Andrew Olsen joined us to talk about the decreasing trust that Americans have in NGOs to “do what is right”, what nonprofits should do to proactive build donor trust, and his suggestions on how a nonprofit’s posture toward donors directly impacts their ability to deliver on the mission.
Andrew is a #1 Best Selling author, speaker, and nonprofit marketer. He’s helped raise more than $250 million for nonprofits. With more than 20 years of leadership experience, he currently advises nonprofit leaders, boards, and development teams through strategic consultation, coaching, and classroom instruction. Andrew is a Senior Vice President at Newport ONE and a frequent speaker at nonprofit industry events.
As more Americans say they don’t trust nonprofits, Andrew had several recommendations in the episode for building donor trust. Among them were these three principles: provide an excellent donor experience, center your donor, and don’t be afraid to take a risk and change how you do things, it pays off.
Donors decide whether or not to trust you based on their experiences at your organization. If you consistently show them that you’ll do what you say you will, use their gifts to impact your cause and are appreciative of their contributions, you’ll build donor trust.
It sounds simple, but it simply isn’t a priority at many organizations. At the beginning of the COVID-19 crisis, Andrew made donations to ten different charities he knew were doing good work. While he hadn’t intended it as an experiment, after a month passed, he noticed something: he hadn’t heard anything from most of the nonprofits he’d given to. Only two had sent thank you letters.
When he posted about it on LinkedIn, he gave organizations some tips on donor stewardship. “One of the things that I said was if you’re too busy to properly thank donors who are stepping up at this time when people are losing their jobs and when people are being furloughed, and laid off, if it’s too hard for you to say thank you, you might want to rethink whether or not you should be fundraising at all at this point,” he says.
The post sparked a lot of frustration, commentary, and discussion. “A lot of people came out and said, ‘Yes, this is our experience,’” Andrew says. “And it’s unfortunate because then, it’s our experience even when there’s not a time of crisis.”
When donors don’t hear from you after they’ve given, it’s not a good experience. Forgotten details, misspelled names, organizations that are hard to reach, any of these can turn a donor off your nonprofit, possibly forever.
“In conversations, particularly with high-net-worth donors that I’ve heard, to a person they’ve said, ‘When I have experiences like that, I have no incentive to give again. And I’m going to make sure that all of my friends in my network, so likely other high-net-worth individuals, know that I had a bad experience there because I don’t want them to waste their time or money on that organization.’ So, I think if we’re not fixing those things, we’re in for a really rude awakening,” Andrew says.
If you want to create trust with your donors, start by thanking them promptly and enthusiastically, everytime they give. Make sure it’s easy to get a hold of a live human being to talk to at your organization. Keep track of the details, double-check spellings and titles, and apologize when you get it wrong.
Andrew acknowledged some nonprofit professionals will push back on this idea, but he considers donors the primary customers of nonprofits, not program beneficiaries.
“I think one of the reasons why we’re at this crossroads is that many nonprofit organizations don’t understand who their customer is,” he says. “When you think about the economics of a philanthropy, you can’t discount and say the people that we’re serving don’t count. But if you want the engine to run, and you want to be able to deliver programs, and feed people, clothe people, end poverty, improve the environment, provide healthcare, the organizations across the globe can’t do that without the strength of philanthropy behind them. It’s just not possible.”
How would your communications change if you considered the donor to be your primary customer? Would you highlight what they care about, over what you think is most interesting? Would you listen to them differently?
You have the opportunity to show up and support your donors in a way that is more meaningful to them, ultimately creating donor trust and retention. This is always necessary, but never more than in a crisis.
Andrew points out that after the 2008 financial collapse, some organizations doubled down on “thank you calls, thank you emails, all sorts of different engagement like that,” he says. “They were actually able to come out of that financial crisis faster and healthier than those that didn’t.”
As COVID-19 and economic uncertainty make donors feel less secure in general, you can help them feel more secure with you by digging into engagement and sending the message that they matter.
Andrew Olsen: The economics of philanthropy, you can’t discount and say that the people that we’re serving don’t count, but if you want the engine to run, and you want to be able to deliver programs and feed people, clothe people, end poverty, improve the environment, provide health care. The organizations across the globe, can’t do that without the strength of philanthropy behind them. It’s just not possible. So, to discount the donor and not view them as a primary customer in that equation, I think it’s a really big mistake.
