Episode 230: Creating Choice Architecture for Donor Giving Options: Strategic Yet Not Overwhelming
Welcome to another edition of Around with Randall, your weekly podcast for making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett.
I'm always taken back just a little bit. When I know people have joined me. Randall, on this or any edition of around with Randall. Today we hop into something I'm seeing a lot more often with the nonprofits health care, education, social service that I have the privilege of working with. And there seems to be a hole in how to get to how to figure out what to ask for, to advocate for, to try to connect to when it comes to our donors relationships and eventually solicitations.
Today is about creating what I think of is it's concept choice, architecture that is strategic yet not overwhelming to put the right things in front of donors. The challenge is, is that we are in this middle ground where we have donors who might say, well, I don't know exactly what to give to. They can't articulate their passion per se, and we'll talk about that in a second.
But at the same time, our organizations aren't exactly giving us a great arsenal of things to ask for as they are in some ways almost paralyzed by the economic climate that we're in. And we all know that philanthropy at its height is really about elevating organizations. The things that the mission purports to really try to signify direction for.
How do we make the world a better place? I'm going to take something off the table and give you a couple references that you can go back and listen to. The perfect scenario is, as we tend to talk about here on around with Randall and I talk about with my clients, we should be spending more time figuring out what the passion of the donor is.
If we can figure out what the passion of the donor is, then it's a lot easier for us to figure out what to go ask for, as long as it's within the strategic and mission oriented nature of what we're trying to do. I'm going to take that off the table and say that the challenges we're having are when we can't figure out that passion.
So if you're looking for that best option, how do you get into the conversation about someone's passion and elevate that? I'll give you three episodes of a run with Randall. Go back and listen to that. Focus on this. Episodes 148 and 149. And then again, 204, 148, and 149 are really tactical practical. 204 is about the questions to be asking and what things you've got to really think about.
You should listen to those because that's a prelude to almost anything that we want done correctly, or elevating in the relationship building process. But the problem is, is that that doesn't always happen. And that's really one where we want to spend our time today. What is choice architecture. So we'll start at the top as we always do the philosophical.
Then we'll kind of move into the tactical choice. Architecture is a decision making kind of process that can doesn't really actually I've never heard it used in philanthropy. It's used in business schools. It's used in sales. It's used in psychology about how do people make decisions. Choice architecture. And what that is, is about giving structure around options.
I kind of think of it the way that we try to raise our children. I don't ask my kids very often, what is it you want with all the options on the table? I tend to ask them, here are three choices that you can look at. And I was a parent. My wife and I. We're okay with all three.
I really don't care which one they make, but we're not choosing four or five and six. It's these three. Now the older they get, the more longitudinal, choice in terms of self-determination. But we found this incredibly helpful the younger they were, because then we kind of kept moving forward the way that we thought the family should, or the moment should.
So it's framing all of this when it pertains to donor strategy, to philanthropy. What we're talking about is trying to find a middle ground when someone doesn't quite know what to give to. Their passion isn't quite enthusiastically known. Between too much and too little, too much can be overwhelming. Too little. It feels too restrictive. And so when we think about our conversations with donors around, I'm interested in the organization, have had a great experience.
I really believe in it. I believe in the wider perspective. But I'd like more details as to what my money might be used for, how it can make a difference. This choice architecture is a balance. Scale on one side is too many options, which causes confusion and really hinders the ability to make a decision and elevate into transformational giving.
On the other side is too few options and that causes a sense of restriction control rigidity because people don't feel like they can make decisions that are in the best interest, not only of themselves, but the organization, that connection. So we're left in the middle trying to curate different options clarity. This philosophy of choice architecture leads us to the thought process around our mistakes.
So kind of one step down from the general philosophical what do we do? What are we seeing? What are we doing right now? So I think of three. One is what I think of is the the menus of doom, that the things that we're asking for. And we'll get into this in a few minutes around how we can force organizations or organizations to better help us identify strategic things that over the next five years can make a difference, is they are paralyzed.
