CLIMBING THE DONOR PYRAMID: TRANSITIONAL AND MAJOR GIVING Lawrence Henze, J.D., Principal Consultant Target Analytics
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CLIMBING THE DONOR PYRAMID: TRANSITIONAL AND MAJOR GIVING
Lawrence Henze, J.D., Principal Consultant
Target Analytics
Introduction
Hi! I’m Lawrence Principal Consultant
At Blackbaud: 15+ years
Non-profit experience: 36+ years
Residence: Centennial CO
Interesting fact 1: Not Larry
Interesting fact 2: I am a Cheesehead
Due North
Overview of presentation
• When tradition and best practice clash
• Multi-dimensional, overlapping issues, that affect our
fundraising success
• Many mistakes are due to flawed view of donor
development
• Assumptions are dangerous; knowledge is powerful
• We may:
• adhere to institutional tradition (blindly?)
• and/or adhere to fundraising tradition in general
• and/or focus solely on short-term success
• Best practices for success
Traditional donor pyramid
Today’s donor pyramid
Not all pyramids are equal…or even pyramids
What shape is your pyramid?
• Create a gift chart
• Trace the outside for your ‘pyramid’
• Assess your strong and weak points
• Use prospect research, analytics and new strategies
to strengthen the weaker areas
• Business as usual highly unlikely to work
10
Best - or not so best – practices Over-solicitation
Conflicting goals
THE ORGANIZATION WITH THE MOST
SUSTAINABLE DONOR POPULATION IS MORE
LIKELY TO SUCCEED
That organization is not necessarily the
nonprofit with the most donors
Target Gift Range
Annual Giving Likelihood
Score $1 - $50 $51 - $100 $101 - $250 $251 - $500 $501 - $1,000
Excellent
(AGL 901-1000) 0 8 125 1,578 2,278
Very Good
(AGL 801-900) 19 170 758 3,078 3,597
Good
(AGL 701–800) 655 3,294 6,530 7,162 2,873
Average
(AGL 501–700) 4,100 14,529 17,290 10,651 2,556
Lower Scoring
(AGL < 501) 67,860 66,438 16,645 5,284 1,085
Story time – case study
• Best Prospects (Green) – solicit for annual gift within target gift range
• Good prospects (Gold) – good prospects for annual gifts
• Unlikely prospects (Red) – reduce or eliminate
Lesson
• Allocate resources to those donors/prospects
most likely to give
• Use analytical tools to determine giving
likelihood
• Reallocate resources not used to solicit unlikely
prospects to:
• Stewardship
• Retention
• Upgrades
15
Best - or not so best – practices
Silos
The silo approach
Removing the silos
• Strive for an integrated plan encompassing all
aspects of development
• Opportunity to reduce redundant expenses
• Reallocate resources to higher ROI projects
• An integrated planning process should help promote
a donor-centered process
• Assess your donor-facing communications
• Purpose
• Number
• Timing
• Pay attention to over-solicitation
18
Best - or not so best – practices
The missing middle
7.17.16 2015 ATLANTA ONLINE FUNDRAISING SUMMIT
• If you want a successful major
giving program you build from the middle
Stuck in the middle?
• Two concepts that are not identical in concept or meaning
• Mid-level giving defines contribution levels bridging the gap between
annual and major giving
• Not all mid-level donors transition to the top of the giving pyramid
• Transitional giving defines progression through the giving pyramid
from entry level giving to ultimate giving
• However, both transitional and mid-level giving often exist in the void
between traditional annual giving methodology and the assignment of
individual prospects to development officers
Mid-Level and transitional giving
Annual
Transitional Giving
Mid-Level Major
Transitional Transitional
N/A
has not made a gift in 3 years
At Risk Donor
giving is decreasing
Slow and Steady Donor
giving is staying the same
Rising Star giving has gone up
• Retention enables positive velocity Stable velocity may also be positive
• Calculation total giving in the most recent year divided by
the average giving in the last 3 years
Increase Rising Star 2,218
Same Slow and Steady 6,721
Decrease At Risk 2,147
No Rating NA 8,025
Identify positive activities - velocity
Promoter Giving in all of the past 5
years
Devoted Giving in 3 to 4 of the years
Sporadic Giving in 1 to 2 of the years
Deeply
Lapsed
0 gifts in the past 5 years
Identify strengths/weaknesses
Source of original gift
0 20 40 60
Direct Mail
Telemarketing
Special Events
Email/Online
Social Media
Recurrent Giving
% of Donors
How long to first mid-level gift?
0
5
10
15
20
25
0 1 2 3 4 5 6 7 8 9
10
11+
Percent of Donors
Percent ofDonors
26
Best - or not so best – practices training gift officers
Bringing professional development
to development
• Development Officers (DOs) - Issues
• We hire smart people and provide limited training
• Set expectations for short-term goals only
• We promote great fundraisers to management roles
• How to hire fundraisers
• Be willing to hire outside of directly related experience
• Hire energetic and motivated people
• Hire DOs with specific contact goals
• Dollar goals “only” discourage prospect development
• Create the right priorities for DOs
• Flexible compensation?
