Your donors lose trust in you. Here’s why.

Why are CEOs insecure? Why are boards confused? And what does this lead to? Marc Pitman tells us!

MT: You said, because of all these problems, we decrease donor trust. So how does that impact organizations?

MP: Can you imagine? Why would you want to give money to an organization that doesn’t even know you? My dad calls it anal confusion. I’m going to offend some people. I apologize for this. But they don’t know their ass from their elbow. I mean, if you’re just not really sure what you’re doing and you’re just kind of putting up wallpaper and tearing it down for the next person coming by, that is the impression that a lot of people have about the nonprofit sector. I firmly believe it’s not true, and I firmly believe the nonprofit sector is a vital part of western culture. The way we have built up western culture over centuries.

We provide for the fringe. We provide a social safety net. We give enhanced quality of life to the arts and entertainment. There’s a ton of amazing, amazing things we do and amazingly committed people here. When you know them individually, you can see the difference. But when you look at it as a sector, their trust continues to fluctuate and compete with government for lack of trustworthiness over time.

And it could be just a simple thing, not simple to the person experiencing it, but a donor sending a check and not getting a thank you. I just saw some stats from Bloomerang and others have done these $10 giving experiments at the end of the year. They didn’t even hear from two out of 50 nonprofits, they didn’t even acknowledge that a gift had been received. I’m just talking transactions. I’m not talking a handwritten note. I’m not talking a call. I’m not talking a thank you letter, thank you email. There was no acknowledgment at all that the gift had been processed.

So those things just – we like to think we don’t have any competition in the sector, or we like to think our other competition is other nonprofits. What we’re really competing against is Disney and FedEx and Amazon Prime’s 48 hour shipping. We are part of a person’s experience, and what we want to do is we won’t be able to have the resources, necessarily, to compete on a customer service level. But we should be as human and personal and authentic in our letting the donor know our gratitude.

MT: Yes, definitely, and what you said echoes what is in the Uncharitable book by Dan Pallotta, how we’re just competing with attention, let alone all these other nonprofits. To get attention, you really have to stand apart and provide that ultimate customer service experience, which unfortunately due to fundraiser turnover and disorganization in a lot of nonprofits, donors don’t get that. Then they just go.

So actually that’s why we did the Fundraising Career Conference in the spring, and I’m so glad we had you speak at that, Marc. I’m so glad we’re having you speak again at the Nonprofit Leadership Summit. Because this is one of the key things, that as leaders, we have to be thinking about. We are wasting money, $300,000, every time a fundraising person walks out the door. Even if you’re just paying them $50,000 a year. That’s how much money it costs to replace them, assuming that you replace them within a month of them leaving. The longer you leave that space, the more money it costs in donor attrition and all these other things.

MP: Yeah, it’s horrendous, and it’s not all doom and gloom. We are a great sector. We’ve got great people, and we’re learning together. But I would submit we need to learn faster.

MT: We’re seeing this in England now, more regulatory threats and measures. What’s happening in the U.S. with regulatory threats because of all of these other nonprofit leadership crises?

MP: I won’t rehash the UK, but if you go to Critical Fundraising, which is the blog on University of Plymouth, has a Center for Sustainable Fundraising run by Adrian Sargeant and Jen Shang. They have a think tank called Rogare, which in Latin is to ask, that has a blog called Critical Fundraising. It’s really looking at – they’re just doing a lot of heavy academic research and I’m honored to be one of the advisory panel members of that. But they’ve really done a really good analysis of this whole Olive Cooke thing, where a woman took her life and the newspaper created a story, or the press created a story, that she took her life because she was haunted to death by charitable solicitations.

MT: I heard about that.

MP: It’s awful. There was not a strong enough response from the nonprofit sector. So the government stepped in to stop these cruel people that were hounding. There are bad apples in every sector, but the bad apples are not the norm. What we’re finding, there’s this interesting construct that we’re seeing in the United States too of distrust of charities. Charities are out to trick us. They’re out to [inaudible 00:26:48]. Some examples that I’ve seen here, one the IRS over the last – in the last part of 2015, I think it came to a head.

