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From the Annual Fund to Major Gifts
Jesuit Advancement Association ConferenceJune, 2007
Lawrence Henze | Page #2© 2004 Blackbaud
Donor Development
Here We Go – Our Agenda
Overview of prospect/market research Research and Annual Giving
– Segmentation– Direct Mail and Telemarketing– Transition to Major Gifts
Lawrence Henze | Page #3© 2004 Blackbaud
Donor Development
Major Giving– Understanding propensity and capacity– Moves management
• Cultivation and solicitation• Stewardship and recognition
Planned Giving– Characteristics– Marketing
Here We Go – Our Agenda
Lawrence Henze | Page #4© 2004 Blackbaud
Donor Development
Integration of Development Functions– Bringing it all together into a cohesive effort
Summary and Questions
Here We Go – Our Agenda
Lawrence Henze | Page #5© 2004 Blackbaud
Donor Development
Underlying Assumptions (Overview)
We need to understand our constituencies Effective prospect research depends on:
– Understanding key segments– Thinking “out of the box”
Each organization has multiple donor profiles– Key to effective cultivation and solicitation– Understanding non-donor segments
Ultimate GivingMining your Database to Maximize Gift Potential
Lawrence Henze | Page #7© 2004 Blackbaud
Donor Development
Traditional View of Donor Development
Prospects (Database)
Donors (First Time or Sporadic)
Major Donors
Planned Givers
Lawrence Henze | Page #8© 2004 Blackbaud
Donor Development
True View of Donor Development
Prospects (Database)
Donors (First Time or Sporadic)
Loyal Donors
P
lan
ned
Giv
ers
M
ajo
r &
Pl a
nned D
onor s
M
ajo
r D
on
ors
Lawrence Henze | Page #9© 2004 Blackbaud
Donor Development
Ultimate Giving
Everyone on your database has an ultimate gift Ultimate gifts may be of any size or type Data mining will help you to determine the ultimate giving
potential of your prospects Once you know the ultimate giving paths on your database,
you may develop cultivation/solicitation strategies suited for gift maximization
Lawrence Henze | Page #10© 2004 Blackbaud
Donor Development
Definitions
Market Research (The Market Research Society)– “A systematic way of finding out what people believe,
think, want, need or do.”– “…and establish policies matched to the public’s needs.”– A.k.a. survey research, social research, and ‘prospect
research’
Lawrence Henze | Page #11© 2004 Blackbaud
Donor Development
Definitions
Data Mining: Investigating and discovering trends within a constituent database using computer or manual search methods
Predictive (Statistical) Modeling: Discovery of underlying meaningful relationships and patterns from historical and current information within a database; using these findings to predict individual behavior
Lawrence Henze | Page #12© 2004 Blackbaud
Donor Development
Applications of Market Research (NonProfit)
Targeting donor prospects Test new solicitation strategies Evaluate program performance Evaluate solicitation performance Assess prospect interests Benchmarking Monitor constituent satisfaction
Lawrence Henze | Page #13© 2004 Blackbaud
Donor Development
What Works for You?
What do you analyze?– Do you know what is effective?– Do you know what non-donors think?
Do surveys work for you? What are you doing online?
Lawrence Henze | Page #14© 2004 Blackbaud
Donor Development
Predictive Modeling – Who Uses It?
Finance Insurance Meteorologists Political Pollsters and Campaigns Retail E-commerce Thousands of Nonprofits
Lawrence Henze | Page #15© 2004 Blackbaud
Donor Development
Nonprofit Uses
Higher Education– Recruitment, matriculation– Retention, graduation– Fundraising
Other Nonprofits– Fundraising– Membership– Interests/marketing/readership
Lawrence Henze | Page #16© 2004 Blackbaud
Donor Development
Prospect Screening
When to use? How to use?
– Have an implementation plan!– Secure commitment from all players!– Use it! Evaluate it!– Do something different!
Use alone or in combination?– Comprehensive to focused, or vice-versa?