Tradition
Descriptive Statistics and Past Behavior
Analytics and Predictive Modeling
In-Depth Research
Field Qualification
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Best Practice
Training
Descriptive Statistics and Past Behavior
Predictive Modeling
& Analytics
Field Qualification
Research Asking
30
Best - or not so best – practices not soliciting your best prospects
• You have assigned your top prospects to gift officers
• You remove these prospects from annual solicitation
plan
• For many potential reasons, the solicitation does not
happen
• Your best donors/prospects go unsolicited
• Strategy: don’t eliminate from all annual solicitations
• Better, create a few high-touch solicitations
Oops!!!
32
Best - or not so best – practices major gift asking strategies
0% 20% 40% 60% 80% 100%
1 year before
2 years before
3 years before
4 years before
5 years before
Give nothing
> 0 to < $1,000
>= $1,000 to < $2,500
Giving prior to $10,000 gift
Giving after a gift of $25,000
0% 50% 100%
1 year after
2 years after
3 years after
4 years after
5 years after
Give nothing
Downgrade
Same level
Upgrade
What is needed?
• An effective mid-level or transitional giving program
• A stewardship program that adjusts to increasing
potential
• Effective communications of goals and priorities
• Knowledge of donor interests
• A fluid mixture of prospects and donors
• Better asking strategy
•Would your institution…Prefer a one-time gift of
$100,000…
•Even if the donor stopped giving for several
years after?
•Or a staggered pledge…
7.17.16 2015 ATLANTA ONLINE FUNDRAISING SUMMIT
What is needed
Escalating Pledges
Build in retention
Build in velocity
$10,000 $15,000 $20,000 $25,000 $30,000 $100,000
37
Best - or not so best – practices undervaluing planned giving
Planned giving is a necessity
• It is likely that you have more dollar potential through
planned giving than outright cash gifts
• If just starting, concentrate on simple gifts: bequests
• Do not forget the greater community as prospects
• See our papers on planned giving (last slide for link)
• This should be a priority for every institution
• Planned gifts = major gifts for donors fitting the
profile
• Previously known as deferred giving, planned giving
has traditionally been defined as the gift that an
individual creates during his or her lifetime that will take
effect at or after her passing. For the majority of donors
making a planned gift it will be the largest gift they make
to the recipient organization.
• The profession surrounding this type of charitable giving
is often referred to as gift planning.
• It is rarely accorded the respect, budget and staffing the
number of prospects would warrant.
Definition of planned giving
Planned giving prospects and the pyramid
• Individuals most likely to make a planned gift to your organization are loyal
donors, as evidenced by their recent giving over the most recent three years.
• They are more likely to live in communities with smaller household size (# of
people) and a higher percentage of older residents.
• Additionally, prospects will be more likely to live in communities with a
prevalence of retired individuals or those working in management careers.
• Financially, higher income and larger retirement accounts are also predictors.
Planned giving characteristics in Canada
Planned giving characteristics (years giving)
0% 20% 40% 60% 80% 100%
International Relief
Public University
Cultural Arts
Community Hospital
> $501$100-$500< $100
Planned giving characteristics (gift size)
• Planned gift donors/prospects are loyal to your organization.
Identify what constitutes loyalty to your mission
• Through stewardship and donor relations, recognize their
loyalty and increase engagement
• Monitor and control the communications they receive
• Understand their motivation/affinity
• Annual/membership solicitations offer opportunity to share
planned giving information when appropriate
• Reach out to your best prospects personally
Planned giving action plans
45
Best - or not so best – practices acting on analytics
ANALYTICS & THE JOY OF DISCOVERY
THAT ARE CAPTURED IN
DATABASES
DONORS LEAVE DISCERNIBLE
PATHS, TRENDS AND
CHARACTERISTICS
RAISE MORE MONEY
UNDERSTAND THE DATA
ACT UPON THE DATA
DO NOT TAKE ON TOO MUCH
The goal
Data and analytics inform strategy
Taking action based on knowledge
Analysis to action
• Create reasonable but aggressive timeline for implementation
• Annual giving/direct marketing
• Likelihood/probability scores easy to implement
• Target giving/capacity scores help form asking strategy
• Use to determine segments, frequency of contact
• Mid-level/transitional giving (also major giving)
• Fewer, more high-touch solicitation efforts
• Personalized stewardship efforts for identified prospects
• Portfolio assignment for top prospects
• Cultivation events (not galas) to share information and create
awareness
• Ongoing relationship management to encourage gift retention and
growth
7.17.16 2015 ATLANTA ONLINE FUNDRAISING SUMMIT
Analytics yield a profile of best
annual/membership prospects Solicit the best with the best
Try new tactics with high scoring
prospects
Reduce or stop soliciting unlikely
prospects
Upgrade prospects?
Refine stewardship
Understand existing
communications
Identify interests
Inform, Engage, Solicit
Analysis to actions
Analysis to action
• Major and principal giving
• Create portfolios, add and delete prospects
• Use newly identified prospects to create fluidity of portfolios
• Planned giving
• Integrate marketing with annual giving (direct and digital)
• Steward annual donors in conjunction with their planned giving
probabilities
• Assign prospects for cultivation and blended gift opportunities
7.17.16 2015 ATLANTA ONLINE FUNDRAISING SUMMIT
Lawrence Henze
3490 East Easter Avenue
Centennial CO 80122
843-991-9921
Thank you!
http://www.blackbaud.com/company/re
sources/whitepapers/whitepapers.aspx
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