How to Think About the Cost Of Major Gift Fundraising–last in a six-part series

#6 – Getting Rid of Cost by Getting Rid of Donors

I will never forget the major gift officer I sat down with several years ago who was managing a list of 864 donors!  That’s right – 864. It had never dawned on her that there was no way she could relate to each of them.  And her manager thought it was the right thing to do – to “just handle everyone who has given more than X.”

So we got talking about the list.  She had so many stories about many of donors – about this lady, that business woman, that man, that couple, etc.  She loved all of them.  I had to figure out how to break the news to her that most of these donors needed to be managed solely by direct mail.

I started by talking about how she felt about the money non-profits spend on running the place and raising money.  She was pretty balanced about it but definitely leaned toward being a conservative spender.  I was glad to hear that because then I could talk to her about things like:

  • Dividing her huge list down into the donors who wanted to talk to her and those that just would not connect no matter what.
  • Then taking the resulting list of those that wanted to talk to her (a.k.a. “qualifying the donor”) and sorting them by recency, amount and capacity.
  • Then reducing THAT list down to 150 donors – and here I got into the subject of cost to service one donor by adding up her total costs (salary, benefits, travel costs, operating, etc.) and comparing that to the revenue from that donor.

And then, as we kept talking, she began to realize the stewardship responsibility to use HER time wisely; that not all donors are the same; that she needs to be with donors vs. being in the office; that there is only so much time in a day, a week, a month, and; that she needs to let go of some donors.

What happened in our conversation was, essentially, a very soft discussion on the cost of major gift fundraising, the topic we have been discussing in the last five posts.  And as she understood that she had to make cost decisions (use of her labor, value of the donor) she realized how stewarding her time aligned itself with her values about the donor and the organization.

Well, by the time we were done, she was ready to move down to a shorter qualified list of donors.  And, as we got to the last group of donors that needed to go, there were some real personal attachments she needed to work through, because many of them had little or no economic value.

So we had to have that philosophical discussion on what was more important: money or the donor, and that opened a whole can of worms which we successfully navigated through. (By the way, this subject will be a topic of a future post.)

In the end, it all came out OK.  And I was thankful.

And just in this ONE story you can see the whole message of this series which is summed up in the following points:

  1. You need to have no more than 150 qualified donors on your caseload.  You do not have time to handle any more than that.
  2. Donors have different economic value.  You should, therefore, tier them (A, B, C) and treat them differently.
  3. You, as the MGO, need to be out on the field.  So you need good support back in the office.  Managers:  support your MGO and let them be with donors.
  4. When donors are not contributing the value they need to, you need to remove them from your caseload.
  5. All of this is about managing the return on investment and being a wise steward of the money your good donors have given AND being a wise steward of the organization’s money as well.

After all, that is what we are all trying to do, isn’t it?  We want to help donors express their heart and passion for a suffering world – but we want to do that in a manner that reflects good stewardship for donors and the organization.

And managing cost creates so much freedom in that dynamic.

Richard

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About Jeff Schreifels and Richard Perry

Jeff Schreifels and Richard Perry have over 55 years of experience fundraising for non-profits. Richard Perry was co-owner of Domain Group until 2005. Jeff Schreifels was a Senior Strategist for Domain Group for 12 years. They came together a few years ago to start Veritus Group, a full-service major gift fundraising agency. Veritus Group has a unique, data-driven approach unlike any agency focused on major gifts. Jeff and Richard are passionate about their work, passionate about life and hopes this blog will provide you with insights and tangible benefits for you and your work. Thank you for reading!
This entry was posted in Development Directors, Donor-Centered, Major Gift Officers, Major Gifts, Marketing Plans, Non-Profits, Philanthopy and tagged , , , , , , , , , , . Bookmark the permalink.

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