As we talked about, this menu of doom is kind of one of two contexts. One is it's just a list of things that are not that inspiring. And it's way too many. And there's not a real connection as to how they make a big difference or two. They are so dismally lack of enthusiasm, lack of of interest. They're almost like asking for Q-tips.
Like. They're not. You're not. No one's quite. Yeah, we need them. But what are we doing? Either way, I'm seeing more of those. And this is being pressed because our organizations can't strategically thank the paralyzed. So the first is this kind of bifurcated option. Or maybe they're combined of the menu of doom. The second is the idea of false equivalency that the options that might be available if someone says, what are the most important things you're trying to accomplish, as they maybe don't have a sense of priority for their own giving, that they're in distinctive or lack meaningful differentiation?
It's like it's the it's the list that says, if you're in education, well, here are six scholarships to fund. Well, I don't fund scholarships, but yet there are six different things. But really they're they're all the same thing and they're not very inspiring to me. Now for someone else they might be, but we want a wider array of options.
The third area of mistake, which I see most common is the thought processes of overselling, kind of versus overstepping. That overselling is kind of an over personalization without the donor's intent. This goes back to that passion. We just literally put the same thing in front of everybody, and they're not very distinguished. They're not very individualized. Somebody who just gives or doesn't give to capital projects, buildings, and you just keep throwing that in front of them.
The second part of that is overstepping, where there's so lack a idea of intentionality. It's almost like we're asking for major gifts just for unrestricted giving. So the common mistakes, the menu of doom, that's it's we're going to keep barely keep the organization open. It's not very inspiring. Number two false equivalency. There's no differentiation. You know, it's it's just generic titles research education patient like but what in there.
What were we trying to accomplish. And the third is overselling it overstepping that it's either so confining that we only do this or it's just basically unrestricted doesn't make sense. So this gets us to the tactical. What is it we can do. So I basis on kind of the rule of three that we need to have thoughtfulness. We need to have distinct options.
And we have to have kind of an understanding of connection. So let's start with part of the problem right now as we've talked about, our organizations are paralyzed. I'm working with a client who has a very legitimately so critical need to the organization, and I have never seen anybody raise money for this. It is the most uninspiring lack of input or lack of connection, lack of impact that you could ever discuss.
And I'm not going to share what it is because it might tie to maybe not a client, but an area. I'm not going to do that. I keep things generic, but we've even tested this. We did a feasibility study and I said, don't test this. And we talked. I talked to more than 50 people as kind of standard feasibility process and like 40 plus of them said, are you insane?
We're not giving money to that. Well, the organization is struggling because that's the only thing on their mind. It's huge. It's expensive. It's needed, and they want philanthropy to pay for it. And now we're into this conversation of not what's going to happen. And so we've begun a process of really establishing a strategic thought process around philanthropy. Here's what we're doing.
We're breaking the organization into areas. This could be by department, service area, university for schools. What the law school needs is different than what the music school needs. And so the first thing is, is that yes, there may be global things we're trying to accomplish, but people give to their area of interest and to get to strategy and kind of long term thought.
We got to break it down. So the first thing is, is not just doing the whole organization. If your food kitchen or food pantry or food support, there are different parts of it. There's acquisition of food, there's the community portion, there's the staffing, there's the outreach. How do you break it down in more meaningful ways? So the first part is don't do everything at once in one case statement or one mini case statement or one one pager.
Get it down in areas. Number two is take apart the budget. I talk about dissection. Our organizations are spending money on things. The CFO and finances and his expenses. I see them as opportunities, as long as they have some intent in the mission and making people's lives better, or what we're trying to do better, get into that budget.
Where are we spending money? We're spending money on people. Programmatic support you're spending money on on different, in health care. Could be research. It could be maybe remodeling spaces or refreshing spaces in education. The same is true there. Maybe you're spending money on actual buying of food or building of houses for housing insecurity. What are you spending money on?
Get into the budget because that's where you can begin to define where philanthropy might have options and things that we can go out and talk about. The third is based on that. Sit down and say, play a game. I'm putting $5 million to your CEO, your chief of strategy, the dean, the head of a service line. I'm putting five, ten, $25 million into a pot on this table.
