Episode 304: Are We, You, Ready for the Fundraising Office of the Future?
Thanks for taking some of your day to join me, Randall, on this edition of around with Randall. Last time we talked a little bit about what the role of the Chief Development Officer was and really expanded that to leadership roles. Whether you manage a team or you're a director or something of that nature and how you really need to look at your job, well, take it one step further today by kind of the conversation, adding to it around what is the future of the development office look like now, I could try to predict every aspect of adult office, and I'd be wrong on most accounts in that level of specificity.
But the point is that I think there are some things that we can look at to better understand. No matter if you're in healthcare or in education or higher ed or social service, whatever, that there are probably some key components of things we have to be aware of. And what we really want to talk today is to think about what should the sophisticated philanthropy office, development office, Foundation, whatever look like in 5 or 10 years will look different.
And the answer is yes. How will it look different? Well, I can't answer all of those things, but what are going to be the impacts? We can certainly talk about that because I think some of those things lay out right in front of us if we pay attention. And then, as always, we'll have tactical solutions for you to look at how you can be prepared for this.
What can you do to honestly assess what should we be and how should we do it? So, as we tend to do, let's start at the top. Work our way down. First of all, let's start with why we're talking about this. I don't anticipate, and I think people who are in the know tend to agree that we're just going to have a bevy or an increase in funding options, looking forward, that the idea of return on investment value is going to become more and more and more important.
When we evaluate, we think things like budget, staffing, where we put our resources, where do we invest, how do we grow? The larger management issue that we're going to have to deal with is more along what the for profit world has been working with for the last ten years or more is that as we look at what happens in the kind of evolution of the work that we do, are we willing to change?
And those that aren't willing to change will eventually pay for it, and they'll see the outcomes of that unwillingness about higher costs, weaker productivity, lost relevance, declining market share or position, less money raised. We have to be willing to admit and to be open to the world is not going to be the same, and we have to make adjustments to be ready for it.
So that's kind of the bigger picture of why. But that really gets us into the question of what's what are some of the inputs? What are some of the rationales? What are some of the things that are going to force us to do this, really? We're talking about donor expectations. We're talking about labor costs. We're talking about data.
We have to think about these things in ways that allow us to have the opportunity to see how we must change.
Let's start as we think about these inputs, these the these pressures that we're going to feel. The first is economics, the idea of simply having larger staffs. It's not going to be the answer. Working on a very interesting project with a client doing an assessment and had a meeting. And I think there was this natural assumption that we were going to recommend.
I was going to recommend more major gift officers. And what we came back with was, no, actually, we're not quite sure. Your major gift officers are all that productive. What we need are 1 or 2 coordinators that can free them up to do things that are actually driving revenue, meaning relationship building. And I think that surprised some people.
And that's what we're talking about here. What we're looking at is trying to maximize philanthropic revenue in the strongest but reasonable ROI or return on investment, which means that every position, whether it's in the system and event process, portfolio, what are we doing in that kind of view to maximize the limited resources we have? The second thing is we have to be nimble, that if we are stuck in our ways, we're going to get left behind.
The best example of this is looking at donor behaviors. We're seeing more and more conversation in the world of our donors that they are expecting high levels of stewardship. They're expecting individuality. But if we just keep sending out an annual report with the name of lists, does that really engage our donors? Just one example. The key here is that nimbleness allows us to adjust as we gain insight as to what we can do and who we can be, and that we just can't wait 2 or 3 years anymore to say, hey, you know, we'll figure it out down the road because somebody else is going to do it better than we do, which means
we need to be willing to adjust.
Three we need to really maximize the value that we have, for which I still think is the tip of the spear when it comes to philanthropy, the relationship building process, the gift officers, the front line. Now, if you're in the infrastructure prospect management finance area, you probably hear this a lot. And it gets old and frustrating because like, we're working just as hard and you are.
But at the end of the day, the dynamics of the gift officers ability to raise money certainly is not without influence of the work that goes on by others, but is the quintessential factor in US driving revenue. Fewer people are making bigger gifts if we're not in front of those people and building relationships with those people, meaningful commitments that will help drive our organization forward, then the fact of the matter is that all of this is for not.