We’re trying to make it so that every nonprofit that had a donor of $250 or more. Every nonprofit had to keep the Social Security Number of every $250 or more donor. So if you give $250 to a place, that nonprofit had to keep your Social Security on file. Now, I don’t know about you, but I’ve worked for a lot of nonprofits and I’m not entirely sure about their privacy. I don’t think the privacy features in most nonprofits, firewalls and all, are as strong as like a bank’s.

So the regulatory burden on small nonprofits would have been horrendous. But that was going to go through, because there was this whole IRS thing. We need more transparency. We need to know more. Fortunately there are enough watchdogs in the group like the National Catholic Development Conference and a bunch of others that were raising the battle cry, saying, hey, this can’t happen.

Another one was in California. I think this was in the early part of 2016. There was an assemblyman. So this was the scary part. California, big state, large part of our economy. An assemblyman at the state assembly floated a bill that was like – I consider it the surgeon general’s warning. Any nonprofit charity site that could have been read by a Californian, by law, was going to have to have a warning label on it about their cost overhead versus money to mission, which is a hugely problematic construct and really bad. We shouldn’t have ever told our story that way. I could preach on that, but I won’t.

But they were going to have to, on their donation page, there was going to have to be like almost a second step. Before you make a donation, you have to see our entire disclosures without any articulation. Because sometimes nonprofits, they need to have higher overhead because they’re expanding. They’re adding staff. We’ll prime the pump for more impact later. But there are just stages, and if you don’t know that, it will look like, wow. That’s bad. Those proportions aren’t what I’m used to seeing.

But anyway, he was going to make it so that every nonprofit website that could have been read by any Californian would have had to have these in there. It was even spelling out what size font, what style font. I mean, it was really, really bizarre. Fortunately, people like Roger Craver and the Agitator blog got a whole bunch of us to just ask them to table it. But the thing is, it’s tabled. So it’s not going to leave committee. But it’s still there, and it’s all because there’s this kind of weird thing. There’s people want to give to charities. Stores want to be aligned with a cause because it makes them look charitable, makes them look like the good guys.

But we don’t trust the charities. There’s a very easy myth, story, or archetype in popular culture of charities are the big guys. They’re in boiler rooms making phone calls to little old ladies that are making them give more money than they should ever responsibly give. It’s really an interesting thing, and if we don’t get our stories right as leaders, if we don’t start talking about the donor’s impact and the impact it’s having on lives, we’re going to have people scrutinizing our finances, which isn’t bad per se. But it is bad when they’re not looking at the right metrics.

If they’re looking at financial metrics and trying to figure out overhead, as though you could have any impact without overhead. Or somehow having overhead lessens impact. It actually maximizes it; we know that. Done rightly, just like in any corporation, having a certain level of overhead makes it so that it frees up other people to be able to do more mission. It’s all mission. Anyway, we need to be able to tell our story of donor impact. I think I would submit, more confidently.

But rather than just leaving doom and gloom, one of the things that we could start doing better is asking every board meeting, figuring out what is our mission? What is our theme? What’s the impact we want to have? Then having some story of impact every board meeting, before the meeting starts. Some people do this by having their boards do one or two thank you calls together, an index card with a name and a number. Just, hey, this is so and so from the XYZ nonprofit board. I’m a board member. They tell me that you’ve supported our cause, and I’m just honored. We love the impact that we’re having in the neighborhood and we couldn’t do it without you. Thank you so much.

Can you imagine what impact that would have on your board meeting? All of a sudden the petty differences go away, and the “I can’t believe he said that” sort of stuff goes away.

You’re focusing back on what brought you all together. That can also be done with a story. Hey, one of our themes is we have a stable adult in kids’ lives every day. That’s one of the stories that we like to share about our nonprofit. So having a staff member come and say, “Hey, Sally, could you tell us a stable adult in kids’ lives story since last time the board met?”

