Discussing 2018 Fundraising Trends With Gail Perry, MBA, CFRE

Our own Steven Shattuck and Jay Love recently joined Gail Perry’s Facebook Live series to chat about 2018 fundraising trends.

You can view the full conversation here.

Full Transcript:

Gail: Hey, everybody. It’s Gail Perry. And happy new year to you. I’m so glad you’re joining me for Facebook Live today. I’ve got some special guests that are going to join me, Steven Shattuck and Jay Love from Bloomerang, one of our favorite vendors and donor relationship management people in fundraising.

We have a very interesting topic today. It’s the trends that we can expect to see in fundraising for 2018. There’s a lot going on, especially with the new tax law in the nonprofits. In fact, I published a post on my blog last Friday on my personal top ten trends for the year. Several people asked me why didn’t I include the tax law. That’s one of the things I want to talk about today.

Let’s see . . . Steven Shattuck is here. Hello, Steven. I’m going to go ahead and bring you online and invite you to join us. If you ever do Facebook Live, this is what you do. We have to do a test ahead of time if any of you saw the test that we do. Hey, Steven.

Steven: Hey, how’s it going? We made it.

Gail: How are you? We’re matching, right?

Steven: Yeah, this is great. You look a lot better in the color than I do. You look lovely. I look kind of dorky.

Gail: If you’re here, say hello so we can see who’s here because it’s really fun. Linda Buchner says, “Happy new year,” and Rebecca Davis is here and Rebecca says hi. So, Steven, we’ve got such an interesting topic today and you’re [looking up from 00:01:30] your perch at Bloomerang. You are seeing a lot of nonprofits. How many customers do you all have?

Steven: We’re in the thousands now. I think it’s near maybe 4,000 or 5,000. It seems like we’re adding about 100 a month. I have to check the total. We did get a lot in December. So, I haven’t done my full December debrief. We’re just kind of coming out of hibernation. But yeah, people are liking it.

Gail: Bloomerang, by the way, is our number one recommended software.

Steven: Thanks.

Gail: They’re not paying me for this personally, that’s the one I recommend the most. Also, we have Jay Love, the CEO of Bloomerang too but I can only have one guest on at a time. So, Steven, you get to have some time and then we’re going to bring Jay. So, Jay, if you’re kind enough to keep watching and we’ll bring you on. We’ll say hello to Julie Edwards and some other people. Dawn is there saying happy new year and Richard says happy new year. Hello, hello, Jason. And everybody, you can see the content stream and some of you have some comments. I’ll try to keep up with them. Simon is here. [Joelle Simpson 02:33] love Bloomerang. Oh my gosh.

Steven: Simon’s my boyfriend.

Gail: So, anyway, Steven, what do you think? What do you think about fundraising?

Steven: I love your blog post because it seems like this always comes up in January. We know what works. Your blog post, nothing really new there except for a couple things, like the things that work in 2018, they worked in 1918 too, right? Treat your donors well. Tell them how the gift is being used. Thank them over and above asking for money, which kind of hasn’t really caught on as much as I think it should and tell those impact stories, “This is a kid who just went through our program and he’s the first in his family to graduate from college. This is a space in the wetlands that you helped save.” Donors can’t get enough of that.

If you do those things, you’re fine. You don’t need to buy the newest whiz-bang tool or join the hottest social network or make sure you’re on Snapchat or these things. I know it’s surprising to hear a millennial say these things. It’s usually like, “Oh yeah, if you join Snapchat, you’re great. You do everything good.” But if you treat your donors well, you’re fine. That’s all you need to do, really. It’s hard. It may be hard to stop doing things that maybe don’t pay as many dividends as that, even though they’re things we have always done. Your blog post nailed it. I can probably just read your blog post 20 times over the next half-hour or so and it’d be the best advice.