And so we have to think about it in a more holistic way, to really let people do the work that people can do and prioritize that work as quintessential for everybody in the organization. We also have to allow technology to help us. Now, AI is the quote unquote soup de jour today. I guess that's repetitive soup de jour, and it certainly can be.
It needs to be embraced. We've talked about this multiple times, but not overly dramatized in terms of, well, it's our savior or it's the worst thing in the world. It's a tool that, if we use correctly, can help us. And it may be things more on the infrastructure side. Interestingly, I'm a member of the Southern California Healthcare Advisory Association for development, excuse me, Healthcare Association for development, Scat.
And we just did a amazing education session. I wish more people would have watched it. On having an AI gift officer fascinating. Not sure I'm totally bought in, but it was fascinating in terms of what was possible, particularly if you segment out the types of people that they're working with or maybe lapsed donors and things of that nature.
But really we're talking about maximizing AI, maximizing technology, maximizing automation to ensure that we're prioritizing the value of the of the opportunities in front of us. We have to move. I know this may sound strange to start, but I think most of you in this area will agree. I do think that there is a commentary around prospect management or research being a dead subject, because we're going to evolve.
I'm not saying you're eliminated. Please don't hang up the phone or turn off the podcast yet to prospect intelligence, which makes what you do even more important if you're in this area. We need to help gift officers if we're going to maximize the time and the value that they have into this intelligence, that it's not just saying these are our best donor opportunities, but help gift officers derive priorities about who deserves now, when should they?
What kind of outreach should it be? What kind of pathways should there be to exist? What should happen next? I think there's actually a call for prospect research to even be a higher level conversation or opportunity.
We also need to think about the idea of specialization that not everybody can do everything, and that there are certain components of the work we do that are critically important, which means we need to think about the design that we have. We need to think about the how we, you know, really dive into the idea of where specialization, which may mean outside people, some of you may have found out, I do some fractional plan giving because not everybody needs a full time plan giving person, but they need plan giving.
How do you maximize these things? And lastly, we need the organization to realize and we need CPUs and leadership and philanthropy to integrate into the strategy. It's not there just to react to what they want or part of the strategy building process. We talked about that last time around. What can be done with philanthropy at the table?
When we put all these things together, that means that we're looking at some pretty big, daunting things that are going to be moving in the next 5 to 10 years that are part of this process, and it's all backed by data. It's all backed by fact that costs are rising faster than productivity. And that's just not true in the philanthropic world.
That's true everywhere. The leadership tends to protect what's historically known. Did a podcast about this about 6 or 8 weeks ago around organizations that say they want to change, but really don't want to? How do you move past that? That we have talent that's hard to retain. The mobility of our workforce is more mobile. They have the ability to go where they want and move what they want, how they want to do, which means we need to be more able to retain them and find ways to integrate them into what they think is really important.
We have organizations strategically that operate from a position of only making change when there is a challenge or an issue, that's actually a place of weakness. We've done some podcasts on strategic planning, and you hear me say often the best time to strategic plan is when the organization is great because it gives you the most options when you're weak, when there's limited options, we're only choosing from what's possible, and we don't have all the things that are available to us as an arsenal.
All these things have examples that we can see, feel, touch. Let me give you a couple to think about. And this is in the for profit world blockbuster believe that DVDs were the greatest thing in the world and that we can deliver them, even from a mail perspective, never venturing into never considering the idea of streaming no more blockbuster.
For some of you, you might be seeing what's a blockbuster used to go to a store and get a DVD, or even a VHS tape and get it to watch at home and then drive it home. But then that all disappeared. Nokia is a more recent example from a technology perspective. They were a mobile phone company, but when the iPhone arrived, they were unable to adjust.
And you might remember they were the ones who kind of had this inside network where it was kind of cool thing about it as a phone walkie talkie, but somebody realized, what the heck is the difference? IPhones give me not only the mobility of a phone, but give me a computer in my hands. Nokia disappears. My favorite all time is Kodak.
