Episode 233: Creating Second Time Repeat Donors: Needing Speed and Personalization to Succeed
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.
Thank you for taking some of your day to join me, Randall, on this edition of around with Randall. As we continue to see a challenge when it comes to, as discussed many times, the decreasing nature of households wanting or able or desiring or combination thereof of making one gift any non profit, it pushes us more and more and more to ensure that those that do give to us were stewarding correctly, and then elevating into second, third and fourth gift opportunities.
Where I see such a challenge is how to do this. Today we're going to talk about how important speed is in the stewardship process and really what I think of as a re qualifying process in these conversations with donors who have made a gift, particularly those that have made those first time gifts. Why is all of this important?
Well, let's start with how what kind of work? This particular podcast, I will try to do both annual giving and make some references to maybe some mass stewardship efforts. And I have a podcast that will refer to in a moment where I talked about this in more detail, but we're going to focus on where the money's at, and that's in the major gift plan, gift principle, gift conversations.
We know that most of the time, the gifts that we read about those million, 2 million, 5 million, 10 million, and then obviously bigger gifts, we're most likely not first time donors. Those are repeat donors that many of our more sophisticated philanthropists are giving gifts to test the organization. They want to find out kind of an exploratory nature about whether or not you, as a nonprofit, do the things you say, whether or not there's a connection, whether they see value in that connection from a personal perspective, it elevates in those second time gifts.
So let's start with the philosophy. Before doing that, I want to make a couple references. We are not going to do basic stewardship today. If you're interested in basic stewardship, you can check out episode 24. And then in episode 182, I take apart the top. I think it was 7 or 8 questions that should drive our stewardship mentality.
And in doing so, what we know is, is that we've got to find a way in which we build a stewardship program. Those will help you. The idea of re qualifying, which we're going to talk about here in a moment. You can talk look at episode 164 where those are about upgrades. How do we really get into a lot of data to get into the right number of people?
5000 people cave. How do we find the right hundred to 250? We'll hit a couple highlights on that.
Why are we doing this? Why is this important? Well, as we just said, that we know those first time gifts sometimes are test gifts, exploratory gifts. Which brings us to the question of, well, really, how important is this and what is our timing element that I mentioned at the top? And it turns out, like most things, it tends to be faster than we realize.
Many times I see the nonprofit clients that I have the privilege of working with, stewarding probably what I would call longitudinally for months, six months, a year later. And part of that is resources. Part of that is there got lots of other things going, but what the data shows is that that is an immense mistake. So according to Nonprofit Pro, only 19% of our first time donors actually make second gifts.
So we're talking about a small percentage. Now, if back to my 5000 person or donor example. So which 19% or in this case about a thousand people is that I don't know. And we'll talk about re qualification here in a moment. But the speed at which this happens and the rationale as to why is critical. So if only 19% are making second gifts, if and when that 19% makes that second gift, if stewarded correctly, communicated correctly, what we know is, is that 63% become regular donors.
They continue to donate. And because of that, their calculation of if you do this kind of work, lifetime giving potential and we can get mathematical formulas on that increases dramatically.
So we know that we have these donors who we want to give again. The speed element is critical. The first 90 days after our first time gift is quintessential. It is the difference of whether many people will become second time donors, donors who receive. And we'll get into the specifics. Incredibly specific, time framed stewardship. Personalized, if at all possible, are the ones who become that 19%.
There's some fascinating numbers. So when we talk about things like thanking donors with a thank you note and doing so within 48 hours, I think maybe we've all heard this, but there's data to support. Why? AFP did a study, and they found that donors that are thanked within 48 hours personalized. And I don't mean a personal handwritten note, but it's not a blank email like they get a letter that says, Dear Randall within 48 hours.
And in particular, if impossible from from the possibility signed by or initiated by the solicitor are four times more likely to be retained as repeat donors. And if there are some type of acknowledgment from leadership. Penelope Burke did an interesting study where she found that if board members sent some type of acknowledgment, thank you note, and maybe you take notes into your board meetings and have them sign that there's a 39% increase in retention.
So you could do that through your board or executives. But the idea of elevating that thank you is critically important. Within 48 hours. So if you want to increase the number of people that are giving. Find ways to get them a thank you by data effectively and efficiently. But it's got to be somewhat personalized. I've talked about my wife and I giving not massive amounts of money, but enough for us what we can do and how we want to make the world a better place for the in the missions and organizations we believe in.