Let me tell you about Joey. Joey’s life was going to pieces, but man, Susan was there, one of our staff members who was able to spot it because she sees him every day. Joey didn’t go through the crisis he was going to go through. He’s getting the help at school that he needs.

Board members won’t remember the financials. They won’t remember the mission vision elevator speech. But when they’re at the next Rotary meeting or Kiwanis meeting or Lions Club, they’ll be able to say – somebody says, why are you on the board? They’ll be able to say, I don’t remember exactly how they do it, but man, let me tell you about Joey. There’s this kid named Joey who was just going through a really hard time.

That’s what the people they’re asking want to hear anyway, and that will give us the confidence of being able to say, yeah, there’s a lot of ambiguity. There’s a lot we don’t know as nonprofit leaders. But you know what? I do know the impact we’re having and I do know that donors are central to that. I’m going to take a stand, even in the media, because I know the media. I’ve cultivated a relationship with them, and because I don’t think donors are the bad guys. Even though I didn’t want to get into fundraising, if I’m a founder, I didn’t do it for the fundraising. I felt for a while angry at donors because they just didn’t get. It’s so self evident to me. They should just be donating. I shouldn’t have to ask. So they’re the ones putting me in this bad situation. I worked through that and realized I need to tell my story clearer so I could connect the dots for people.

And then I found out that I’m developing great relationships with people that couldn’t ever do what we’re doing, but really care about it and wish they could. So I’m finding that I’m actually adding value to their lives by asking them to invest significantly in our cause, because all of a sudden the work that they do to generate that income is making an impact in something that they really, dearly value, and weren’t sure how they could ever see happen.

MT: I wanted to ask you, Marc, because we sort of touched on this briefly before. There’s one the thing that can turn all of this around. What did your research find?

MP: One thing that can turn this around is a strategic plan. That’s what we found in the nonprofit sector leadership report. We asked about, do you have a strategic plan? Then we asked,, do you have it in writing? Because 90% of the people said they had a strategic plan, but they didn’t have it in writing. So somebody that was looking at the data said, oh, that explains the board meetings I’ve been to. Everybody has their own strategic plan in their head and there’s talking with great confidence, but they’re not talking about the same strategic plan.

So I don’t know if you can hear this. But if you snap your finger to a tune – or have you ever played Humdinger? There’s a game, Cranium, and you do Humdinger. You get a song and you’re supposed to hum it, and people are supposed to guess it. Or the other one is you can just snap out a tune like this. Then you ask people, what’s the tune? That one I just did, what would you say it was? Just out of curiosity.

MT: I do not have any idea. That could be so many tunes. I do not know.

MP: Yeah, and that’s where I was too. But people consistently say either Happy Birthday to You, or the Star Spangled Banner, and it’s both. I have done it with either one in my head, and they’re both – so you’re walking around with your tune in your head, but nobody else has a clue what that tune is. Even though you’re doing the snapping or you’re doing the humming, it helps to get the strategic plan written down.

We found that people that did that, they have boards that are more willing to take risks because they know why they’re taking the risk. They know what they’re trying to accomplish and what needles they’re trying to move. They have far higher ability to tell their plan in a way that brings together all the different donors and board members and staff and mission. They are able to tell a much more cohesive story. The statistics are shocking how much better it was.

So I was glad when we asked, do you have a plan, that Jen Shang over at the University of Plymouth then said, well, these statistics are interesting, Marc. But so what if they have a plan? Does it actually make a difference? Yeah. It turns out it does in a whole bunch of areas, the way you communicate, the way you fundraise, the way you lead, the way you take risks. The way you continue accomplishing your mission with greater impact.

MT: What are you teaching at the Nonprofit Leadership Summit?

MP: I’m going to teach how to fix it all. Just kidding. I will be teaching what we found with our research report about why nonprofits fail, and what you can do about it. In the fall of 2015, nine partner organizations got together, spearheaded by my firm, Concord Leadership Group. We ran this nonprofit sector leadership report, had over 1,000 people take it, and I’ll be unpacking the findings that were in that. The data seem to suggest seven areas that can be addressed. They can either be sequential, but most of our nonprofits, we don’t have time to work on plan A, then go to plan B, then go to plan C. We just have all the plans working concurrently. So they can be a choose your own adventure. They can be a step sequence, or they can be something that you’re working on together.