Some of you are like, who the heck is Kodak? Eastman Kodak out of Rochester, New York. Yeah, they made film. That's all they said. We make film. We make film. Well, did you know that things like the copier came out of people that used to work at Eastman Kodak, but they were told, we don't do that. We just do film.
The idea of taking a picture with your Google phone or your or your iPhone. Digital photography 1970s, early 70s came out of Kodak and they said, no, we just do film. Eastman Kodak was one of the drivers in the early part of the 20th century in economic and innovative science, but yet they were so limited their view as to what they needed to be and do not willing to adjust.
They put themselves right out of existence in the 80s and 90s. The point being is that the history of business, for profit or non profit is littered with organizations and people who weren't willing to change, and they fell to depths of despair and also nonexistence because they were disconnected from the ideas of what might be possible still in the area of what they wanted to do, but unwilling to change.
And if we're willing, not willing to do that, your nonprofit will suffer. And that's where we have to see these opportunities be at least thought of, accepted, maybe even embraced. So this brings us to our tactical thoughts. What can you do to begin the process of figuring out what might be possible inside your own organization, inside the nonprofit, inside philanthropy, fundraising, development office, advancement office, Foundation, whatever you want to call it.
Five things. Number one, audit your economics. Spend some time with data. Where does your revenue come in? What were our costs to do that? How much time did we have to spend on that? Where did our people come from? You need to identify where staff time is consumed, in which activities or engagement or work created, donor movement or revenue.
The goal is to understand that the current economics of what you are now, so you can make changes and realize maybe there's some things you do that don't drive it. When I arrived at the Nebraska medical center back in 2008 or 9, we had ten events. I killed nine in the first year because I didn't audit, and that all was in my head to quickly realize we are spending a lot of time on events, not driving a lot of revenue.
Was it popular? No. Did it cause some issues? Yes, but I was willing to put my neck out there a little bit and say, let's look at the data, show that data and say, look, we have to make some changes. Not easy. But you got to audit time, effort, dollars and where revenues coming in and if how efficient and effective those revenue streams are.
Second, redesign the workforce before you start adding people. And this is the example that I started with, kind of at the top of the of the podcast that the recommendation we made was, I don't think you need to add people. We need a coordinator to that would take a lot of work. That is non relationship based off the gift officers.
Really what we were saying was I don't think we know if you have good fundraising staffs or not. If they know what to do, we have to separate the idea that more is better and that when we free up the tip of the spear, the fundraisers, the relationship builders to really do the work, we can evaluate a couple things.
Number one, our individually, are they any good number two individuals or as a team? Are they any good? Number three do we have a whole bunch of prospects that we can't get to because we're maximizing the people we have tends to be the opposite. Well, we need to raise awareness. I'm not saying don't add major gift officers or fundraisers.
What I'm saying is, do you know how many what skill sets, what are you looking for? Is it an intermediate or a leadership annual giving to build a pipeline? I have no idea. But if you don't do some type of redesign to maximize their time and effort, you really won't ever know. Number three is build out. As I mentioned, the prospect management prospect research intelligence.
In your prospect management efforts, we have to look past Will. They gave a gift last year. How did they engage? What did they who came? What did they come to? Do we know their interest? Do we have putting it in the CRM? Be nice. Do we know their communication? What's the fundraiser telling us? All these things need to be accumulated.
Then if you're really good. What are they saying in social media? Where else are they engaged? What else did they give to? What do they do with their spare time? Where do they go on vacation? What's their business? All of this, it creates an output option or actionable output that can help guide the relationship. It gets you from what do we feel to what do we actually see?
Why now? What should we discuss? What type of priority should we have? How does this help open the relationship to greater, more creative opportunities? There's a wonderful book which I'm reaching back to grab called Neuro Giving by Cherry and Kosky. And what I love about it is it's really forcing the conversation around answering the question for business as well as for non-profits.
What is it that solves their problem? And this is where intelligence becomes really important. Instead of us telling people what they want. We actually can get into the conversation about their they're trying to accomplish. X how do we help them do that? What kind of intelligence comes with that to help gift officers to figure that out. Number four create a technology plan.
