Episode 243: Why Obligatory Giving Sticks for Donors - How to Move Toward Passion Discussions
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 so honored to have you join me for this edition, or any edition of my podcast around with Randall. I want to talk today about obligation and really more from not the donors perspective, but what our nonprofits are doing. And we're going to couch this or position this more in a religious prospecting perspective, but don't turn it off.
If you're in university, health care, social service, wherever, because this is going to apply to you as well. I have found myself over the last several, probably year, six months could say months, but year doing more and more conversations with religious organizations about how they fundraise. And maybe this is my next book per se. I'm working on one now, but how to reframe the donor journey and how we view it?
But the one after that me beyond how we have in some sectors of our nonprofits, in some areas of gift officer's perspective, certainly from the perspective of finance and how we build our metrics, we think of people, our donors, those that, frankly, are the most loyal as being somewhat obligated to give to us. Which if I think if you put it in those terms, most nonprofit professionals fundraisers will say, well, of course or not.
But what we do indicates that we kind of believe that. And if we don't, we're actually sending signals to our donors that they should think that they're obligated to give to us. Today, I want to take apart the idea of obligatory giving, reposition it back into passion, which you and I'll refer to other episodes of this podcast where you can get in more into the details.
But what actually is occurring that's causing me to see, think, talk. Feel this. And maybe, maybe your organization's doing some of these things as well. So let's set the stage. I believe that there really only are two kinds of philosophies of giving. One is passion, which is really based upon the alignment of the donors values, identity, purpose. Their goals, what they think is most important to them.
We're going to come back to that here in a few seconds. The other, which I obviously referred to a few months ago, is the idea of obligatory giving meaning. It's almost assumed that they should give to us. Where do I see this and where am I actually talking more and more about it? I've been asked to speak at different.
I'll call them conferences, gatherings in religious parts of our nonprofit world. I've spoken to an archdiocese or two, and the priests, I've talked to Adventists. I've talked to one, great organization who works with rabbis, talking about this idea of obligatory giving. That when you're in the pulpit, when you're at the front of the church, it's almost assumed that your congregants are going to give to you.
And this may fit a university. The alums, your most consistent donors, and you just assume they're going to continue to give to you. Maybe it's in health care. It's grateful patients who have just a passion for the organization because a position a team ended up saving the life of them or a loved one, and they continually giving you assume they're going to continually give it misses the point of passion because it deals more with things like duty, guilt, expectations, almost like a membership.
I'll give you a couple of other examples that I find interesting. I'm not saying that we shouldn't have 100% board giving levels. I've worked with a Jesuit priest where I've said, you've got to give at least a dollar. I know you talk about poverty, but everyone on the board has to give. But it's setting a board level and just assuming the board members you're going to give to that level.
A lot of times donors do this, but it misses the point of getting to transformational, because we just assume that they're going to give to what we do and how we do it, because they've always done it that way, that it actually leads to this kind of story. I have a friend whose family works and is a member of and when I say works volunteers is deeply engaged in the church.
And the story goes that shortly after the death of the patriarch, when the matriarch made the decision, as they plan the funeral to make memorial gifts, go to the church, the pastor minister leaned forward and said, when it was indicated that that those gifts should be more for the endowment than they are for current operations, there would be probably some significant gift opportunities from this particular passing that, interestingly enough, the minister leaned forward and said, but we have current needs in this moment.
Then on top of that, the same family making a required minimum distribution for charitable purposes so they don't get the tax deduction, but they don't have to pay the income on assets, the required to distribute over a certain age in doing so really never got thanked but was actually said told that, well, instead of having those larger gifts now go to the endowment.
We need operational dollars. It's almost like it was an obligation for the choice in which they were. This family was choosing to give has to go to what we think. This also leads into the conversations I have all the time with CFOs where they say, well, we will decide where the money goes. And I'm like, yeah, that's not how this works, because donors have opinions.