Noah Barnett: From Virtuous, I’m Noah Barnett. And this is the Responsive Fundraising Podcast, the show where we talk with fundraising leaders and thinkers to uncover how today’s top-down profits craft remarkable donor experiences and build lasting relationships at scale.
On this episode, I’m joined by Andrew Olsen. He’s the Senior Vice President and partner at Newport ONE. But he’s also a published author and the host of the Rainmaker Fundraising Podcast. Andrew is a wealth of knowledge, and we dive into a pretty hot topic where we address the fact that only 50% of Americans even trust NGOs to do what is right at this point, and how this is driving donors to opt-out of the generosity ecosystem.
We talk about this and many of the other challenges facing fundraising leaders today as they push through the rest of 2020 and into 2021. It’s an action-packed, insightful conversation. So let’s dive in.
What does donor stewardship have to do with donor trust?
NB: Andrew, you sparked quite the debate on LinkedIn a few weeks ago. What happened?
AO: Honestly, I had no idea it was going to create the interest and friction that it did. To give everybody a sketch of what went on, right as the COVID-19 issue became significant, I decided to make some donations to different charities that I’ve worked with in the past or that I know are doing good work, particularly in and around the causes of hunger and homelessness, with a thinking that at a time like this, those places are going to be overrun with additional needs. So, now’s the time to be supporting them.
I didn’t initially do it as a thought experiment, but 30 days after I sent those gifts, I hadn’t heard from any of the organizations. And then I realized that I had received thank you letters from two.
I took to LinkedIn, and I just wrote a … Well, I thought it was a pretty simple post, saying, “Hey, I did this thing. We sent gifts to 10 different organizations. And so far, I’ve only heard from two. And heard zip from everybody else.”
And then, I think I put like, I don’t know, five or seven tips for nonprofit organizations of; “Here are some things to think about in your stewardship approach if you’re currently raising money which I suspect most organizations are, some of the things that you ought to be thinking and doing differently to make sure that you’re stewarding those donor relationships well.”
And this is built off of 20 years of experience, I’ve been in this sector as a front line fundraiser at a children’s hospital and as a consultant for a long time. I’ve worked with over a thousand different organizations. So I feel like I’ve seen a good breadth and depth of the sector.
One of the things that I said was if you’re too busy to properly thank donors who are stepping up at this time when people are losing their jobs and when people are being furloughed, and laid off, if it’s too hard for you to say thank you, you might want to rethink whether or not you should be fundraising at all at this point.
And that I think sparked a lot of the frustration. It was really interesting. I think that that post has been viewed something like 16,000 times now, and there’s a bunch of commentary on it. And a lot of people came out and said, “Yes, this is our experience.” And it’s unfortunate because then, it’s our experience even when there’s not a time of crisis.
And I suspect in a crisis situation, there’s a little bit more grace for things like this when people aren’t able to be in their office. So, they’re not processing mail on a timely basis, things like that. But the bottom line is, from the cross-section of responses that we got was, there are a lot of people who say, “Yes. The charities that we support just as a matter of fact aren’t set up to really adequately show donors that they care about them as human beings rather than just ATM machines.”
And then, there was an interesting group of respondents who came out of the woodwork and essentially said, “How dare you suggest that we need to do things like this?”
One person was so bold as to say something like, “I can’t believe that you’re putting your own stewardship perspective, and agenda on organizations like this. It’s hard enough for us to do our mission. How dare you ask us to beg donors and get on our knees to plead with them for support when they should be giving? And we should just be able to do our mission without having to respond like that to donors.” Which I think is a fascinating point of view.
And it’s both concerning and fascinating honestly because I think it paints the picture … And a lot of donors and particularly high-net-worth donors have talked about this … but it paints a picture that many nonprofits are disconnected from donors relationally.
And because they rely on transactional fundraising for many of their organizations operating budgets, there’s just not the same care and attention put on the donor relationship that we all know is what’s necessary to create great relationships and to sustain long term giving. So, it was eye-opening for me to see that conversation play out like that.
NB: And I think it brings up a bunch of different things that we could dive into. I definitely want to do that because I feel like there were different elements of that conversation that are so important not just now, but in general.
How can nonprofits connect givers with good and build trust?