You can touch it. How are you going to spend it in the next three years? If you had all the options in the world, what would they be? You force them to think about spending money beyond their current budget. And unfortunately, too many of our nonprofits right now are retrenching into not only can we not want you to think about money we don't have, I want you to think about spending 10% less than you currently are allocated.
How do we get a combination of the budget versus strategy or thought to come together? And that takes effort. It takes a commonality of understanding with the executive leadership that yes, I know we're trying to cut expenses, and I'm not denying that. But I want to sit down and just talk about what might be possible if someone laid $10 million on our table in the service area, in the school, in this department.
So the first thing is, is to get some of these things out and develop what I call one pagers, because what that's going to do is if you can balance the budget and kind of the $10 million question into what things are being spent or what things will be hopefully be spent if we had the money, you can begin to create a list in your mind that can then talk about where we're going next, about framing what that means.
So the first thing is you're going to have to dissect. And that leads us into then how do we do this. So the first thing is, is that our donor relationships should be based and thought process on what we put in front of people should be based on their past giving history, their known interests, their strategic institutional priorities that we have.
We're trying to merge the two. The one thing I don't want to do is put a list of needs or a one page case statement in front of a donor. First thing. The first thing is, as we talked about, is thoughtfulness. I want to hear what they think. And they may say, I don't want to give to that.
Thank you for thinking of us. I'd like to help you figure that out. Tell me what you get great joy out of. What? What interests you? What do you. If I was to give you these options to read about what we do, which one would be the most interesting to you? What would you find the most connection? If I just put down the list or the the case statement without asking their opinion, I may be putting down things in front of them that they'll give ten bucks to, but not 10,000.
I want to cater a little bit as much as I can. On the idea of thoughtfulness behind that.
Then I can begin to figure out what to put in front of them. And hopefully, if you've dissected the budget to have the strategy thought process, just getting some directional things, you can then use language moving into options.
We've identified some important opportunities priorities, their general. I'd love to get your feedback and find out what you think about them. These seem to fit with generally maybe some of the things you think are most important. These things would be meaningful. Could we explore if any of them are very interest to you? This is why the two coming together in terms of bringing options together.
So important. What dude? Can we get anything out of them again? Start with the passion. If they tell you you know where to go. But a lot of times it doesn't happen. Then we got to pull that out of the organization to find out. How do we make that connection? Inside each option, there are four things that need to be thought about.
Number one, obviously, what will the gift or the any type of gift achieve? What's the goal of this? That particular need? Number two what what's the why? Is the role of philanthropy important not only from the organization's perspective, but for the donor's perspective? Why this donor? Why is this a right fit? Number three is is in each one kind of what their investment level might be.
What's the structure. Because this then gets us into if they have great passion, they they didn't know originally. They maybe they want not a university as a whole, but school of law. And it turns out that they have a program that allows, law school students coming close to the bar to be given free, bar testing prep, as well as because they have kids, some service to make sure that passing the bar is important to law school.
Even though I never practiced that may be of interest to someone. Now we can get into, well, if they're really passionate, could we talk about because they went through that 30 years ago and no one helped them, and now they want to cash versus pledge versus blended versus planned because the level of their investment will determine maybe where you fit.
And the last is what's the time horizon, not only for the project but for them. Is it immediate? Is it down the road? Down the road means legacy. So in doing this, we've got thoughtfulness, we've got distinct options, and then we're defining those options. After we've worked through the organization, budget, goals, thoughts. Put $10 million on the table just to get us some direction, and then pulling out as much as we can for the donor to make that in the middle.
So the idea of that cultural choice architecture is to create a synergy between what they might think versus what we're doing. We got to work on both sides to get to that middle. And then it becomes lastly about customizing the gift as you go through the cultivation process. And I talk about two stages. General meaning hey, area or school or I don't give to capital, but I give to programs, I don't give to programs.
We only put money in buildings. Okay? And then honing it down to that secondary level, that that that complex level specifically. What will they do and how will they do it? This gets us into customizing those gift types. So if you have, as I've talked about, one page case statements with some general six things within cardiology, or nine things that are needed within a school of law or whatever areas, you can break the organization down into.
