information about Ms. Martz’s financial status and desire to give and if and how they would ask her for a gift during an in-person visit.

They were also required to send thank-you notes and other follow-up materials to Ms. Martz, just as they would with an actual donor.

All the fund raisers wanted to be successful, Ms. Martz says, but some were better than others. Among the problems she observed were a lack of focus, providing too much information, relying on hand-out materials rather than communicating with the donor, and not using research consistently or effectively.

To solve those problems, Ms. Martz and Ms. Quin have held training sessions in which fund raisers share stories of their best and worst solicitations, brainstorm about solutions, and share ideas.

Another big change the two women made was getting fund raisers and researchers to work closely together.

Before the change, researchers had a basement office and passively responded to fund raisers’ requests, in many cases never meeting with the development officer.

“Research was reactive,” says Ms. Quin. “It was like a mystery elf in the basement would do the research.”

The women moved the researchers into a new working space within the development office, changed the title for their position to “development research analyst,” and required them to attend meetings with fund raisers where they now actively participate in coming up with ideas for approaching individuals for large campaign gifts.

“Two years later,” she says, “we see a definite correlation” between the changes that were made and how much is raised.

Pitching Causes in Effective Ways

Charities make numerous mistakes as they seek to explain to donors why they should give, said Tom Ahern, a Foster, R.I., consultant who advises nonprofit groups on communications.

Chief among the mistakes, he said, is that charities’ solicitations fail to answer three key questions in the minds of donors: why the organization deserves a contribution, why that support is critical now, and why the donor should care.

To show donors why they should care, he offered an example of a simple but highly effective appeal to get people to attend a fund-raising event to benefit a firehouse: “Come to our breakfast,” the appeal read. “We’ll come to your fire.”

Some fund raisers make the mistake of thinking that donors go about making a gift in the same way they calculate whether to make a purchase, Mr. Ahern said. But “giving is not about a calculation of what you are buying; it is about participating in a fight.”

That distinction, Mr. Ahern said, helps explain why Barack Obama’s presidential campaign was so successful. Voters, he said, “wanted to get into a fight and win it. Think about what kind of fight you can get your donors into to improve the world.”

Answering Donors in Smart Ways

Why ask me for money?

That is one of the many questions that donors ponder, says Harvey McKinnon, a fund-raising consultant in Canada.

In a speech here, he described a conversation that Mal Warwick, also a fund-raising consultant, had with a wealthy woman who focused her giving on organizations that help older people.

Mr. Warwick was raising money for a youth charity and asked for a $5,000 gift.

When the woman replied that she gave to groups that aid older people, Mr. Warwick asked, “Do you see a contradiction between your support of seniors’ groups and of a youth charity?”

The woman paused and began to talk about the children who cheered up older people at the charities she supported. She soon talked herself into making the gift to Mr. Warwick’s group.

In a presentation, Mr. McKinnon offered other questions and possible answers:

Who is asking? Donors don’t like to be solicited for money by someone with a title that sounds like he or she is a lowly assistant, said Mr. McKinnon.

To counter this, charities often give staff members titles that sound senior because they command more respect, he said.

Donors also like to hear from people who clearly care about the organization. Mr. McKinnon described a man who felt his daughter had been able to recover from cancer because of the Make-A-Wish Foundation. “Can [the girl’s] dad raise $1-million at every event he goes to?” he said. “Yes, he can, and you can understand why he’ll be volunteering for that organization for the rest of his life.”

How much do you want? “People don’t give what you think they should give,” said Mr. McKinnon. “They give what they’re asked.”

He talked about a friend who works at the Nature Conservancy. She asked a donor for $500,000 and the donor replied, “That’s all you want? Sure.” The fund raiser left feeling terrible because she probably could have received a few more million dollars for her organization.

Will I have a say over how you use my gift? “Increasingly, donors want a say,” said Mr. McKinnon. “You have to be careful to respect donors’ wishes without distorting the mission of the organization.” When asked how to respond to someone who wants all their gift to go to programs and none to administrative costs, Mr. McKinnon advised fund raisers to explain that the charity needs a certain amount for administration to do its work well. Most donors will understand the importance of administration if it is explained to them, he said.

More details on these sessions and many others are available online at http://philanthropy.com/extras.