The first one I wanted to bring up is something you already referred to as this disconnect between our view of fundraising. Or the nonprofit leader’s view of the fundraising task versus the programmatic work.
So, there’s the givers, and there’s the good. And they sit on two sides of the fence versus the donor’s expectation of what they’re getting involved in by giving. And they’re the giver, and they’re doing good.
And so, how do you reconcile that disconnect? Or how have you seen organizations navigate that? Because I think that’s something we see in our own research here at Virtuous, which is causing a lot of organizations to really struggle and be on a hamster wheel because this disconnect exists.
AO: It’s a great question. So, I’m going to use some language that might not be comfortable for some in our sector. It’s not crass foul language, it’s corporate language. But I think there might still be a little bit pushback here. Here’s my thought on this. I think one of the reasons why we’re at this crossroads is that many nonprofit organizations don’t understand who their customer is.
So, when I think about a commercial organization, let’s think about Facebook. There are millions, maybe billions of people who use Facebook. They are not Facebook’s customers. Many of them might feel like they are, but they are not, they are essentially the product. And Facebook’s customers are the advertisers, the people who pay the bill.
So, I think if we think about the nonprofit sector, and trying to understand the difference between a customer and those who we serve, I would argue that the nonprofit organization’s customer is primarily the donor rather than the people who are served by the nonprofit; they are recipients of value and service.
But when you think about the economics of a philanthropy, you can’t discount and say the people that we’re serving don’t count. But if you want the engine to run, and you want to be able to deliver programs, and feed people, clothe people, end poverty, improve the environment, provide healthcare, the organizations across the globe can’t do that without the strength of philanthropy behind them. It’s just not possible.
So, to discount the donor and not view them as a primary customer in that equation I think is a really big mistake. And I believe that it leads to organizations dismissing the desires of the donor and saying, “Well, they funded the organization, but we’re the experts on this cause. And so we’re going to do what we know is right for the people we serve.” And when that happens, there’s a really big disconnect. And I think often, it leads to donors probably making one gift and saying, “Well, that was a crappy experience. I’m never going to do that again.”
And that results in the acquisition hamster wheel that so many organizations are on. It results in the pretty pathetic retention rates that we see today across the sector.
And I mean, if you look at people like Lisa Greer over at Philanthropy 451, and some of the commentary she has around the experience, particularly that high-net-worth donors have, I think that’s why we’re seeing a lot of high capacity donors back off and say, “You know what? I’ll put my money in a donor advised fund, I’ll get my tax benefit there. And occasionally, I’ll make gifts from that, but I am not going to deeply engage with organizations because they’re not treating me the way that I’m accustomed to being treated everywhere else in my life.”
NB: And I think that difference between the experience that’s expected or cultivated through all of our other experiences. We talk about this in our Responsive Fundraising book about this idea that personalization is everywhere and this idea of how we have a connection with and confidence in the brands that we engage with, and that’s driven through personalization. And then, the absence of that in our generosity and endeavors is so stark.
And I guess the question is not whether there’s an issue there, I almost am curious how organizations begin to process this challenge internally. Because some of this is cultural, it’s not even strategic or at a strategy level. It’s like there’s a cultural narrative in their organization that we are doing the good, and someone is giving us money.
So we can go do the good versus what the Facebook example would say is, that no, we’re actually a platform where there’s users and advertisers. And the advertisers give us money to connect with the users. So, they’re using their platform as a way to bridge advertisers, and users in the same light nonprofits can use their platform. Or become a platform to connect the givers to the good.
NB: But how do you begin to navigate this? Let’s say we agree with you, and people are nodding their heads. They’re like, “But how do I begin to tackle the hard work of transitioning my organization’s posture?”
AO: It is hard work, as is really any major change initiative. And this is maybe one of the biggest changes that any organization would have to go through. So, I think the first place that has to start is with executive buy-in. If you can’t get a board and the C-suite of an organization to agree that we have to treat our donors in a more human way so that we can more effectively build long term relationships with them, then there’s no reason to try anything else. If you don’t have that buy-in to support an initiative like this when it gets tough, you’re never going to be successful.
So I think the first step is articulating the rationale for why you have to do this. And I think you can do that with data that’s on hand.