Then it's about customizing it into areas that major gifts frame. Solving problems. It's just not about the money. It's about what? Not just about a scholarship, but about giving kids opportunities that are underrepresented and never have had an opportunity that go to school for the first time, that has a passion connection rather than just scholarships. What problems are you solving with major gifts?
Principal gifts are about conceptual framework. Yes, there's a problem or but it's not a specific problem. It's about finding growth or finding increased impact because somebody's principal gift a million, 5 million, 10 million is about an investment in creating new opportunity in some way, shape or form and plan. Gifts, when we talk about this customization, are all about this idea of and long lasting investment, matching moral fiber of the donor or the prospect to what you're trying to accomplish.
A planned gift is a signal of someone's personal belief system.
And customizing either the problem, solving the conceptual framework at the highest levels, or this legacy moral connection is important to realize. It's going to steer you into different gift conversations. Choice architecture how do you frame the different options and keep honing someone in to wear you down, down to 1 or 2 things where people can feel good about it?
So what should you take from this? You should think about your least, maybe the top 1015 donor relationships that you have or prospect relationships that you have where you want to ask, are you understanding as much as you can, particularly the ones that don't tell you passion, what their framework is? And do you understand the other side of the equation, the framework?
Are you having conversations? Is your leadership your gift officer? In a large organization, you may not have the responsibility nor the political clout to sit down with a service line leader or deem someone above. You've got to be thinking that strategy. Are you helping them? Think about it in a meaningful way to get down to this idea of creating a match for your top 10 to 15 donors, which ones are you a little unsure about?
And can you think about choice architecture bringing fewer options, figuring out how to narrow out options based upon what they want and what is needed to get to something that matches? It's not easy. Organizations who don't have a strategy are having trouble articulating vision to the larger, higher level. More sophisticated donors are asking, what do you do with my money?
And this current economic kind of uncertainty, we got to keep pushing in. If you're the leader, your responsibility, if you will, maybe you have somebody to report to that is the leader or part of a leadership chain. You got to push into those leaders and say, there's this crazy way of thinking about how we can figure out more things that we need that are part of that strategy, $5 million over the next five years, what would you spend it on?
It's all about how you bring the conversation to bear. Choice. Architecture is about narrowing, just like my kids narrowing options so we have the right options for the right people to do the right things that our organization needs highly complicated 2020 two minutes to frame all of this, but this gets you started. And this is what I'm talking about with a number of my clients trying to get them to think about it a little bit different way so they can maximize their philanthropy.
Don't forget check out the blogs at Hallett Philanthropy two per week 90s. Different things I see wrote here recently about an opinion about what's going to happen with Nil money in athletics and gender equity, which I have been studying for 30 plus years, that two specifics about philanthropy just wrote, one about a, interesting, new issue or article or in the Chronicle Philanthropy, where they have a tracker now about job losses in the nonprofit world, different things worth kind of some thoughts, some just knowledge.
92nd retail athletes App.com. If you'd like to reach out to me, it's podcast. It has this link to become. I say it over and over, and I don't mean to be a broken record, but I kind of do. If you're in this space, if you are working in health care, if you work in education, if you're working in social service or working anywhere in the philanthropic nonprofit world, what we're doing is really important.
I think things are going to become more complicated before they get easier. And this is where philanthropy can be as best. It solves problems where there are gaps between free enterprise and government, where nobody wants to do it and it's in the government and efficient have to do it. Philanthropy lives it. It's the essence of what I say at the end of every podcast.
Some people make things happen, some people watch things happen. Then there are those who wondered what happened. Philanthropy is about people who make things happen. You matching the work that you do with the donors out in the community who want to do the same for the people and things in our community that are wondering what happened. We need this now.
What you do is important. I hope you make an extra call. You feel better about yourself. I hope you believe in what you're doing because we need this. No matter what part of the world you're in, no matter what sector of the nonprofit world you serve, what you do is important, and it makes a difference. Every day. And I'm hoping as I do this at the end of every podcast, you feel that I'll look forward to seeing the next time, right back here on the next edition of around with Randall.
And don't forget, make it a great day.