All this is to say is, is that if we allow ourselves to position it as an assumption that people are going to give to us for the reasons we think they are. It misses the whole point and creates some outcomes. Before I get to those outcomes, I'd be remiss if I don't mention, which I do quite often just the numbers that fewer and fewer families are making gifts to nonprofits.
We're below somewhere around 46% of households in the U.S. is making any gift. One gift where we used to be 20 plus years ago, two thirds of the households. And we all know that the most generous, the largest donations are making it more and more of our annual campaigns or capital campaigns and things of that nature. Why is there a problem with obligatory giving?
Well, it does some things. The first is it creates what's called the reluctance theory. When you make the assumption that somebody is obligated to do something, it reduces their freedoms. So from their perspective, it kind of reminds me of how I raise or we raise our children great kids. We are blessed beyond belief. They are really, really good kids, but they're still kids.
Which means, as my dad would say, the brains are in their socks. As soon as you eliminate a choice, as soon as you eliminate a cause, as soon as you eliminate an option. What do kids like to do? They want to actually go to the thing you've eliminated. So if you can use reverse psychology or you keep as many options open, help them reason they make the best choices.
That's the concept generically of reluctance in philanthropy. That means that if you tell me that you think my money should go to something, I pull back and it I feel like there's freedom reduced in my world. Well, the outcomes of that are small or token gifts are declining engagement, our reluctance to think about larger gift opportunities because this idea of reluctance.
I don't want to do what I don't really have to do. I don't want to do what I don't want to do it. Even though I love you as a nonprofit, I don't love something. I'm against you. But what you're asking me to give to. The consequences of this idea of reluctance theory are all based on outcomes. That you have lower donor retention because you ask people what you what you think they should give to rather than what they want, what's important to them.
It's lower gift sizes. We can all understand just for our own personal life, that we're less likely to do something if it's something we don't want to do. And when we talk about philanthropy, this leads to lower transformational gift opportunities, in particular planned giving because we know planned gifts are an an embodiment of a donors passion, of their values, of the things they believe in.
Most. If you are sending annual fund pieces that say give to this particular cause, this limited item, and not giving donor segmenting, you know there's an expense involved for some nonprofits because they're smaller. But if you're not finding ways to allow people the most series of options for them to be able to give to you, then you're going to end up with a lot of obligatory gifts, which are going to be less and less likely to continue if you're not building individualized relationships, which we're going to talk about here in a second.
As your tactical solutions to this particular problem, what you end up with are fewer gifts that are larger, major gifts, transformational gifts, and certainly planned gifts. The power in passion giving is actually the kind of 180% opposite of reluctance theory. When we dive into passion, as we kind of pivot toward the tactical and what we should be thinking about.
So the psychological driver that comes from passion is self-determination. I get to choose what I value. I have the ability to do what I think. Let me give you a historical parallel. Has nothing do with philanthropy. It's the American Revolution where those 55 individuals who signed the Declaration of Independence, who represented obviously a lot more people than just themselves, said, we want some idea of self-determination.
We want freedom. And when you put it in that context, you're like, wait a minute. This begins maybe to make some sense. There's a sense of autonomy, there's a sense of relatedness, connectedness. There's a sense of joy. I always talk about the difference between joy and happiness. Happiness, I think, is fine, but it comes from the outside. It's.
And it's last shorter period of time. Joy is inwardly driven, and it's like a fire that will burn and create a sense of warmth for what you're engaged with or what you believe.
We have to change to passion driven philanthropy, less obligatory giving, and all kinds of ways because it leads to our donors being investors and partners. And it talks and speaks to this theory of self-determination about it. That leads to the opposite of the idea of reduction or having limited options to abundance. I have so much that I can give.
I'll give you more. The outcomes are pretty simple larger, more transformational gifts, longer engage donors, stronger loyalty advocacy. They'll start talking about it. All this is to say is, is that as you talk about maybe you're in a prospect meeting. What's their passion? Why would they tell our story? If they gift officer doesn't know it, then we probably need to find out.