And I've talked about it, that we've made gifts, bid for figurines, first time gifts, and all I got is an email which was, you know, kind of proforma and not individualized and we didn't make it gifts to a lot of those organizations that there was no follow up. We never knew what the money went for. It sounds crazy that that happens, but it happens too often.
So timing is important and we're going to break apart then the next we've talked about 48 hours. What happens after that? The other thing is to think about in this process is what I've talked about in terms of re qualifying, how do you're qualify people? Well, if we take our 5000 donor number trying to figure out what thousand, you got to have a process.
And it may seem too quantitative and that's fine, but I don't know how to. You can't look up 5000 people. Will screen screening who has the greatest potential? So everyone would receive some type of 48 hour. Thank you note maybe something within three months from a board member or an executive. And if you have $5,000, you can't even do that.
Screen everybody figure out who has the biggest potential. Does a $10 donor come back screen that they could give you a 500,000? Well, I'd want to have it. And how do we elevate that? The other thing is what I would call instinct, particularly if it's a major gift. Start someone out. We see this most often in places like health care with grateful patients, where sometimes the first gift could be 10,000, 25,000.
Well, to get to that number, usually there were some meetings. What is the instincts of the inexperienced gift officer say, though their spidey senses go off and say, man, this could be big. So part of this is timing. Part of this is, is is scaling. It so that you can figure it out. In episode 216, from an annual giving perspective, I talked about different mechanisms that are out there to automate mass amounts of stewardship.
And I would recommend you go back and listen to that in particular for your annual giving for the, let's say, the 4000 that we're using, the 5000 donor example, we're trying to figure out what thousand, maybe we want a little more individualized stewardship with that group, maybe even down to 500. What do you do with everybody else? Automation is a great way to do that in terms of using AI and using technology.
216 and then the second thing is, is episode 225, we talked about creating a permanence in a feedback loop. Lots of different ways you can use feedback loop surveying and other things that can be done in mass numbers. So there's a little bit of connection to annual giving. But from a major gift perspective 5000 our number. How do I get that down to 100.
250 screening could be a part of it. Instincts are part of it. And the reason that's important is, is that you want to find a way to create a stewardship plan for the ones you believe. It's a guesstimate. It's a you're using data, instinct and the fact that they've given 5000. Who do I need to have an individual conversation with?
And this means that you need to deliver some kind of plan, clarify what the results are. And the more opportunity, the more individualized that conversation is. Second level gifts. Second time gifts are all about trust. Third, fourth, fifth onward. About trust. And secondarily, I would add, impact. It's tough to build trust without some kind of relational conversation interaction.
I know that this may sound overwhelming. Your small nonprofit potentially pick 50 people, pick 25 people. If you're not intersecting with donors in meaningful ways to figure out how to steward an upgrade and create longevity. Then you're just transactionally fundraising, and eventually you're going to run out of people and money. People don't get invested unless you build that relationship.
Maybe another trick, although I hear often about the donors that memorialize or recognize or honor individuals, for the most part, those are really hard people to transition into long term donors. They didn't give because of you. Now there's a couple of exceptions. If you have a grateful patient program in health care, they're giving because of their experience within the organization, and maybe they're honoring a caregiver as part of that.
That's different than honoring or memorializing or recognizing. Maybe I think about what in fact, we lost dad, you know, a little under two years ago. The memorial gifts were staggering. My mom and I, we were splitting up thank you notes for months. They weren't going to give again to the scholarship fund or to the church that they gave, because a dad and mom.
And so you might be able to eliminate a large group depending on if you're in the health care area, what that looks like right off the top, find the right people and then hone it down, particularly for major gift elevation, individual conversations around finding the right number. And so you might look at your timeline something like this. We talked about the first 48 hours being critical.
Now we're kind of moving into the tactical things you can do.
One through seven days is all about acknowledgment personal in terms of the solicitor, if at all possible. Absolutely individualized in terms of the the notes or the letters that are the official correspondence. Even when I was at the medical center and even at the holidays when we were dealing with thousands, thousands of gifts, I would take the thank the thank you letters.
I mean, 205 hundred. I don't think I ever saw more than 500 in a night. My wife knew that I was going to say we'd have dinner before we had kids. I would just sit as the chief philanthropy officer and sign everyone, every single one. Every gift that came in when I was at the Academy, at Saint Thomas or Rockhurst, every one I signed and everyone I put a note.
Thanks. Usually was just one with an explanation, but it was in pen. And then I'd look at the name real quickly and probably 10%, maybe 5%. There'd be something I would know or I know the person put an individual note. I cannot tell you that how much that meant to people. I did it because I had a great mentor and father, Tom Pesci, who taught me that because any gift above a certain level, he would sign and he would personally sign notes personally.