Gail: I will say one of the things on my blog post I did add, I have a background in politics because I’ve been volunteering in politics in North Carolina forever. All of the capital campaigns of most of the projects I’ve ever worked on were public-private partnerships. We successfully secured public funding for all sorts of projects, particularly capital projects all over the East Coast that I’ve worked on. Oh, hi—I’m saying hey to Kitty Miller and Nancy Tobin. All our friends are here, Steven. This is so much fun.

I think that learning how to appropriately advocate your cause in front of elected officials is so important and I’m thinking of doing some training on that this year. I think people are afraid to touch their legislators and their elected officials, but the legislators love to get in front of nonprofits. They love a microphone.

Steven: Or maybe they want to do and just don’t know how. That can be kind of daunting, like, “How do I reach out to my center? I’m just a one person shop.” It’s hard.

Gail: I think you treat your elected officials like they’re major donor prospects. That’s my point of view.

Steven: There you go.

Gail: I invite them all to my parties.

Steven: Your porch parties?

Gail:[inaudible 00:05:22]

Steven:I need to go to one of those.

Gail: I don’t know, this might be a loaded question, but what do you think about the tax law? I know you and I were chatting earlier.

Steven: Yeah. I think it’s good that nonprofits now can get out of the business of offering tax advice to donors. I was looking in my email inbox New Year’s Eve or the day before New Year’s Eve and all the appeals were, “Hey, get a gift in before tax time,” and tax deduction and tax [inaudible 00:05:51]. I’m just like if you had asked me for money and told me what the money was going to do, like it was going to help this, that’s what gets people to donate.

I think maybe one positive side effect of the tax bill, even though there are obviously a lot of negative things and they’ve been well written about, but now nonprofits can stop offering people tax advice and tell them how their gifts are going to make a difference or at least make that the focus of the appeal. I’m thankful for that.

Gail: I saw some really crappy last-minute appeals that made me sad. I’m reading my email and I’m going, “Dag gummit, that’s awful. They should do better.”

Steven: I gave—I gave on New Year’s Eve to the one or two that appealed to me in a heartfelt way and didn’t make it about being able to deduct it.

Gail: “We need your gift.”

Steven: Right.

Gail: One of the things that I was reading in the Chronicle of Philanthropy this morning trying to bone up on our conversation that with the loss of the charitable deduction for many people, I personally am starting to worry about how it’s going to impact people who give from the $1,000 to the $10,000 range. So, I think all we can do is hope and wait until better stories, right?

Steven: That’s it. The standard deduction is doubling. So, I think the amount of people itemizing is dropping from 30% to 5% and that really is in that income range of people, exactly what you said, who are that kind of mid-level range, maybe $1,000 to $10,000 a year. For them, all the more reason to talk about the impact of the gift and move away from the tax benefits because for those people, there really aren’t any tax benefits anymore. The appeal has to be based on what’s the gift going to do, the difference you the donor are going to make and making sure the spotlight stays on them, donor love, donor centricity, whatever buzzword you want to use. That’s the key there for those [inaudible 00:07:53] donors.

Gail: That’s classic good fundraising, isn’t it?

Steven: Yeah. Again, that’s always how it’s been, right? There have been surveys and studies done ad nauseum that have all drawn basically the same conclusion. If you tell donors the impact of their gift and make it all about them, that’s how you get the money.

Gail: It should not be so hard.

Steven: It’s hard, but it shouldn’t be.

Gail: Julie Edwards says that she’s worried about major donors. One of the things I was talking about Friday in my blog post is I think there will be more major gifts available because the wealthy are so much more wealthy, quite frankly. The mid-level donors probably are going to be hurt, but the major, major donors are going to be feeling fairly flush. I think that major gift training—I just want to remind you that my major gift coaching is open for letters of interest and we’re going to start in mid-February. So, if you want my help and my team’s help to get set up in fundraising, major gift fundraising, shoot me an email or post a comment and I’ll be in touch with you.

Steven: Please do that because Gail is awesome. She will help you. It’s worth the money.