Lawrence Henze | Page #17© 2004 Blackbaud
Donor Development
Custom Modeling Applications Annual giving propensity Target gift amount Major giving propensity Planned giving propensity
– by planned giving “type”
Membership propensity & levels Direct mail vs. telemarketing propensity Acquisition vs. retention
Lawrence Henze | Page #18© 2004 Blackbaud
Donor Development
Modeling Direct Marketing Data
Lawrence Henze | Page #19© 2004 Blackbaud
Donor Development
Wealth Screening – Hard Data
Wealth ID P!N WealthEngine Target America Marts & Lundy Grenzebach & Glier
Lawrence Henze | Page #20© 2004 Blackbaud
Donor Development
Wealth Screening – Breakdown
Stock holdings Real estate holdings Business ownership Large asset ownership Income Corporate and foundation executives
Annual Giving
It is the cornerstone of most successful major and planned giving programs
Lawrence Henze | Page #22© 2004 Blackbaud
Donor Development
Annual Giving – A Working Definition
Solicitation efforts designed to:– Promote introductory giving– Promote loyal giving– Reach larger groups of individuals– Be efficient and cost effective – Minimize the intrusion on the donor’s life
Lawrence Henze | Page #23© 2004 Blackbaud
Donor Development
The Relationships Between Donor Types
Is annual giving the basis of:– Major giving success?– Capital campaign success?– Planned giving success?
If yes, are there exceptions? Do we underestimate the value of the $20 annual
donor?– Do we over-solicit these individuals?
Lawrence Henze | Page #24© 2004 Blackbaud
Donor Development
Annual Giving Applications
Annual giving propensity Target gift amount Membership propensity & levels Direct mail vs. telemarketing propensity Acquisition vs. retention
Rating Propensity
Who is most likely to contribute?
Lawrence Henze | Page #26© 2004 Blackbaud
Donor Development
Annual Giving Model
Lawrence Henze | Page #27© 2004 Blackbaud
Donor Development
Annual Giving Scores
Targeting Right
Direct Mail with a Purpose, or Looking for Love in all the Right Places
Lawrence Henze | Page #29© 2004 Blackbaud
Donor Development
Creative Challenge #1
A public university sends one undifferentiated letter to all of its 40,000 non-contributing alumni
Lawrence Henze | Page #30© 2004 Blackbaud
Donor Development
The Letter
STATE University Dear Graduate:
Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime.
Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000…
Lawrence Henze | Page #31© 2004 Blackbaud
Donor Development
But…
STATE University Dear Graduate:
Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime.
Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000…
But, prior to 1957, it was “State College and Agricultural Institute.”
Lawrence Henze | Page #32© 2004 Blackbaud
Donor Development
However…
STATE University Dear Graduate:
Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime.
Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000…
However, until 1987, they were known as the “Red Indians”
Lawrence Henze | Page #33© 2004 Blackbaud
Donor Development
Unfortunately…
STATE University Dear Graduate:
Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime.
Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000…
Unfortunately, in a nightmarish record of futility, they lost all of their games between 1974 and 1987 (perhaps prompting the change to Red Rabbits)
Lawrence Henze | Page #34© 2004 Blackbaud
Donor Development
Abandoning the Nest…
STATE University Dear Graduate:
Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime.
Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000…
The Raven’s Nest was abandoned in 1993, and the site now features a tattoo and piercing parlor
Lawrence Henze | Page #35© 2004 Blackbaud
Donor Development
It is Not “Happy Days”…
STATE University Dear Graduate:
Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime.
Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000…
And even if it were still open, who calls it a “malt” anymore?
Lawrence Henze | Page #36© 2004 Blackbaud
Donor Development
All Alumni Are Equal…
STATE University Dear Graduate:
Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime.
Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000…
Do you really think a 30 year old and a 50-year reunion class alum should be asked for the same gift amount?
Lawrence Henze | Page #37© 2004 Blackbaud
Donor Development
Improvements…
STATE University Dear <Name>: Like me, you probably look back fondly on your years at <State University. > Cheering on the <Team Name> to gridiron victory. <Enjoying a malt at the Raven’s Nest.> The friendships <and romances> with your classmates, which, in many cases, lasted a lifetime. Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of <$1,000>…
Using strategic customization, we can isolate variables that impact response rate and reflect “predictors” from statistical modeling
Lawrence Henze | Page #38© 2004 Blackbaud
Donor Development
Improvements…
STATE University Dude: Was college great or what? I’m still partying man!
You knew this was coming, didn’t you? That’s right, we’re asking for money. Welcome to the real word!