So, in just about any organization, you’re going to have some donors who are closer to the organization than others. Whether they’re major donors and they’ve been managed by a development officer, and that development officers treated them well, and so, therefore, they’re connected deeply. Or maybe they’ve received services, maybe it’s a hospital, and they’ve been a patient, or it’s Boys and Girls Clubs, and their child has been cared for at the club or something like that.
So, those people who are already close to the organization, I would say look at their value relative to the value of everybody else on the file who’s brought in through other channels and maybe more of a transactional supporter. And I suspect what you’ll see is the people who are closer to the organization tend to have a longer retention, longer lifetime giving. Probably more valuable, and probably less expensive to engage on an ongoing basis because of that relationship.
So, I think if you can make the case that, “Look, getting closer to our donors, being more personal and more human with them is already shown to bear fruit with this small group of donors. Imagine what it could look like if we could do that at scale?” And if you can’t convince the board and the C-suite with an ROI conversation, I’m not sure what else will. And then, once you’ve got that agreement assuming that they say, “Yes, okay, we buy off on this. Let’s do it.”
Then I think it’s a matter of “How do we thoughtfully construct a constituent journey that will allow us to engage these donors, volunteers, however else you’re engaging with individuals in a meaningful conversation over time that exposes them to everything that we’re doing?” helps identify the things are most important to them that we’re doing and then creates opportunities for us to engage deeply in those areas, eventually asking them for a gift to support something that’s meaningful to them.
And then, also providing that feedback loop on an ongoing basis so that the donor sees, “Okay, I gave you $500. You then, fairly immediately told me … you thanked me, you showed me how my dollars were being used. And then you came back to me after the fact and told me the impact of how those dollars were being used.”
I think, constructing that journey, and then, ideally having the framework behind the journey so that it’s not just something that humans have to be doing all the time. So, to do this effectively, you’ve really got to have some level of automation capability behind it. Otherwise, you’re going to have to add hundreds of staff to do this at scale with any file of significance. But I think those were the things … And then I would say celebrate the small wins.
So, this might be a multi-year process to get an organization aligned around something like this, but it doesn’t have to mean that you wait two or three years before you say, “Hey, this worked and we should all be glad about it.”
If in the first 90 days you start to see an emerging trend that looks positive, stop, and celebrate that. And make sure the entire organization, including the board and the executive director, know, “Wow, you guys signed off on this. Our team’s been working our butts off to do this, and look just 90 days, here’s what we’re seeing. These are positives. And therefore, it makes a lot of sense for us to continue moving forward because we’re already seeing the fruits of even our early activity.”
NB: And I think that, that whole idea of being able to first and foremost get leadership buy-in … Obviously, if they’re not the leader, you’re exactly right. If they’re not sold, then you’re in trouble.
But then also applying the strategic layer. What is our strategy to actually deliver this? Which we talked about journey mapping and being able to execute on that. But then, it’s actually like putting the systems in place over time. That’s one thing that we’ve been talking a lot about here at Virtuous; is how do you act? What is a … Because I don’t think there’s disagreement in what you should do. I really don’t.
When you get down to the brass tacks of it, people are like, “Yes, I should treat all donors. Yes. I should do this. Yes. I should do this.” Then you get into the problem of systems and scale, and you address that.
NB: I’m curious how do you take a systematic approach to even being able to build this? You talked about putting something in place and then celebrating the early wins. But I still think there’s this gap between where I am today, and even getting close to that. And that’s how do we guide organizations through that process? Especially the fundraising leadership.
AO: So, I think one of the things that we have to be really mindful of, is the way that most nonprofits budget, and the way that they manage cash with the exception of a small few handfuls of organizations. And maybe if you set aside the Eds and Meds of the world. But if you’re talking about really any other organization, it’s highly unlikely that they have more than 6 to 12 months of cash reserves on hand.
So, one of the difficult pieces around that is that sometimes doing this work and setting up these systems is going to take multiple years, and it’s going to take a lot of investment. Probably the only place they can shift that investment from is going to be fundraising.
So, the push-pull becomes, we want a better future reality, but our budget is such that we can’t give up this current year reality because if we short acquisition, or if we cut our appeal budget, or if we don’t do this event, this year’s cash flow is going to look bad. And programmatically, it may impact things.
But also from a fundraiser performance perspective, if I’m a fundraiser and I’m graded, if you will, annually on dollars raised or any other numbers like that if you take away some of my budget to fund largely infrastructure improvements to make this possible over time, I’m going to fail. And most organizations aren’t nimble enough to set up a structure that allows for the flexibility to shift investments. And in a corresponding manner, shift expectations of their staff as well.