Gail: You and Jay are going to join me for a webinar, The Insiders [School 00:09:12].

Steven: Yeah. Next week.

Gail: You’re going to talk a little about the donor made a first gift. How do you get them to make the second gift?

Steven: Yes. Well, I can spoil some of the webinar, but it’s basically what we’ve been saying—making them feel like the most special person in the universe is what gets that second gift. I heard a presentation by Steve MacLaughlin from Blackbaud and I really liked how he put it. He said the first gift is kind of table stakes. The first gift you shouldn’t really get excited about and pat yourself on the back yet. It’s the second gift that you want to get because the retention rates for first-time donors, it’s between like 18% and 23% depending on the gift size.

So, we lose like 8 out of 10 first time donors. That’s really bad because if you spend more to acquire that gift than they actually gave, then you’ve got negative ROI right off the bat, right? You have to get the second gift to get to break even and then above break even. A lot of people, they get the first gift and that’s when you celebrate? No. It’s the second gift. That’s when the work really begins.

Gail: Doesn’t the data say that once you get the second gift from a donor, you’re far more likely to keep them for the long run?

Steven: Yeah. It goes to 40% to 60% on the second gift. It’s a massive jump. That data is from the FEP Project. There’s a couple other studies that study donor retention that pretty much have the same percentages. You go from like 20% to 60%. If you can get a monthly gift or some sort of recurring donation, whether it’s bimonthly or whatever, 80% to 90%.

So, the second gift is great, but if you can get a first-time gift and then introduce the concept of monthly giving to start with that second gift and get the future ones, you’re in business. You wrote about this in your trends piece and I think it’s spot on. I think it was number one, which I agree with, is getting that sustaining support is really going to be the key for all of us.

Gail: By the way, we’re doing a monthly giving intensive in The Insiders with Erica Waasdorp, who’s one of the great monthly giving teachers. [inaudible 00:11:16]

Steven: She’s the best. She’s the queen of monthly giving.

Gail: Yeah, good. I’m going to start telling everybody she’s the queen of monthly giving. One of the things that I did talk about was internal support for fundraising. What do you see—by the way, if y’all are liking Steven’s recommendations and suggestions about the [second gift of the donor 00:11:37], give him a thumbs up or a heart so he knows that you love him. What do you think about internal support for fundraising? Is that really a make or break issue?

Steven: It’s make or break. You have to have a culture of philanthropy from the beginning on the inside or else you’re not going to get buy-in to spend more time on thank yous and stewardship than you do on maybe fundraising and events. That’s the key shift that I think organizations need to make, where thanking donors is more of a priority than doing that 5k or that spaghetti dinner that everyone kind of hates and doesn’t really do much for us.

I like events. Events are fine. But the thanking and the telling of the stories and handwritten notes and phone calls to donors, that should be job one. You actually have to get buy-in from that because sometimes the board resists it or the leadership of the organization resists it, but when the board or the leadership are the ones doing those things, studies have shown that the results are much greater.

I think it was Penelope Burk who found that—she has that great annual report, but if a board member is the person thanking a first-time donor, those percentages go even higher than one I said. So, you have to get that buy-in to do it yourself or even better, to get them involved in all those things.

Gail: So, funny, somebody was telling me recently about they finally had their board members do a thank-a-thon. Some of the board members were terrified—that was the word she used, terrified—to do a thank-a-thon. One of the donors got a phone call and he was so excited to get a thank you call from a board member that he sent in $10,000.

Steven: Yeah. It’s amazing what happens when you thank people. I think that with board members, we always rush to get them to raise money for you and if thanking terrifies a board member, imagine what asking for money is going to do, right? But to get them thanking, I think it’s kind of a gateway drug to the fundraising.

Gail: Gateway drug.

Steven: Is that okay to say? I probably should have said it in a better phrase. Like they kind of get hooked on talking to donors. It’s not scary. You thank them. No one gets phone calls. No one gets a thank you phone call. I’ve gotten one or two a year from the organizations I support and it always stands out. That could be a really good way to get them involved in future fundraising is get them started with thanking.

