A Lesson Learned in Vegas Can Help You Score Big

I was recently in Las Vegas. I was there to see Keys to Tall Buildings, a play written by Lloyd Noonan (http://twitter.com/lloydnoonan), a former development professional turned playwright. In my friend’s darkly comic play, the hero (or anti-hero, depending on your point of view) kills “bad” people. The initial twist is that the “bad” people have committed only minor offenses such as failing to properly sort recyclables and trash at the Whole Foods Market. The second twist comes when we learn that those responsible for minor offenses are also guilty of terrible crimes. Oddly, this got me thinking about the impact of stewardship on the philanthropic process. Allow me to explain.

Most donors to nonprofit organizations make modest donations, at least initially. Even people of great means make modest contributions. For example, I did an analysis for one large charity and found that over one-third of their donors of $5,000 or more made an initial gift of $100 or less. In other words, as many modest donors gained confidence in the organization, they increased their giving. One way this organization earned the confidence of donors, and their increased support, was with effective stewardship.

Consciously or subconsciously, donors often test nonprofit organizations. They seldom start the relationship by making the largest possible gift. Instead, donors want to see if the organization uses their money responsibly. They want to see the impact of their giving. They want to know that the organization appreciates their support. Good stewardship will help donors answer the questions they have about the charity. Effective stewardship will also set the stage for the next ask. The better the stewardship, the better the outcome of that ask.

Unfortunately, some organizations have decided to cut corners during these economically tough times. Some view stewardship activities as expendable. These organizations are bound to pay a serious price in the months and years ahead.

Lloyd Noonan

In Noonan’s play, those who committed minor offenses were also guilty of serious crimes. Donors to nonprofit organizations assume that a charity that commits minor stewardship gaffes is or will be guilty of committing major offenses down the line. If you mistreat a donor or their gift today, how can they trust you with another gift? This is a particularly serious matter where planned giving is concerned. If you do not take good care of your donor and her money while she is still alive and looking over your shoulder, how can she trust you to properly steward her gift when she is no longer here? The donor’s assumption will always be the worst case scenario.

Conversely, if you properly steward donors and their gifts, your organization will reap significant benefits. Here’s what H. Gerry Lenfest, entrepreneur and philanthropist member of The Giving Pledge says about stewardship, “Once gifts are secured, it is also essential that institutions find creative ways to ‘credit’ and celebrate each planned gift donor. Remember, any planned gift donor is a ‘major gift’ donor. Those of us who make planned gifts do not expect, nor do we want, lavish thank-you presents or excessive recognition. However, we do want to know that the organizations we support appreciate our philanthropy and will use our gift in the way we intend. So, do not make the mistake of forgetting about us once you receive our gift commitment. We may truly appreciate how efficiently and effectively you handle contributed funds so much that we entrust you with another planned gift. We are also in a position to influence others to do the same.”

To ensure the success of your development program, make sure you have a highly effective stewardship program in place. Be sure donor gifts are used according to donor wishes. Be sure to report to donors about the impact of their gifts. Be sure to appropriately and creatively recognize donors. Commit to seriously investing in stewardship.

That’s what Michael Rosen Says… What do you say? How do you recognize your donors? What kind of information do you share with donors? Is your organization investing more or less in stewardship this year compared to last?

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13 Responses to “A Lesson Learned in Vegas Can Help You Score Big”

  1. I was wondering for a moment how we were going to make the leap to donor stewardship here, but it worked!

    Totally agree with your thoughts on stewardship and the idea that sometimes donors are “testing” the organization. I am volunteering with a very small NP right now and they do great stewardship but terrible solicitation. They didn’t believe they should be asking at all and were horrified at the idea of asking their $50 donors to move up to $100 for a capital campaign.

    I explained to them my own story – made a small donation out of the blue, they sent me a heartfelt 4-page thank you letter which prompted me to become a volunteer. They were shocked to learn that my donation was only about 10% of last year’s donation budget for my family and that the door is open to ask people like me for more. I was absolutely testing them to see if the relationship would be a fit.

    On tight budgets, sometimes all we need is a phone call once a year or a holiday card with a real signature and a couple of words to make our donors feel that they are part of the work that we’re doing.

