Building Your Philanthropic Resources Prepared for the USHCC

1. Building Your Philanthropic ResourcesPrepared for the USHCC Presented By: Mark C. Germano Creating Solutions 847-624-5142 mark.c.germano@gmail.com

2. The Environment

3. Philanthropy is Huge in U.S. • Philanthropic giving by Americans in 2012 is larger than: • Google, Facebook, and Amazon Combined • Individuals & Families are the key drivers for philanthropy and have been since philanthropic data has been collected

4. 2012 Contributions: $316.23 billion by source of contributions(in billions of dollars – all figures are rounded)

5. 2012 Contributions: $316.23 billion by type of recipient organization(in billions of dollars – all figures are rounded)

6. Total giving:1972-2012(in billions of dollars)

7. Trends in total giving,1972-2012(in billions of dollars)

8. Total charitable giving graphed with the Standard and Poor's 500 Index,1972-2012 (in billions of inflation-adjusted dollars, 2012 = $100)

9. Individual giving as a percentage of disposable personal income, 1972-2012 (in current dollars)

10. Corporate giving as a percentage of corporate pre-tax profits,1972-2012(in current dollars)

11. Education – 7% Human Services – 3.8% Foundations – (4.6%) Health – 4.9% Public Society or Benefit – 5.4% International 2.5% Arts & Culture – 7.8% Environment – 6.8% In-kind – (6.8%) Changes for Specific Areas of Giving

12. The longest running, annual report on U.S. charitable giving Estimates for: −Sources of giving −Amounts received by type of organization Published by the Giving USA FoundationTM Began in 1956 by the American Association of Fundraising Counsel, now The Giving InstituteTM Made possible by contributions from The Giving InstituteTM member firms, foundations, and other donors Researched and written by the Indiana University Lilly Family School of Philanthropy What is Giving USA?

13. What Financial Index is the Best Predictor of Philanthropy? • Dow Jones Industrial Average (DIJA) • Standard & Poor’s 500 Index (S&P 500) • NASDAQ • Gold Index

14. Key Data About Donors • 68% of American Households (HH) report making a charitable gift • 95% of HHs with income of $200,000+ make a charitable gift • 50,000,000 itemized IRS returns • HHs with $100,000+ gave over 70% of all $s • Use www.census.gov to understand your donor base

15. High Net Worth Household Definition Defined As: Household Income: $200,000+ Assets: $2,000,000+

16. It’s Worth Repeating • Individuals & Families gave $229,000,000,000 in 2012 • 95% of HHs with income of $200,000+ make a gift • Professional advisors playing a greater role in decision-making Source: NonProfit Times, October 30, 2006 Study by Center on Philanthropy, Indiana University Funded by Bank of America

17. Correlation: Time and Dollars Myth: Wealthy “write a check to discharge moral obligation” Volunteer Hours Average Donation 1 – 50 Hours $39,263 101 – 200 Hours $95,868 • 89% of High Net Worth HHs report they volunteer

18. Expectations Are High • Following factors among those most important when determining which to support: • Sound business and operational practices (86.9%) • Acknowledgement of contributions (including receipts) (84.9%) • Spend appropriate amount on overhead (80.1%) • Protection of personal information (80.1%) • Full financial disclosure (61.7%)

19. Top 3 Reasons for a Significant Gift • Feeling moved about how a gift can make a difference • Desire to support the same organization as long as it is efficient • Feeling financially secure

20. Why do Wealthy Donors Stop Giving? • The top 3 reasons why donors stopped giving to a particular charity include: • “No longer feel connected to the organization.” • “Decided to support other causes.” • “Feel I am being solicited too often.”

21. Create Your Agency’s Story • Themes • Imagine your audience • How we began/who influenced us/founders/family/ board • Obstacles faced and problems solved • On-going benefits given • Examples-specific people • Values in action • Before we came on the scene/after we did our thing • Accomplishments/victories, feeling good

22. Elements of a Good Story • Pathos – Emotion • Logos – Reason or Logic • Ethos – Guiding Belief

23. Speech Structure • Hi! My name is_____________________ and I work with… organization • You know how… problem • Well, what we do is… feature • So that… benefit • We’re kind of like the… metaphor

24. What Must Be in Place Within The Organization for Success? • Unifying Vision • 3 – 5 Key Message Points • Strategic Plan (Values/Vision/Mission) • Outcome Measures/Ability to Articulate

25. What Must Be in Place Within The Donor to Prompt a Significant Gift • Alignment with Values • Ability to Self Select through Engagement Strategy • Feeling of Stewardship • Perception that their Gift is Truly Important • Perception of Legacy with Lasting Impact • Philanthropic Reciprocity