Or a board member doesn't. You don't know what the board members passion is. Organizations are not singular. Need entities. Everything in your organization that you do that cost money is a specific sub need of the greater mission. The more you understand that and connect it to people, the better off you're going to be. So let's quickly take apart the tactical pieces.
What can you do? First couple I'm going to give you some other podcasts. So you get a pen out. You can write them down and listen to more detail about them. But they are part of this larger conversation about obligatory giving and the challenges with it. Number one is you've got to discover donor passions. So two episodes, episode 2 or 4 and episode 148, you can go back and listen to specific things, but these are really about open ended questions.
What's important to them? When I work with religious leaders, this is a real challenge because they're like, but I know what the church needs. And by the way, that's not exclusive to churches. There are some CEOs and hospitals and universities that I've worked with saying, I know what they need. I'm like, great, do you have the money to pay for it?
Well, no. Be nice to know what your donors think. Open ended questions. What's important to you? What he value? What do you give to? What do you like about what we do? What is most? What do you want your legacy to be? Those two episodes? Give them 2 or 4 and 148. Get into more of that. So step one is figuring out donor passions.
The second is a really tactical thing is breaking up your budget into smaller, bite sized, what I call passion point. You can get into really great details into this. And episode 149, where I break apart an organization's budget to get you smaller segments. If you're a, let's say, foods, a bank or food, provider for those who have food challenges, food scarcity issues.
This is not about the food. There's volunteers, there's trucking, there's transportation. If you're a church, it's mission work. It's music. It's kids education. It's the pastor, minister, rabbi, priest. There are costs involved with our organizations. If you can break them down into smaller pieces. And you know that when someone says, well, my passion happens to be if we take the church music, you know, we spend a lot of money on music for our choir, for robes, for the music director.
If we could find the right thing for you, would you be interested in a more robust, deeper conversation about our music program and why it's so important? If you do one and two, everything else takes care of itself. Number one, ask what they care about. Number two, know your budget broken out in a more meaningful way so you can connect them to the things that are passionate that you actually do.
Then you go into step three, which is about stories, and connect them to emotional narratives. What it is we do, why we do that, what's important if we use our church example in the choir, we know that music lifts people. Maybe there's somebody who says, I like the organ. And you know, the old time hymns. We have a service for that.
And we really struggle to support that. We'd love to do more. Can we talk about that? Maybe they're no more modern. You know, the guitar, you know, families up in front singing, leading the congregation a PowerPoint presentation or, you know, the verses instead of hymnals. You know what? You'd be surprised what people support, but you start telling stories.
Here's what it means. Here's some of the outcomes. What that does is lead to step four, which is all about trust and shared vision. I try to tell nonprofit leaders, particularly those who don't want to listen, donors have opinions. There's nothing more offensive, even for organizations that we believe in deeply, when they don't listen to what we think is important, even if they're not going to do it.
How do you build trust and create a shared vision? Because then that leads you into bringing them in to parts of the organization they don't normally see with. They like to sit in a class. If it's an educational institution, it's not just sit for a couple hours while there's a lecture going on, relive some of those things, maybe important.
Maybe it's coming to a meeting in a church, like on Wednesday or Tuesday instead of just Saturday or Sunday when they come to the sanctuary, how do we bring them in and ask what they think about these things? What is it they want to accomplish within these things? Go back to our music example on a church Tuesday night would they like to come and sit and watch the choir practice and see how we do what we do?
If they're not in the choir, maybe they just go every Sunday because they love the music. How do we bring them in and ask the most important question, what is it you want to accomplish? What is it you would do differently? How would you make this better? Number five then leads us into empowering them because once we bring them in, it gives us opportunities to tailor the kind of experience they want in a church is probably not a lot of naming university.