Gail: I don’t know if you’re seeing the comments, but everybody’s laughing about the gateway drug. By the way, Jay Love, how about giving me a comment so I can bring you on as a guest now? Steven, do you have any final words? Jay, show up again so I can see you in the stream so I can invite you.

Steven: Well, Jay will do way better than I will. He’s the man. He’s got the experience, for sure. Call your donors and say thanks. This is a good time to do it.

Gail: Tell you what—why don’t you do an introduction for Jay while I’m waiting for him to come on?

Steven: Wow, that’s a lot of pressure. I’ve worked for Jay for I think maybe seven or eight years. He’s the best. He’s a mentor of mine.

Gail: I’m going to invite you . . .

Steven: Listen to Jay and not me.

Gail: I’m going to invite Jay. This is how we do guests, everybody. If you have a guest—I’m sorry, Steven, I didn’t mean to cut you off. There you go. There’s Jay.

Jay: Hey, hello there.

Gail: Jay’s trying to get his phone. One day I’ll do a Facebook Live on how to get set up on all this. How are you doing?

Jay: I’m doing good. Thanks for having me on here, Gail.

Gail: You just arrived from Florida. Is that right?

Jay: I was down there over the holiday period. I literally came back to Indianapolis this morning. I don’t know why, but I did.

Gail: He came from Florida to Indianapolis. So, bless his heart. He’s going to freeze to death. You can get a little bit closer to the phone, I think, so we can hear you—that’s great.

Jay: Is that better?

Gail: Yeah. So, Jay, I’m dying to talk to you about trends. There you are at the perch, at the top of our industry. You see all these donations processed through Bloomerang. You deal with all of these wonderful nonprofits who use your software. What do you think?

Jay: I think you and Steven were touching on the very important ones already, the fact of properly thanking donors and doing the proper donor recognition, etc. People are taking it up several notches from what it used to be. Part of that is the awareness that so many more fundraisers are now getting proper training and listening in to webinars and sessions like we see now that they’re really enjoying it. But I think a big part of it is that all of a sudden now, you have even the 60 and 70 and 80-year old widows, they’re on Facebook too now. They’re aware that proper communications can and should take place and they want to know what their monies are being used for, all these good common sense things that in the old days, when we sent out that December appeal letter, we got to send back a thank you letter that looked like it was written by an IRS agent, those days are gone and hopefully forever.

Gail: Yeah. What do you think is going to happen about the tax law in the US?

Jay: Well, obviously it’s the doubling of the standard deduction. That’s going to make a lot of the midlevel donors have to think about the real reason for donating rather than having it be a tax purpose. But honestly, I don’t think it’s going to be much of a change for the higher level donors, the higher level household incomes are still going to be able to take that deduction, I’m going to guess. That will still come into play and obviously will still be a factor as you’re introducing legacy trust instruments and things of that nature.

Gail: It seems to me, my thinking, my gut feeling is that wealthy donors are going to feel even wealthier.

Jay: I would hope so. If nothing else, the stock market certainly proved that to them [inaudible 00:17:57].

Gail: We saw in the recession when people were worth $20 million and now they’re worth $10 million, they don’t feel wealthy anymore and they cut back on their giving. I do think we’ll see an uptick or maybe more major gifts will be more available to nonprofits, all the more reason to sharpen your major gift skills.

Jay: Don’t forget too with the stock market going up as high as it’s been, there’s going to be a lot more people thinking about donor-advised funds and moving appreciated stock over into donor-advised funds to avoid the taxation there rather than doing it through a deduction. I think we’re going to see a tremendous increase in the amount of donor-advised funds that have come into play from individuals that are just now thinking about that that never would’ve before.

Gail: Right. Learning how to deal with the donor-advised funds, it just makes me tear my hair out. It’s like the money goes into this black hole and the investment advisor keeps you away from the donor. All you can do is do your traditional major donor engagement and involvement.