But we’ll look at ways the data suggested what to do with a strategic plan, how to do it, because that can be confusing. If you ever Google strategic planning, or nonprofit strategic planning, you get millions of hits. So we have a simplified way of doing that. How to implement that, very low impact, high yield way, and then there’s other ways to do it too. But there are some low hanging fruit there. We’ll talk about succession plans. There’s a huge demographic shift happening around the world, but particularly we know in North America, and people aren’t talking about it, even in their nonprofits.

We’ll talk about some wording on how to talk about it so it doesn’t become a personality thing, but it becomes a systems thing for your nonprofit. How to be working with developing new leaders, and bringing in different generation types. There’s a lot of slamming of millennials, which I wish people would just stop doing. Because every younger generation gets slammed by the older generation because they’re different. But if you really look at them, they’re not that different. Especially if you’ve been paying attention to generational stuff. If you’ve been following generations, this doesn’t take you by surprise. If you’re been talking in your own little echo chamber, millennials seems weird, and they’re not.

But there’s certain things you can do in your nonprofit or in your board to help bring them on in meaningful ways that they value and will actually help your nonprofit. Then we’ll talk about storytelling too. All that in just a short session.

MT: Who should attend this session then?

MP: I would say board members for sure. I’m particularly working with executive directors on how to implement this stuff in my coaching. But also others. So one of the things that was unique about this study. There’s been a lot of studies done of boards and of executive directors. A lot of good organizations doing a lot of really solid research. What we wanted to do differently here is we believe that leadership exists at all levels in a nonprofit, and so we looked at board members, CEOs, seniors leaders like CFOs and COOs, middle managers, staff, and volunteers, and some of their perceptions.

In the report, there’s perceptions from each of those groups that are different and insightful. So I would say anybody that sees themselves as a leader or wants to have an impact. In fact, I may even say this in the report, when we wrote the report, that even if you don’t have control of the helm of your nonprofit, you do have a circle of influence. So creating a strategic plan for your area that you just operate from, even if you’re a one person area, will start moving you in the right position. There’s a saying that we say here at Concord Leadership Group, that healthy nonprofits start with healthy people.

The more that we can individually grow healthy as people, we’ll start setting the right boundaries. We’ll start asking the right questions. We’ll start developing trust with each other and we’ll be able to turn our ship around and our sector around, I believe.

MT: Wow. I hope everybody attends your session at the Nonprofit Leadership Summit. I think it’s very  needed. I’ll be talking about fundraising planning, but I really feel like the strategic planning piece and the storytelling piece that you’re going to bring in will really help people bring it all together. So I’m so excited to have you speak, Marc. How can people get in touch with you if they want to learn more about you and what you do?

MP: Well, I’m on Twitter all over the place. @MarcAPitman. The Concord Leadership Group consists of http://www.concordleadershipgroup.com which has a blog that we blog on leadership stuff. The report is on there. There’s a training for CEOs there. So http://www.concordleadershipgroup.com/blog/CEO. But all that, a significant part of leadership rests on revenue generation. http://www.fundraisingcoach.com has been around for about 12 years. It’s one of the longest running fundraising blogs in the sector, and there’s just a wealth of information there and courses and other things.

MT: Wonderful. Thank you so much, Marc. This has been incredible and I think people are going to learn so much from you.

MP: Well, thank you for having me. I’m so excited about the conference because there’s tremendous speakers. I’m only one part of this. I mean, there’s all sorts of tools that are going to be talked about and this is something – leaders need this desperately. Sometimes there’s just not a safe place to say, I think I need to grow as a leader. You don’t necessarily want to tell your board or your staff. It can feel awkward. So the fact that this is online, you can do it in the privacy of your own home or your office or mobile device probably. I’d recommend that people just take advantage of the whole thing, because this type of training is training that can help you excel in all areas of your life, but particularly as a nonprofit leader.