Lots of different ways we can recognize, and some people may not want any recognition in doing so. What we do is we empower them as partners. We get them to see that their passion allows us to grow. We're not just sitting there asking them, give us because we deserve it. It's you want to do this because you believe in what this part of our organization is.
We would be remiss if we didn't jump for just a second into kind of the tactical side of the organizational structure. Number six is we need to change our mindsets for gift officers. If the mentality you have is we need gifts, that's obligatory. I cannot tell you how much it drives me crazy when clients or others ask, well, how do we increase the number of donors?
We have a goal of 4000 5000 donors. I'm like. What is that helping you figure out someone's passion just by putting a number out there? What you're saying is we need money. You should give it to us. Obligation. How do we change the metrics? How do we know when we know someone's passion? Upper level gifts, planned gifts, things that are passion driven, latent in the donors efforts to make a difference.
The gift officers. We need gifts. Wrong. They need impact. Donors want to make impact. That's the mentality that we should be selling. Talking about leading, preaching, teaching. So the gift officers, particularly young ones who maybe not have done this along, those that maybe don't believe it quite as much, are forced into conversations about why someone thinks their passion can help us and what their passion is that gets us to do that not about what we need, but what the donor wants to do.
The last is there's always overcoming challenges when we make these kind of shifts. I would advocate, no matter where you are, what you do as you begin this process to find internal champions, to find people that will help you board members, CEOs, executive teams, you're going to have to have conversation with your CFO because the money may come in differently, more restricted, which sometimes finance gets a little agency about.
They like that freedom to know where they can put the money where they want it. It's also going to change the timeframes in which we look at gifts, because it may mean that a instead of a year over year gift to get to transformational, they may miss a year or two, or they're smaller gifts to get to that big transformational gift.
All this is to say is, is that if all we do is keep talking about what we need in nonprofit work and we miss the whole idea of philanthropy, philanthropy doesn't mean money. It doesn't mean obligation. It means, as we say all the time, love of mankind, love of humankind. It doesn't mean we need money. Help us. It means people wanting to make a difference, to make their community a better place.
It's amazing how far sometimes I think we get from the basics of who we are, because we are a philanthropy industry which has nothing to do with obligation. How do you position yourself to figure out what donors want, then connect it back to what you do so that it fulfills their passion to be a philanthropist. If you do that, you'll always be successful.
Don't forget to check out the blogs at how It leads to 2 or 3 per week. I write about them all kinds of aspects of the world my own personal life to philanthropy related issues. Usually they connect to philanthropy or leadership or something in some way. How it's philanthropy.com backslash blogs encourage you to check them out, get an RSS feed, write to you and if you'd like.
Of course, you can always email me a podcast. It helps me to become, as the world seems a little uneven, Teeter totter up and down. What we realize is, is that playing therapy in the world in which we live in the nonprofit world is more and more important. We serve in that gap between free enterprise, who doesn't want to do what philanthropy can do because it's not cost effective, nor is it providing a profit.
And the other side of the wall is or the where the gap is, is government, which really sometimes doesn't do it very well. What we're doing is more and more important, and the more topsy turvy things feel for families, for people, for organizations, the more important philanthropy is realize that you're making a difference. Realize that you have something to offer, and not be satisfied with.
What is the status quo? What can I do today not only to find their passion, but to build mine for my job, for the organization, for the profession, and for which I serve? Volunteer, gift officer, CEO, whatever it might be. Don't forget some people make things happen. Some people watch things happen. Then there are those who wondered what happened.
We live in a world where we fall into one of these three at any one time, and you are someone who makes things happen. You partner with others in their passion to make things happen for those people, organizations, issues, groups, whatever who are wondering what happened. Pretty cool way to spend a career. Realize your value. Understand its importance.
Lean in a little bit. Walk away from obligation. Walk to passion so that you can continue to make a difference. For the people who are wondering what happened. I look forward to seeing you the next time, right back here on the next edition of around with Randall. Don't forget, make it a great day.