So, I think before you get into what tools do we buy, how do we project manage this, all those things, I think it really is a conversation about investment strategy. And then also, how do we help organizations think differently about KPIs, Key Performance Indicators, and things like that around an annualized fundraising approach?
Because this might take two to three years to really see the full fruit of a program, a change like this. And in that time, money might come in differently than you expect it. And costs may look a lot different because of the fact that you’re investing in different infrastructure, different technology and things like that.
So, I think there’s a lot of conversation that has to be had around those areas. And I think it’s particularly important for organizations that maybe get a lot of their budgets through grants and things of that nature. Where they just don’t have as much margin as they might have from other high margin activities like major gifts and things of that nature. So, I think it would be more difficult for organizations that are structured more around corporate and foundation giving. But I do think that that’s the kind of conversation that has to be had before we can go forward.
NB: And you bring up another interesting point here; is that, even with leadership buy-in and strategic clarity, there becomes this … How we describe it as a lot of nonprofits or nonprofit leaders are actually handcuffed to a system that isn’t designed for the world that we live in today. Whether it is budgeting, or whether it is the wheel of how we measure success.
And you really have to take a strong look at all of these things and say, “Well, why are we holding on? How do we reorient from a new starting point?” Because sometimes, it’s always … and we work with a lot of organizations on this here at Virtuous where they’re trying to just take what they were doing and shove it into our new box type thing.
It’s like, “I can’t let go of this process, or this approach, or this report that we turn in every week or this month or whatever.” And so, how do you overcome the inertia of the endowment to the old as you approach this process? Any advice specifically on that? How do you fight against the endowment of the current?
How do I make a change at my nonprofit?
AO: It’s funny you say this, I had a situation like this come up fairly recently where someone said to me, “Well, wait a minute, you’re not doing it the way my old partner did this work.” And I had to stop and say, “Right. Because you wanted a different outcome. I could do it the way that your last partner did it. You’ll probably get the same outcome you got back then, but that’s what caused you to fire them. Right?”
So, it’s that definition of insanity. If you keep doing the same thing over and over again, you’re going to get the same result. And the same applies and holds true here as well.
I think three or four years ago, I led a major change initiative for a fundraising agency on the West Coast. And it was a really big change, and it was painful. One of the things that we articulated and this really comes from John Kotter, who’s written a number of books on change management and how to do it well … And the thing that’s really important in scaling a big change like this is to make sure that there’s alignment across the organization that the platform is burning.
What that means is, if everyone in the organization or at least everyone who has decision making and implementation authority, if they don’t all agree that what you’re doing, today is so significantly broken or sub-optimal that you have to change, then what’s going to happen is, you’re going to have more and more people who sit out the change.
And when that happens, one of two things happens; either the change stalls or you force it forward. And at some point after the fact, it fails … because people just say, “Well, I wasn’t on board to start with, so I’m not going to do it differently now.”
I think the first and foremost has to be that, framing a philosophy and agreement across the organization that, “Yes, we all believe that this is the right thing to do. And we believe that it’s bad enough that we have to do it. There’s not a going back point.”
And if you have that as your starting point, then when it gets tough, I think you can step back and say, “Wait a minute, we all agreed, The platform is burning down. We have to move forward. We have to get something different because going back is not acceptable.” And I think if you have that alignment, then it makes it easier to get over the hurdles that otherwise come in a big change process like that.
Now, there’s also the structural pieces.
In some organizations like I said, if you’re funded primarily through government grants, and fee for service, and things like that, you simply won’t have the margin to make big changes like this because those contracts and those grants stipulate that you’re not going to be able to capture as much margin out of the income that passes through the organization as an organization that’s raising money primarily through major gifts or even direct response. You don’t have the flexibility.
So, in a situation like that, I would say you might have to take an even longer time horizon view of this. And in the first couple of years, maybe the approach is, we’ve got to raise quick cash in other ways that don’t have strings attached so that we can then use that money to fund this change.