Jay: I think the nonprofit itself takes some responsibility of being aware of who has the donor-advised funds and realizing that this is really a truly potential major gift donor or legacy donor that’s there that they would not have considered that person to be that before. So I think they’re going to have to take extra steps to note that. I’m a big believer that should be somewhere in their donor database for instance to make sure that information is contained so they’re aware they could openly talk about that, perhaps.

Gail: That’s exactly right. Who knows? Maybe one of our major efforts is to try to discover who is leaving a planned gift to us in their will. That’s the discovery process. Do we know? And who knows, maybe another major effort is going to be do they have a donor-advised fund somewhere that we need to know about.

Jay: Right. As you participate in a donor-advised fund, my wife and I became part of one about four years ago or five years ago. The information that’s shared by the donor-advised fund asking you to be aware and ask some of the tougher questions, we didn’t see that before, so all of a sudden you’re going to be hearing mid-level donors asking about how sustainable your nonprofit is and what are your cash reserves and questions that we never heard donors asking before.

Gail: Oh wow. [inaudible 00:20:34]

Jay: I don’t know if you participate in a donor-advised fund, but they send out a newsletter on a quarterly basis, the one that we’re part of, and it literally gives you questions to ask nonprofits.

Gail: Really?

Jay:Yes.

Gail:Wow. What other trends do you think we’re going to see? One of the things I was thinking about monthly giving, I think sustainer programs are really getting settled in much more so than they used to. What do you think about monthly giving and sustaining?

Jay: I think there’s going to be many more opportunities for that to be the case. You see that now that it used to be maybe one out of ten of the donation pages on a nonprofit website had an opportunity to do monthly giving. That’s probably up to as many as four or five out of ten now. There’s a much bigger awareness of that coming into play. I think the other trend I want to make sure we talk a little bit about is the nonprofit marketers and fundraisers are watching what the commercial world is doing finally.

I always tell people if you’ve purchased a car or refrigerator or anything in the last ten years, you know you’re going to get a survey and they’re going to ask you about your opinion and how satisfied you are. We’re just now seeing that come into practice for more and more small and midsize nonprofits that they know the value that someone that answers a survey is more than likely going to become that second time donor like you and Steven were talking about.

Gail: That’s right. I was reading somewhere that donors are comparing their customer donor experience interacting with a nonprofit, they’re comparing that with their experience with maybe Zappos or Amazon, that we are being compared to for profit customer service operations, god help us.

Jay: Very much so. You even see now occasionally on a nonprofit website that when you go there, all of a sudden, there’s someone available to do online chat with you to answer any questions why you’re about to make the donations. That’s earth shattering for people to go to that level of customer service and be able to help the donors. Wouldn’t it be nice on Giving Tuesday where every email led you to a website where there was an online chat person that could answer questions for you? What a concept, huh?

Gail: Yeah. What do you think about Giving Tuesday and crowdfunding? I posted on my blog last week that I thought they were on the rise and they have a strong, strong future. I was just reading something in Fast Company a couple of days ago about GoFundMe is becoming a real player in disaster fundraising outside of the Red Cross and other agencies.

Jay: I’ve got some definite opinions there.

Gail: Tell me.

Jay: First of all, the Giving Tuesdays and the other crowdfunding days that are there, I think the nonprofits have to be careful that they’re using more of a focused approach on who they’re reaching out to because you want to be careful that especially Giving Tuesday being in November that you’re not just taking from a potential larger annual fun gift in December and having it come in in November for that.

Just going through your list of your names in your database and saying maybe this is a good way to reach out to lapsed donors. Maybe this is a good way to reach out to people that have only made a single gift that might love the enthusiasm of the whole event. And be a little bit more careful, make it more a little more focused rather than sort of a shotgun approach to going after everybody. I think the groups that do that are benefitting very nicely.