And I learned from him. And what I realized over time was it made an impact. So one, two, seven acknowledgment. How do we get people officially at the solicitor or the head of the school, or the CEO or a board member or somebody to do that? Days eight through 30 are all about impact. And this gets into the really tactical things.
We tend to wait too long. Oh, let's wait six months. What we know is the first 90 to 100 days is critical. That when we reengage our people from a stewardship perspective, within that first 100 days overall, the increased likelihood of them giving again goes up exponentially. So that date days, that first month days eight to maybe 32 to impact, what can I send them about the impact that philanthropy maybe has as a whole?
Or if you have a little bit bigger space shop, bigger organization, more invested in entropy and in stewardship, can I do something in the service area? And then if you've screened and you know a little bit more about your donor and you've handpicked some people, now I'm going to do individual conversations. Days 31 through 60, maybe 75. I'm having follow up.
And then it's about the strategy from days 60 to 75, up to 100 about preparing for that next re-engagement. And the rest of this podcast is to break apart those last two. If you're sending thank you notes, you can do that. I don't need me to tell you how to do that. If you're sending out bored, thank you.
Handwritten notes. You don't need me tell you how to do that. It's your choice. If you do highly recommend it. Or CEO or somebody of elevated stature, particularly on higher level first time gifts or potential, then it becomes about how do we reengage? So let's talk about the sequencing of what re-engagement looks like those post 30 day. So maybe you have the opportunity send something the email I'm not.
Again this goes back to automating, the idea of annual giving. You've got so much material you can use reuse. You don't have to write something new every time you want to send something out about impact, you should have those things naturally. Just because we tell the story of the impact our organization makes. But as time goes by, you're going to start individualizing it.
So the re in the kind of the re-engagement and more individualized. And if you can do it in mass, that's great too. Answering three questions, getting the donor to answer these three will begin to reformulate what the next steps are. Number one is what inspired their gift, particularly if we haven't had an individual relationship. If you listen to this podcast around with Randall enough and other people that I really look up to, Jim Langley and others, we tend to talk about how we don't talk about passion in us.
What was the rationale, that passion that drove and inspired that gift? Well, if we are bringing in a first time gift of 25,000, most likely we've had some meetings and hopefully you've asked about that passion. But the other side of it is getting into, particularly if it's a mailed gift, they give a $500 and you can requalify and you see there's more potential.
What can you do to find out about that inspiration? Number two is how was that gift structured? Now you don't have to ask that. You can look. But did they just do it outright and at what level? Because if they just did it outright at some higher level, that kind of tells you that there's probably more potential there.
Pledged $100 per year for five years. That's where that screening outside data can be helpful. The third question is what did they think about recognition. And this is just more not to lead you to larger gift because I know of some some eight figure gifts that there was never any mention of recognition, but it frames maybe their understanding of philanthropy.
The more they understand of being a philanthropist, the more likely they are to have larger gifts. And so it's kind of an indicator of, hey, did they understand that if they did, it leads you into maybe prioritizing them as you start honing the 5000 down to maybe 1000 or 500, then down to 100, maybe it's down to 20 or 50.
That's when you begin to evolve the conversation around impact, around specifically what interests them. And you're creating individualized stewardship plans. And you're not going to hit 100% here. If you identify 50 people, maybe 20 become second time donors at higher levels. And that's okay. We cast this net out. We do it from a qualification standpoint. We have lots of meetings where we talk about the ratios there.
We talk about solicitations, and I mean the one industry standard, it says it's 3 to 1. For every three you get one gift. The same applies here. If you're not casting a net out, how in the world do you know. And the data tells us those first hundred days are important because that's when we can connect with them and the individual speed at which it happens.
Can we not talk about asking them again? We're just building the relationship. You don't want to wait a full year now. This is again the advantage of today's world, with technology individualizing it for 20 to 50 people and finding cheap. Yes, there's some money involved, but it's not expensive money to create mass amounts of stewardship amongst lots of different people.
And once you begin to match those specific interests, you can frame it language to help you. We've seen how much your support helps in this particular area or launch this project. This is what we're thinking of next. What do you think? So you can do it in a meaningful way. And maybe there are milestones. You can use the project, reach a certain level or it's completed or there's an annual report coming out.
You want to get perspective. It's the start of a new fiscal year or serving a quarter or whatever. How do you create an opportunity to go talk with people? And then for those that are interested in moving into that second individualized gift level, or they pop because they filled out a couple surveys and so we may be wanting them.