Now, I say that, and I say it like it’s easy. It’s not. And one of the biggest challenges we have is that with staff, with turn over being what it is in our industry. If you say, “I’ve got a five-year time horizon on this, we’re going to start raising money today,” by year two, I might have a completely different staff in place. I’m going to have a completely different CEO in place. And will that priority be carried through? The answer is, I don’t know. But I think those are the kinds of things that we have to be careful about.
NB: Indeed. And you bring up so many points that we could dive into in a variety of different ways, but I’ll … Because I think there’s almost so many things going against change, especially within the nonprofit structures we have, that makes it really, really difficult to be able to even think about how we make such a transfer.
Because we’re not talking about a chain, we’re talking about a transformation of an organization. And I think it’s quite hard to do that well as you addressed. When funding shortages are there, margins are short. Staffing is turning over.
And then, amongst all of this, like right now, we’re in the midst of a global health and economic crisis basically. And there’s this overall shared sense of uncertainty that is rampant right now. And so, I feel like it’s easy to feel stuck as a leader. And I wonder if that’s why people just opt out because it’s just really hard to be able to do this well.
Who Is Getting Donor Trust Right?
NB: So, we’ve painted a negative picture. I’m curious where the bright spots are. Where are the bright spots of opportunities or organizations that we can look towards that are doing this well? Where would you point people that are looking for an example or some guidance on this?
AO: It is a hard one. And I do think you’re right. I think that as the world becomes more complicated, and as the stresses of leading an organization that is dependent primarily on philanthropy at a time when there’s a lot of uncertainty in the markets, and a lot of volatility in the markets, which we know drives to some degree giving, it can be really stressful and it can cause people to say, “You know what? I know I want something different, but my current reality is really easy to just live it.”
So, you’ve got to think about who’s really committed to doing things differently. And I think we’re … I’m grateful to work with some of those folks. So you and I have a shared client in Mel Trotter Ministries, who is up in Grand Rapids, Michigan.
And they’re a new client of yours, and I’ve been working with them for a while now. But, one of the things I love about them is that they are really deeply committed to doing the best every day. And it’s part of their DNA.
If we walk into a meeting, and we simply say, “Okay, this is what we’ve done before, so we’re going to do it again.” There’s a really good chance that most organizations would say, “Okay, that makes sense.” And their leadership is constantly asking the question, “Well, okay, but what if we did it better? Or what if we did it differently? Could we get a different result?”
But what’s more important, I think: they’re not just asking the question, but they’re leaning in hard when it comes to actually making change and really aggressively pushing forward to say, “We’re going to treat our donors better. We’re going to engage the community better.”
It flows over into their service model as well. The way that they treat the people in their shelters and the people that they work with who are experiencing homelessness is far better, in my opinion, than most organizations that are similar to them. But it’s all because of the boldness of the leaders that are there.
And so, I think the common thing that we will find in organizations that are doing this well is that element of bold thinking and bold action from leaders.
And I don’t just mean like the CEO. I think there are examples of people at many different levels across all sorts of different organizations. They might be CEOs and executive directors. They might be board members. They might be a junior communications person, or somebody who’s a year or two out of school and just started working at an organization because they’re passionate about the cause. But they have a voice, and they’re willing to use it, and really to point out and advocate for things that need to change.
So, I think there are probably dozens of organizations that also fit that bill because while I think it’s tough for a lot, it’s not for everybody. But I do think that it requires that sort of boldness of thinking and action. And a willingness to say, “I’m going to take a risk.” And I think that also is a cultural piece that’s important.
So, I was having another conversation recently when we were talking about the issue of risk. And one of the things that I said was, there are a lot of people in organizations that say, “Yeah, we want people to take risks. We want to do this differently.” And therefore, people take risks. But then when someone on their team does take a risk, and it fails, that person is punished.
And the conversation I was having, the other person said, well, I know of this one organization that any time someone on their team tries something and fails, they send them … They have a cake, and they celebrate the fact that someone tried something bold, someone tried something different, and it failed, and they learned from it.
So, I think … I’m not suggesting that everybody has to have a cake. Although who doesn’t like cake? But I think to the extent that we can celebrate bold action, whether it’s successful or it fails. Simply for the fact that we tried something, and we made the effort to change, even if we didn’t get it right. I think that’s really important.
NB: Going back to the beginning of our conversation, it enables you to actually serve donors better. At the end of the day, what we’re talking about is not this transformational effort for just change’s sake. It’s really so that we have the opportunity to show up and serve those that are supporting the causes that we’re invested in.