26. Let’s Practice

27. Who Are Your Prospects? General Public Former Board Members Corporations Foundations Board Staff Mission Members Donors Volunteers

28. The Donor Pyramid Cultivation * Participation * Commitment PROGRAMS: Upward mobility through information, education, involvement TECHNIQUES: Upward mobility through increasingly sophisticated techniques Planned Gift Programs Personal Solicitation Planned Gifts Capital Campaigns Capital Donor Telephone Solicitation AnnualFund Programs Special Gifts Donor • Mass Solicitation • Special Events • Mass Market • Social Media Renewed Donor Newly Acquired Donor The Universe

29. Planned Gifts Meaning/Purpose Annual/MajorGifts Sense of Community Relationship Events Confidence in Management OperationalEfficiency Mass Market Relationship Dynamics Relationship Effort Type of Gift

30. Creating Relationships Is More Critical Now Than Ever

31. I N S P I R E D Engagement Continuum DONOR Invest Involve MONEY Interest Inform Invite Identify TIME

32. Identify Based upon mission, services and benefits, who should be interested in the organization? • Does the prospect have a history of giving that would reflect what is important to the organization? • What are the points of contact with the individual? • How strong is the current relationship? • What is perceived potential? Are there points of access?

33. Invite Invite the prospect to take some action in support of the organization. The honor of being asked to be involved is another step in the cultivation process.

34. Inform Inform the prospect of: • Organization’s distinctiveness • Place in the community • History of success • Funding needs How? • Repeated personal contact with staff, board members, volunteers • Informative & engaging events and publications (social media, website, mailings, newsletters, etc.)

35. Interest Help the prospect decide that the organization is important to him or her. When the prospect begins to ask questions, make comments, or offer suggestions – it is clear that he or she is ready to be further involved.

36. Involve Prospect signals that he or she is personally committed to the organization’s success by: • Attending a meeting • Placing telephone calls • Offering input on the organization’s programs • Co-hosting a social gathering • Joining a committee • Agreeing to help solicit

37. Invest After the prospect is clearly committed to the organization, then she/he should be asked to financially invest in it. If the prospect has really passed through all of the phases, then she/he will participate financially to the limit of his capacity and interest. If the prospect is rushed through the process, the gift is bound to be smaller than it might have been.

38. Inspire Once the prospect becomes invested in the organization, we hope he or she will be inspired to engage others in the same process.

39. Consistent financial support Asking for Support: Stewardship Building Relationships

40. Major Gifts Lead to Major Engagement • Individuals that reported giving away $50,000 or more per year want deep & meaningful engagement with the institution • 76% want to direct the funds within the organization • 72% want to be ‘highly involved’ with the organization Source: 2007 Prince & Associates Wealth Management research report

41. Donor Solicitation Strategies Select the right person to ask the right person at the right time for the right amount in the right way for the right reason.

42. Prospect Rating System • Capability: A qualitative estimate of what is thought to be the prospect’s financial capability to make a gift, usually expressed in a dollar range.

43. Prospect Rating System • Inclination: A subjective assessment of what is thought to be the prospect’s likelihood to give, or make a gift at the rated capability level.

44. Prospect Rating System • Readiness: A subjective assessment of when, or how soon, the prospect is likely to make a gift or gift commitment/pledge.

45. Prospect Management • What expectations have you set for yourself and your development staff in direct donor work? • How are you measuring it? • Does anyone besides you ask for that information? • What percentage of your time are you really spending with your donors? • Look at your calendar over a month or two month time period. What does it tell you?

46. Time is of the Essence • Major Gift donor relationships take time • Example: Time elapsed between “hello” and first $10,000 gift is 1 year & 9 months • Example: Time elapsed between first gift & first $1,000,000 gift is 2 years and 2 months • Planned Gift donors • What is your ratio of known to unknown? • What is the time between creation of estate plan & realization of gift? Source: 2007 Prince & Associates Wealth Management research report

47. Asking for Major GiftsSix Phases of a Solicitation Call • Opening • Questioning • Listening • Presenting • Overcoming Objections • Closing

48. Four Rules of Persuasion • Reciprocity • Scarcity • Authority • Consistency

49. Reciprocity • People try to repay, in kind, what another person has provided them • Reciprocity’s power stems from the fact that a person can trigger a feeling of indebtedness by doing an uninvited favor • The rule can be put in use by pointing out the services, benefits, and advantages that have already been realized

50. Scarcity • Opportunities seem more valuable when they are less available • Uncommon or unique features or benefits that can not be found elsewhere