Stewardship and Recognition Building Strong Relationships with Your
Stewardship and Recognition Building Strong Relationships with Your Legacy Donors
An Overview } } } Stewardship must be a way of life and part of the culture of your organization Stewardship is more than sending a form letter when a gift is received You must elevate, celebrate, and honor donors. 2
An Overview } Telling questions: ◦ What is your donor retention rate? ◦ What are the trends in your multi-year donor counts? } What I am asking is: ◦ How well do you steward your donors? 3
Just a Reminder About Your Donors
Donors Are Critical } } } Donors are a critical element of your organization’s ability to achieve its mission. They will not stay with you long if they are treated as ATMs to produce money when you need it. Donors require: ◦ Care ◦ Nurturing ◦ Development 5
What Is Donor Stewardship? } Donor stewardship ◦ Is an active process of ensuring that donors have a positive, high quality relationship with your charity ◦ Acknowledges and expresses appreciation for their significant role with your organization. ◦ Helps donors understand the impact of their gifts } Some charities cut back on stewardship in hard times, assuming it has little to do with giving 6
What Is Donor Stewardship? } Cutting back is a mistake: ◦ Ethical issue - donors entrust their funds to you ◦ Donors have choices ◦ Good stewardship strengthens the donor’s relationship and builds opportunities for more and long-term gifts 7
What Is Donor Stewardship? } Four elements of good stewardship: ◦ Strong policies and procedures to maximize use of contributed funds ◦ Prompt acknowledgement of gifts ◦ Recognition and celebration of donors ◦ Regular reporting on the impact of contributed funds 8
The Donor Pyramid Donor Commitment PLANNED GIVING MAJOR GIVING ANNUAL GIVING Gift Officer Involvement
Why It Is Important To Remember the Pyramid } The early days of fundraising are all about transactions: ◦ ◦ Annual campaign Special events Foundation grants State and federal grants 10
Why It Is Important To Remember the Pyramid } } Legacy gifts engage donors as partners in the organization’s vision You must be able to answer and talk about these questions: ◦ What is your organization’s vision? ◦ Is it current, clear, exciting and compelling? ◦ Does every staff member in your organization hold this vision? ◦ Is it clearly positioned for donors? ◦ Do you make it clear that the donor is essential in achieving the vision? 11
The Secret - Knowing Who to Call } Avoid the most common pitfalls in selecting donors for calls: ◦ Chasing those with high net worth ◦ Focusing on donors who have made the “big gifts” ◦ Assuming donors who make small gifts are not capable of making larger or estate gifts
Look for Points of Contact } Ways donors may connect with your charity: ◦ ◦ ◦ ◦ ◦ Regular, ongoing giving Regular, ongoing membership Former and current board members Former and current volunteers Event attendees Capital campaign donors People who use (or whose family uses) your services Alumni Other points of contact?
Regular Givers Are the Most Likely to Make Legacy Gifts } } } Potential to give increases with stewardship Do not limit your review to large gifts only - make legacy giving an opportunity for all donors They must see themselves as potential donors
Prioritize Your Donors Tier I Ready for Calls Tier II Connected, Need to Be Cultivated Tier III Need to Be Connected
Make a List of the Top 50 Prospects } } } } Donors for 7 - 10+ years Members for 7 -10+ years Current board Past board Long-term volunteers Those who use the organization’s services and their families Regular event attendees Capital campaign donors
Make a Worksheet Longterm Donor Cap. Camp. Board Volunteer Uses Services Total Donor A Donor B Donor C Donor D 17
The Benefits of Stewardship } The benefits to your organization ◦ Donors who make planned gift commitments are more likely to stay connected ◦ Donors who make planned gift commitments are more likely to increase annual giving ◦ Donors who make planned gift commitments are more consistent donors ◦ A strong stewardship program changes the culture to one that is more donor centric
Bequest Donors and Annual Giving Do you have a bequest to charity under your will? Average $$ to charity Yes $4, 489. 93 No $2, 043. 21
Bequest Donors and Annual Giving Would you consider a bequest to charity under will? Average $$ to charity Yes $4, 489. 93 No $2, 043. 21
Donors Have More Than One Million Choices
The Benefits of Stewardship } The benefits to donors ◦ Stewardship enhances the gift experience ◦ Stewardship connects giving to impact