Gail: I may be an outlier when it comes to giving days and crowdfunding, but I personally am seeing a number of positive impacts that I really like. One is that small and medium size nonprofits are learning to do digital and social fundraising because of the attractiveness of giving day. They’ve got to get their act together anyway and so the giving day is pushing them to learn the skills and get it done right. That’s making me really happy.

Jay: Then on the crowdfunding, be careful of the partners that you choose on that because some of the crowdfunding sites do not return the names and addresses of the donors back to you. So, you’ve got to be very aware that how can you build a relationship and how can you thank them properly if you don’t know who they are for that. I’ve had people that told me they made a gift to a schoolteacher through Donors Choose, for instance. They said they were surprised they never got anything back from the school thanking them. The school was not aware of that in any way, shape or form.

Gail: Wow. We’ve got some great comments rolling in. Brett wants to know if a change to the tax law suggests that fundraising will be more major gift centric and less new donor development. I think it remains to be seen. What do you think?

Jay: I do too. I think there’s always going to be the need for new donor development. We know that later on down the road, a large major donor is going to start off with something small in most cases just to check out the nonprofit, find out a little bit more about them and see. If that is one of your avenues for bringing in new donors and doing that recruitment, that’s a great way to do it in my opinion. But like I said, be careful who you’re sending those too so we don’t alienate some of the long-term donors we already have.

Gail: Right. I want to say hey to Laura Fredericks up in probably New York City. We’ve got a lot of our friends—Josh Hearse has jumped in. People are adding their own comments to the stream regarding trends. It’s a lot of fun. Thank you. Jay, we’re about to wrap up because these things are pretty brief. Do you have any final words of wisdom for the nonprofit world you want to share in terms of what’s in the future?

Jay: Well, I think we can always see what’s going to happen two or three years down the road by watching what the best commercial marketers are doing. If we take a look—you mentioned Zappos. You mentioned Amazon. Watch what the commercial marketing world is doing and see how many of those would be appropriate to apply.

Gail: I think that’s well said. We’re all going to have to watch, watch, watch in the US about the tax law. I think a lot remains to be seen. I think midlevel donors may be at risk. I think major donors are going to feel even more generous. I hope everybody had a really amazing year end. What are you seeing for the year end totals? Do you have any early reports, Jay?

Jay: Our customer base, it was a wonderful November and December for them.

Gail: Really?

Jay: It was a good year. Don’t you think the stock market is a good prognosticator of what donations are going to be like at the end of a year?

Gail: Yeah. When we had the recession, we saw that gifts followed the stock market. When the stock market went down, gift went down and back up.

Jay: I always think about the few times we’ve had dips in the giving USA totals it really was due to those recessionary times in the stock market and across the economy. We’ll keep our fingers crossed that that’s going to continue on.

Gail: If the economy keeps roaring, everybody, fundraising should be at all-time highs. If you’re doing the basics, you should be doing very well for your nonprofit. So, Jay, let’s everybody give Jay a thumbs up and a heart to thank him for taking the time to join us today. He’s one of my favorite people in fundraising because he always has a smile on his face. He always has something thoughtful and helpful to say.

Jay: Thanks, Gail.

Gail: I love Bloomerang, again, highly recommend Bloomerang for everybody. You see the hearts flying cross the screen?

Jay: I do. My goodness, this is so much fun. We’ve got to do this again, Gail.

Gail: It’s really amazing when you do a heart and you’re on the screen, you see all these things flying across and it makes you feel so wonderful because otherwise, we’re sitting here talking to our phone and it feels lonely sometimes.

Jay: Well, thank you so much for having both Steven and myself on. We deeply appreciate it and let’s do it again next quarter.

Gail: I’m looking forward to the webinar you all are doing for us for The Insiders. We’re going to hear some specific data about how to get the second gift from donors.

Jay: All right. Thank you very much, Gail.

Gail: Thank you. Take care. Bye, bye.

Jay: Bye, bye.