    • Christina, thanks for taking the time to share your thoughts. I chuckled at your first comment; I’m happy to have provided a glimpse into the twisted (ah, I mean, creative) way my mind works sometimes. When it comes to asking, I’ve often found that the folks doing the asking are more uncomfortable than the folks being asked. To underscore this fact, here’s a revealing result from a study conducted by Adrian Sargeant and Elaine Jay: 88.7 percent of donors to nonprofit organizations “indicated they believe it is appropriate for nonprofits to ask for legacy gifts.” Since donors think it is ok for us to ask, we should ask. As for stewardship, your suggestion about the power of a personal thank-you call is right on target. Penelope Burk has done some superb research about the impact of thank-you calls; she found they help retain donors and encourage them to upgrade their support more significantly and more rapidly. I appreciate your suggestions!

  2. I am proud to say that my organization is remaining focused on stewardship year-to-year, which is still pretty new. I completely agree about how important stewardship is, not just in leading up to the next ask, but also because we have an obligation to show our donors that their contributions are important to our work.

    • Dan, thank you for writing! Your comments reminded me of one of my favorite quotes: “Always do the right thing. It will gratify some and astonish the rest.”–Mark Twain. You’re quite correct. Organizations should practice good stewardship because it is simply the right thing to do. The fact that it helps set the stage for the next ask is merely a bonus.

  3. Absolutely! Nonprofit organizations spend far too much time and money trying to attract new donors, while dropping the ball with the donors they have. Smart businesses know that it costs far more money to get a new customer than it does to market to existing customers.

    Stewardship and follow-up needs to play a primary role in every development office. This means not allocating your database or thank you letters to an under-trained volunteer or the lowest-paid staff member of your team.

    Check out my new free eBook download, The Lifetime Donor Attraction System, for some great tips on creating an organization’s stewardship system: http://www.pamelagrow.com/1462/free-ebook-lifetime-donor-attraction-system/

  4. I agree with everything you are saying in your post Michael. Stewardship is so important in recognizing and appreciating donors for their financial contributions. A major role of a development office, I tell non-profits I consult, is to really engage their donors and take time building a trust relationship. Not just thank you notes and newsletters, but recognize them through social media, at special events, or profile them on your organization’s website.

    I believe in these economically tough times there are other ways for non-profits to cut back, but stewardship is definitely not one of them. I like to suggest two major budget line items where substantial cuts can be made- marketing & web hosting.

    I know a lot of non-profit’s websites were established a long time ago and they have been with the same web design/hosting company for a while, usually at a high cost. With so many low cost web hosting sites available you no longer need a degree in computer science to host a professional and exciting site for your organization. For marketing, with everyone on at least one social media site these days, take your pick and platform (focus your energy) to reach your target audience. Make letting your donors, volunteers, and populations you serve know where to find you a priority and easy (brochures, business cards, & website) this will help to build your base.

    Get measurable results, detailed analytics on your efforts, a target audience you want to reach and it will be time well spent and money well saved.

    • Ian, thank you for sharing your thoughts and for your very helpful suggestions. Development is all about building relationships of trust. You’ve offered some great ideas about how organizations can build those relationships economically.

  5. You nailed it, Michael! Stewardship is the key.

  6. Absolutely, Michael! In fact, it’s really not a question of “should we?” but a “we must”.

    I agree with Ian, though we’ve learned that a significant number of our donors aren’t using the computer, or if they are, aren’t using social media – so we do have to depend on notes, newsletters, and other printed vehicles. Newsletters just for donors have been well-received, thanks beyond the gift acknowledgement (just because), inviting comments via surveys… for a small shop, doing those through the mail isn’t terribly expensive, and does pay off in loyalty, and in stronger relationships.

    After all, if we hadn’t sent the surveys, we wouldn’t have known so many aren’t using computers, and wouldn’t have initiated the print newsletter! The relationships, like any good ones, should be two way – not just us pushing info and appeals out to them, but being willing to listen to our donors and to work with them!

    • Mary, thank you for taking the time to share your thoughts! Your comments remind me of a museum client I had years ago. To save money, the great powers were pushing for the elimination of the museum’s membership magazine. They argued, based on no actual information, that no one really reads it. I strongly encouraged the museum to do a membership survey before taking any other action. The survey found that members did indeed value the magazine. In particular, they valued the listing of upcoming events and lectures. Based on the survey, the membership staff was able to successfully argue for keeping the magazine. In addition, they redesigned the magazine based on member feedback. For example, since the event listing was so important to members, the listing was redesigned into a pull-out calendar that members could hang on their refrigerators. As a result of the exercise, member satisfaction rose as did membership retention. It’s amazing what can happen when we actually listen to donors.

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