And we always talk about it this way, where you’re connecting supporters or stakeholders to the story, or the impact of the mission. And that’s why it’s almost worth the change. Because, if the work you’re doing is worth it, the shifts and changes you have to make to be able to accomplish that in today’s world is almost not an optional thing, it’s a requirement because the cost of inaction is so big, we look at numbers like you already mentioned.
Some of the metrics that were shared recently were only 50% of Americans even trust NGOs or the fact that 18 to 25% of people have opted out of giving to charities in the last decade or so. So, you have a decrease of even contributing to the generosity ecosystem. And you mentioned that, the burning of the platforms.
But I feel like the other thing that Jonah Berger mentions in his research they just released, called Catalysts, about how you overcome endowment is actually showcasing the costs to inaction.
Why Don’t Donors Trust Nonprofit Organizations?
NB: I want to circle back to that because we’re not just talking about changing because you have to be able to do this to continue to do the mission and the important work that you’re doing. Because the environment is demanding that, and showcasing that through their dollars.
AO: I think you’re totally right. So, right now, I would say customer experiences is simply table stakes for an organization. It’s not like no one can walk into a room and say, “We give our donors a great experience,” and expect that that puts them … Like there’s something phenomenal in that. It’s the “Yeah, duh, you should.”
We just sponsored a research project. It’s not even out, it’s not even public yet. But we worked with Melissa S Brown and Associates, and the folks at Gray Matter, and Chamberlin/Dunn. And we looked at how Americans are thinking and feeling about giving and essentially, what are they doing to help and give across the country?
And one of the things that we saw is that the average donor has decreased from giving just a decade ago to I think 6.5 to 7 charities to now giving to about 4.8. So, we’ve seen a pretty considerable contraction in the number of charities that people support. And I think that goes in line with everything else you said a minute ago.
And it shows us that in part, the experience is bad across the board. And also donors are being more selective, just like they’re selective with their discretionary dollars in where they shop and patronize from a commercial perspective.
If I go to a restaurant and it takes them a half an hour to seat me, and then no one greets me at the table for 15 minutes, and then they get my meal wrong when they bring it out to the table, I’m not likely to go back there. I’m not likely to give them a positive review. And I’m likely to tell anybody who asks me, maybe some that don’t, that I had a poor experience there. I think it’s naive of us in our sector to think that donors don’t do the same thing with the charities they support.
If I call your organization, or if I go to your website because I want to talk to you about something, and I have to search for half an hour, and still can’t find a phone number or an email address for a live human being, that’s a bad experience. That’s like me waiting for 30 minutes before I can go to a table.
If you don’t greet me and don’t thank me for coming at a restaurant, that’s like after I give my first gift if you don’t thank me for that, or you don’t do it in the timely manner, it’s a similar experience. And if something as simple as you got my name wrong on an appeal similar to getting my meal wrong when you bring it out to me, that’s yet another thing that says to the donor, “Wow. I don’t think these guys have their act together. I’m not going to do this again.”
And in conversations, particularly with high-net-worth donors that I’ve heard, to a person they’ve said, “When I have experiences like that, I have no incentive to give again. And I’m going to make sure that all of my friends in my network, so likely other high-net-worth individuals, know that I had a bad experience there because I don’t want them to waste their time or money on that organization. “ So, I think if we’re not fixing those things, we’re in for a really rude awakening.
And I think we’re starting to see it now, but it’s going to get worse if it doesn’t get resolved.
NB: And you bring up a really interesting thing that I think is compounded due to our connected world. Is that just how we can tap into virality to grow something. There’s almost this negative virality that happens that if one … You mentioned if you have a bad experience, it’s not just like, “Oh, we lost Andrew.” It’s like you lost Andrew, and maybe like four and a half of his other friends that would have given to you or would have supported your business.
There’s a negative virality that happens as donors have bad experiences, or if we ignore their preferences or any of these other things. I think we almost … the impact was maybe less before, and or maybe it wasn’t as obvious as it is in our connected economy where this negative virality comes into play, and has huge implications. Not only for your charity but other charities.
Because I think the stat about only 50% of Americans trusting nonprofits is not due to all of them. It’s due to the ones that had bad experiences, but it’s putting a negative mark on the generosity ecosystem as a whole, which is something that people that are hopefully trying to make our world a better place should consider as part of how we implement our strategies.