This is more than just AI. It's operational knowledge. It's an evaluation. And honest one about your CRM. Is it actually delivering the support that the organization needs? Are you hiring 15 people to do something that could be automated because the CRM can't get it done? Where are the highest values for tools to be used? Priorities around are we actually evaluating meeting preparation and research?
Are we analyzing and looking at how we put data in versus how we get it out? Can we forecast things that I talk about? This is a thought process around actually trying to project or to forecast plan giving. When will revenue come in from things we don't know based on actuarial science. This is looking at workflows. It's about practical guardrails around the things we do.
And we should value privacy and accuracy and donor information and human review. This is not meant to be isolated from humans. But if you don't have a technology plan and you don't know what's out there, then how are you going to integrate it in to make yourself better? The last is reorganize yourself around two things. One is not the traditional organizational chart.
The first is around the donor journey. How do we maximize their engagement? How do you guys yourself on a second thing, institutional strategy. If we focused more on how we create opportunities along the lines of what the donors want and what the organization needs, that merger, we'd be more effective, more efficient, which means we got to look at how we staff, how we do portfolio management, how we choose where we get new prospects, where do we need those pipelines?
Where's our efficiency in doing so? Do we actually need to close some things or not do some things to maximize other things that are going to generate better opportunities? Reorganizing is great, but if you don't about around what's important donor and strategy, then I think you're just kind of picking and choosing options to look different. What we want to do is be more efficient, and to do that, we have to take the two most important things we have our donors and the strategy to that the organization is trying to implement to make a difference.
Bring them together. Those are five tackle things any philanthropy office, hospital, foundation, a nonprofit. Work in the social services, education, higher ed high school, independent school. Wherever you take these five things and think about them. If you think about auditing economics, where's the revenue come? How are we handling this? Redesigning the work before you start adding people. Are we using everybody at their highest level of possibilities?
Can we rebuild the prospect management. Not for management, for intelligence, to maximize the relationships. Can we have technology plans that can use certain aspects of technology to move things forward? And finally, do we focus on the donor and strategy as we reorganize ourselves? If you do those five things, those five things, they will drive the opportunities that we want.
And that's most important. If we start this today, start gathering information, thinking about how we might build this differently when things really begin to change. We'll be ready. And then we can focus on what's most important donor relationships and the things that will make them better, stronger, more engaged. It will require structural change. It will require improving revenue streams.
It will require really honing in on ROI. But really, the organizations that are likely to succeed in this particular area are the ones who not predict the future, but are willing to think about themselves in a different way by preparing, like what we're talking about today. And they'll relocate people and talents and assets to places that are about value.
ROI how do we produce more for our organization? And if we do this in the right way, you'll be surprised how ready you'll be when these things do change. Don't forget to check out the blogs two per week. Kind of a mini classroom, so to speak. Again, the feed. Go to Hallett Philanthropy backslash blogs if you'd like to reach out to me, it's podcast at Hallett philanthropy.com.
I'm going to guess there's some of you, a little bit of me as well, that are apprehensive about the subject today. Human nature is we don't like change, but the one thing that philanthropy can be is a change agent if we allow it. Think about my favorite all time saying some people make things happen, some people watch things happen.
Then there are those who wonder what happened. The people who make things happen. You are willing to adjust. Maybe not quickly enough, but we can get quicker to meet the needs of tomorrow when we don't know what those needs actually are, and the people in the things and organizations that are wondering what happened. They weren't able to adjust.
There were challenges. There were issues. There were there were headaches, there were hurdles. But that's the value of what we are is serving purposes that make a difference for others. Love of mankind, love of humankind. That's philanthropy and being someone who makes things happen. That's what you're aiming for. If that's what you choose to be, you got to be a little nimble, got to be willing to adjust because we don't know what's going to happen tomorrow.
But I know there's going to be need. And I know philanthropy and nonprofits in the work you do can help solve those problems in your community. Pretty cool way to think about your future and the value you have in making a difference for others. And if no one said it to you today, I will thank you for what you do.
You are a difference maker. I'll look forward to seeing you next time. Right back here on the next edition of A round with Randall. Don't forget. Make it a great day.