But the thing is, it’s not really that much. And by giving $50, you could be helping some slacker who has even less money that you did when you were 18.
With much less complexity, we can mail two or three basic versions of the letter, testing dollar asks based on age or other financial/class year criteria.
Lawrence Henze | Page #39© 2004 Blackbaud
Donor Development
Alternatives
Letter 1 to graduates of less than 10 years Letter 2 to graduates of 11-25 years ago Letter three to graduates of more than 25 years How do we use differences in their experiences, ages,
to create messages more appropriate to them?
Lawrence Henze | Page #40© 2004 Blackbaud
Donor Development
And the point is…
Graduates spent 4 (or more years) becoming individuals Lived in different times at school with varying world events Totally different life stages, from finding a first job (or
second) to pondering retirement So why use the same letter with the same ask?
Major Giving
Everyone wants major giving success, but are you willing to walk before you run?
Lawrence Henze | Page #42© 2004 Blackbaud
Donor Development
Major Giving – A Working Definition
Solicitation efforts designed to:– Promote significant giving– Promote loyal giving– Reach one donor at a time– Develop a personal relationship– If desired by the donor, to publicly recognize their special commitment
Lawrence Henze | Page #43© 2004 Blackbaud
Donor Development
Propensity & Capacity
LIK
EL
IHO
OD
AG
L,
MG
L &
PG
L
CAPACITY- TGR & WealthPoint
Projects
Upgrade Top Prospects
Low Yield
Lawrence Henze | Page #44© 2004 Blackbaud
Donor Development
What Do You Know?
If you have propensity and capacity?– Segmentations– Messages– Frequency of solicitation– Exclusion/inclusion– More than giving history and wealth tells you
Lawrence Henze | Page #45© 2004 Blackbaud
Donor Development
Model - Major Giving Propensity
Lawrence Henze | Page #46© 2004 Blackbaud
Donor Development
Why Capacity Matters?
In the giving equation, is it less important? Three reasons people do not give:
– Not asked– Do not support your mission– Not asked for an appropriate gift
Lawrence Henze | Page #47© 2004 Blackbaud
Donor Development
Target Gift Model
Lawrence Henze | Page #48© 2004 Blackbaud
Donor Development
Target Gift Distribution
Lawrence Henze | Page #49© 2004 Blackbaud
Donor Development
What Can You Avoid?
Over-solicitation Ineffective solicitation Short-term needs vs. long-term prospects Minimizing lifetime value Projection of your opinion
Moves Management
Building Relationships That Last a Lifetime
Lawrence Henze | Page #51© 2004 Blackbaud
Donor Development
Defining Moves Management
Correspondence Phone calls and meetings Visits to organization/volunteer activities Proposals and concept papers Ask for involvement
Strategically developed, personalized activities designed to cultivate and strengthen relationships:
Lawrence Henze | Page #52© 2004 Blackbaud
Donor Development
Or, More Simply Put…
CRMCRM Database
Pro
spect
Rese
arch
Moves
Manageme
nt
Actions
Feedback
Constituent Relationship Management
Solution
People
CR
M
Data
bas
e
Prospect
Research
Moves
Managem
ent
Act
ions
Lawrence Henze | Page #53© 2004 Blackbaud
Donor Development
External Prospect Research
ElectronicScreening On-Line Traditional
• Wealth identification• Influence and power identification• Generic modeling• Custom modeling
• Lexis-Nexis • Hoovers.com• Bizjournals.com• Bigcharts.com• tenkwizard.com• Google.com
• Historical review (affinity) • Public records research• Peer group evaluation• Development officer
feedback• Surveys
Lawrence Henze | Page #54© 2004 Blackbaud
Donor Development
Not All Prospects are Equal
A development officer’s pipeline is established by identifying, rating and ranking a prospect’s:
Wealth indicators Improvement Capacity and propensity scores Responses to personal interactions
Debunking the Myths of Planned Giving
Myths, Mysteries, and Meaningful Planned Giving Research
Lawrence Henze | Page #56© 2004 Blackbaud
Donor Development
Sharing Knowledge
Planned giving facts Methodology of determining donor profiles
– On your own– Market research
Understanding the Donor Lifecycle– Annual, major and planned giving
Understanding Planned Giving Behavior– Myths and realities will be addressed throughout
Lawrence Henze | Page #57© 2004 Blackbaud