AO: For sure, I mean, if we think about it again with a commercial perspective, not every lawyer and not every car salesperson are slimy. And they don’t all treat people … But there’s a percentage of them that have really ruined the reputation of both of those professions because of their poor behavior. And so, I think the same is true here.
Like you said, one or two organizations that give a bad experience, that treat people poorly, that aren’t trustworthy, all of a sudden you have half of the country saying, “Yeah, we just don’t think we trust you.” And you’re right. The scale and the speed with which trust can be lost today, I think, are significantly greater than 10 or 20 years ago.
NB: 100%. And we’ve defined it as that attention and trust are the most valuable currencies. And they may have always been. But today in the connected economy, they are the most valuable currency that you have. And it has to be stewarded in that way.
And I think it brings us to the last point. Obviously, Andrew, we could talk about a variety of things, and we have already. We’ve zoomed really far out and said, “There’s some big macro changes that might be multi-year initiatives for your organization to really make a transformational effort.”
And then, we talked about the elements of what is required: leadership buy-in, a detailed strategy, a systematic approach to adoption, this cultural shift within your organization, boldness.
NB: But I think the thing that I want to come back down to, because there’s always this balance in our sector and probably in all sectors of, balancing the big vision or long-term vision versus the short-term plan. And I wanted to get your advice really on what are some two to three must-haves, must-solve for in 2020 if organizations are really going to thrive in 2021 and beyond?
And I think you already mentioned one, which we started this conversation with where you’re like, “Hey, if someone gives to you, thank your donors.” It’s just as simple as that. Thank your donors. But what are some other ones that organizations must adopt? It’s not, wait until the whole transformation is done, but it’s like, you have to have these things in place if you want to succeed and grow in 2021 and beyond.
AO: So you’re right. I think first and foremost, the stewardship piece … and we saw after the financial collapse in 2008, 2009 organizations that doubled down on stewardship and invested more in that area. Thank you calls, thank you, emails, all sorts of different engagement like that. They actually were able to come out of that financial crisis faster and healthier than those that didn’t. So that one, I agree with, done, and gone. If you’re not doing that, you’re failing on a fundamental level.
Beyond that, I think now is the time to be investing as much as possible in individual relationships. Particularly with mid-level donors, with monthly sustainers who’ve given, particularly over multiple years, and with major and legacy gift donors.
Because if we think about it right now, somewhere around 40 to 45% of all philanthropic dollars in the US are given by 1% of donors. So, if we’re not focusing a lot of attention, a lot of energy and even expense dollars on managing those relationships well, we’re in for a rude awakening.
And then, I think the point that you made early on in this conversation around personalization. Organizations that are still sending “Dear Friend” emails, and “Dear Friend” letters are at risk. And I use those as the examples, but it certainly goes deeper than that. The extent to which you can access data that allows you to personalize an experience for a donor at whatever level and in whatever channel you can is going to be really valuable.
So, the more that you can understand your data well and understand what data you need to capture in order to be able to have those personalized experiences for donors, and then creating those different journeys based on whatever it is you know about those donors, which might take upfront investment.
It might take some additional time to create those experiences, and it may take some money. But doing those things well will allow you to start to deliver on that value proposition that donors expect, which is if the entire rest of my life is personalized to me, why can’t philanthropy be that way?
I think right now, those are the biggest things that I would say. And given that we’re still in this COVID crisis situation, I would also add if organizations don’t have a strategic crisis fundraising plan. We’re a little bit late to the game on that today for organizations. But to be prepared for the next crisis, I would say it’s probably also time to plan around crisis fundraising.
NB: Definitely. Well, Andrew, really grateful for your insights and expertise. Thanks.
AO: Yeah, man. Excited to be here. Thanks for the conversation. And that was fun.
NB: Thanks for listening to this episode of the Responsive Fundraising Podcast by Virtuous. Each episode, we’ve designed to really give you the insights into the philosophy process and playbook of leading nonprofits so that you can grow giving and build deeper relationships with the people who matter most, your donors. And if you want to dig further into responsive fundraising, we’ve actually put together an exclusive content pack just for listeners of this podcast.
Traditional fundraising strategies no longer work. This blueprint explains why today's donor expects more, and how nonprofits are shifting to responsive fundraising.