You got a leadership in your giving program. You're going to elevate those into a phone call, follow up, particularly if they've given 1000 or $2500 and you're a large organization, just don't let them sit. Somebody pick up the phone. You have 2 or 300 of those. You're talking about $1 million in potential revenue from an annual giving or leadership annual giving officer.
But whether it's leadership, annual giving or major gifts, moving into planned gifts, blended gifts, principal gifts is you're going to try to move from project to program. They gave to something specific. What does that project do in the larger context of a program? What are you trying to accomplish? They bought enough food for a food bank, for a family, for four.
How does that fit into the larger conversation about feeding the community programmatically? So number one, project to program number two is annual to multiyear. Can you get them signed up for multiple years. Is that possible particularly you're shipping you're giving you've done $1,000. We've had some conversation on the phone. Maybe a quick cup of coffee. Would you consider doing this over 3 to 5 years?
Because it sounds like the program that we're looking to do fits with what that project was you gave to you, and there might be some interest. Is that something we could talk about? And the third thing is can you move out of cash, particularly on the higher levels? Can you get into blended and and, and planned gift conversations?
I would say in some ways I would probably counsel that as a third, fourth and fifth gift conversation, because if somebody keeps giving, I'm going to keep reengaging them. It's almost like the bad commentary. I'm as soon as you ask, I'm going to ask you again. I'm not advocating that, but that principle of engagement is important. So how do you elevate that gift multiple years after a number of gifts, could you have blended in and plan giving conversation?
This is all about stewardship being a strategy and connecting people emotionally to the things that they believe in, that your mission provides? The second and ongoing gifts is not about taxes. It's about emotion. First gift may have been because of taxes a little bit. In second time, third fourth of gifts will take the tax break. But the reasons they reengage aren't tax driven.
They're driven because of emotion, connection, trust. They get into the specifics of what you're trying to accomplish in that particular program. There's a connective nature about getting them closer to not only what their heart wants them to do, but the people in the organization, the nonprofit you that are executing what they believe in. And in some ways, you almost create an exclusive nature in terms of relationship.
Remember, it's not about the number of dollars they can give you. It's about the lifetime giving opportunity that it presents. And the higher the opportunity, the more I want to engage. Second, gifts aren't automatic. They're not granted to anybody. You actually have to work for them. And we've talked about today about the speed those hundred days. I'm not asking those hundred days, but you're going to do things with the right people.
How you can maybe segment 5000 down to 500, down to 50, and how important those first ten days are when it comes. Thank you. And personalization. The first gift leads to a second gift, which leads to a third gift that leads into transformational giving. Planned gifts, plenty of gifts where somebody gift signals their value set. That's all about emotion and connection and trust.
So what can you do last kind of tactical actions? Go back and look and see what your process is. Can you identify the the first time donors in the last, let's say 90 days or 180 days or even 180 days? And can you begin to figure out who do I want to elevate into that conversation? Maybe you create a re-engagement plan over the next year and some money to support it, particularly on the annual giving side for technology, and you build some internal tracking to see who are the people who have given a second time, third time, fourth time.
And what you'll begin to see is trends that become your ideal candidates. If less people are engaging in philanthropy overall for a myriad of reasons and this is where I recommend Nathan Chappelle's book Generosity Crisis. But if we know that that's true, then the people who give to us and they're not memorial gifts are not honor gifts. Unless maybe it's connected to experience.
We got to keep them and engage with them, and by doing so will elevate our giving our philanthropy to a much higher levels. And in doing so, we serve our community at a much more robust, more engaged manner and way. Don't forget to check out the blogs at Health Plan Therapy, two per week, 92nd reads. And of course, you can email me at podcast at Health Link to become.
I take these conversations seriously. I work hard to make sure that the content is valuable. That's my stewardship effort. If you listen to my podcast ones, I want you to come back because you find value, not because I'm selling anything. The podcast learned about my company. I don't talk about it when I'm talking about it is a classroom where you can be better for your organization.
Serving the purpose in the community, that that organization. The mission drives. Success, makes it better. You're someone who makes things happen. Don't forget some people make things happen. Some people watch things happen. Then there are those who wonder what happen. Be someone who makes something happen. Challenge your status quo. Keep those donors close. Engage them. Elevate them so you can find more people just like you who are people who make things happen and they want to partner with you in the nonprofit, in the mission to serve people who are wondering what happened.
Organizations sort of happen, things that are wondering what happened, because that's what our community needs each and every day. I'll look forward to seeing you the next time, right back here on the next edition of Around With Randall. And don't forget, make it a great day.