Donor Development
Planned Giving Facts
Wealth transfer (Boston College study)– $41 trillion to be transferred from one generation to next in 50 years– Estimate that $6 trillion will be given to charities
Lawrence Henze | Page #58© 2004 Blackbaud
Donor Development
Planned Giving Facts
NCPG research - 42% of Americans have wills
o 8% say they have charities in their willso 97% do not revoke charitable will provisiono 14% say that they have considered this provision without being
asked– 89% of planned gifts are bequests– 73% do not inform charities of will provision
Lawrence Henze | Page #59© 2004 Blackbaud
Donor Development
Planned Giving Facts
Why people give– 97% say they care about the charity– 87% desire to do something special– 35% tax planning– 22% know charity’s representative
Lawrence Henze | Page #60© 2004 Blackbaud
Donor Development
Planned Giving Facts
Extremely passive solicitation methods Appeals are broad based and require request for more
information Expectations are unreasonably low
– Far less than 1% give using this methodology
Lawrence Henze | Page #61© 2004 Blackbaud
Donor Development
Age Distribution – Major Giving
Lawrence Henze | Page #62© 2004 Blackbaud
Donor Development
Age Distribution – Planned Giving
Lawrence Henze | Page #63© 2004 Blackbaud
Donor Development
Planned Giving by Gift Type
Each “type” has different traits– Annuities– Charitable remainder trusts– Bequests
Mass Marketing – one to one– Opportunity to target planned giving prospects
Lawrence Henze | Page #64© 2004 Blackbaud
Donor Development
Planned Giving Propensity
Lawrence Henze | Page #65© 2004 Blackbaud
Donor Development
Variables and Planned Gift Types?
Age? Wealth? Credit Usage? Past Giving Behavior? Type of Organization? Relationship to Organization? Marital Status?
Lawrence Henze | Page #66© 2004 Blackbaud
Donor Development
Direct Mail
Remember importance of annual giving– Multiple opportunities to spread the word
Set sights on higher response rate– 1% unreasonably low
Direct mail is passive by nature– Plan follow-up for highly-rated prospects
Information vs. solicitation– Asking is not the sole purpose
Lawrence Henze | Page #67© 2004 Blackbaud
Donor Development
Telemarketing
Personal, relationship building calls Use as a follow-up to direct mail Thank you calls as cultivation tools
Integrating Development Functions
Lawrence Henze | Page #69© 2004 Blackbaud
Donor Development
Integrating Development Functions
Having a plan for all of your constituents Communication among entire staff Tracking Results Analyzing Results Being an Instrument of Change
Lawrence Henze | Page #70© 2004 Blackbaud
Donor Development
What You Can Do
How many “we have always done it that way” programs do you have?
Evaluate the success of each of your direct marketing efforts– Cost per dollar raised– Upgrades– Response rate– Retention rate
Lawrence Henze | Page #71© 2004 Blackbaud
Donor Development
What You Can Do
Do your direct mail letters really speak to your constituencies?
Do you contact your best prospects too frequently? Do you manage your vendors and consultants?
– Do their strategies match your institution?– Custom vs. cookie-cutter approach?
Lawrence Henze | Page #72© 2004 Blackbaud
Donor Development
What You Can Do
Review your prospect assignments– How many assigned?– Is the number of prospects reasonable?– Are prospects being moved through the stages?– Are prospect contacts being tracked?– What are you doing with unassigned major gift prospects?
Lawrence Henze | Page #73© 2004 Blackbaud
Donor Development
What You Can Do
Is your planned giving program too passive? You do not need to wait until you have a planned giving
officer to have a planned giving program! People skills vs. technical skills
Lawrence Henze | Page #74© 2004 Blackbaud
Donor Development
What You Can Do
At the end of the day:– Have a plan for donor retention– Have a plan for donor acquisition– Have a plan for moves management– Have a plan for reaching everyone on your database
o Including ‘no contact’ individuals
Lawrence Henze | Page #75© 2004 Blackbaud
Donor Development
What You Can Do For You
Remember the mission Take chances to grow professionally and personally Be passionate about your work Have fun
Summary & Questions
Cary ColwellCary.Colwell@Blackbaud.com
1-843-216-6200