Stewarding Your Donors
#1 Strong Policies and Procedures } Gift acceptance policies ◦ ◦ } Types of gifts Criteria for acceptance of non-cash gifts Gift purpose Ethical issues Investment management policies ◦ Goals of the investment process ◦ Use of a professional manager and standard for asset allocation ◦ Risk tolerance ◦ Legal compliance
The Benefits of Stewardship } Endowment spending policy ◦ 12 -quarter rolling average (or variation on that theme) ◦ Compliance with the law ◦ Reasonable distributions for economy and condition of fund } Other policies ◦ ◦ Data management Accounting Audit Stewardship
#2: Prompt Acknowledgement of Gifts } Gift substantiation ◦ IRS requirement for all gifts of $250 or more ◦ Must detail the value of goods and services received in exchange for the gift ◦ Example: $800 ticket to the Museum Ball - dinner and dancing have value of $100 - charitable contribution of $700
#2: Prompt Acknowledgement of Gifts } Certain items excluded: ◦ Items received in campaign with de minimis value ◦ Free, unordered, low-cost articles ◦ Newspapers or publications (not available to nonmembers or public) designed to inform about the organization’s activities ◦ Annual membership benefits of minimal value
#2: Prompt Acknowledgement of Gifts } } Most donor management software generates this document when the gift is recorded. Adopt a standard for how promptly the acknowledgement is mailed. ◦ 3 business days recommended ◦ 5 business days outside } Some send letters at the end of the year - not recommended.
#2: Prompt Acknowledgement of Gifts } Irrevocable deferred gifts are more complex. Gift Type Substantiation Required? Charitable remainder trust No Charitable lead trust No Pooled income fund Yes Charitable gift annuity Yes Retained life interest Not addressed
#2: Prompt Acknowledgement of Gifts } } } Revocable deferred gifts do not need substantiation for IRS purposes because they are not completed gifts. Bequests can be changed. IRA beneficiary designations can be changed. Life insurance policy designations can be changed (when the donor remains the owner). These gifts are not complete until death.
#2: Prompt Acknowledgement of Gifts } Add personal acknowledgement. $250 - $499 Personal note or sticky note to say “thank you” $500 - $2, 499 Note from development director. $2, 500 - $9, 999 Note from executive director $10, 000+ Note, call, and perhaps visit Deferred gift Personal note from development director and/or Executive director and note from volunteer
#3: Recognition of Donors } Recognition of current donors ◦ ◦ } Annual report, newsletter, magazine by giving level Online recognition by giving level Luncheon honoring top donors Event to honor top donors Other effective recognition ◦ Add an asterisk to annual listing to show both/and ◦ Recognize multi-year givers separately and with an asterisk ◦ Invite long-term donors to Legacy events to encourage participation
#3: Recognition of Donors } Recognition of deferred donors ◦ Celebrate those who make a commitment to Create Your Jewish Legacy by using their stories to encourage others ◦ Invite them to become a member of the Legacy Society ◦ List their names in your annual report, on your website, or other places where you publicly recognize your donors ◦ Use their stories in your newsletters and on your website.
The Role of Endowment in Stewardship
An Overview } } Most legacy gifts become part of endowment. Endowment: Funds held for the long-term benefit of the organization, the income from which is used to further mission. ◦ True endowment - donor restricted to use of revenue only ◦ Quasi-endowment - funds allocated to endowment by the board
Providing Context for Giving } } When donors give during life they can oversee the use of their funds When they gift at death, they have a much harder time envisioning the impact The endowment provides context for those longterm gifts Understanding its role and impact on mission will encourage gifts
Explaining the Role of endowment } } Do not assume donors believe endowment is important or that they understand its role Your organization must clarify that role, defining how the funds will be used and how they will impact mission
An Example of How to Organize Endowment to Show Purpose
Explaining the Role of endowment } } } These categories or sectors communicate the purposes for which funds can be used These should align with your broad functions Do not create a sector for programs - keep it larger - programs will change over time Report each year on the impact of endowment spending in each sector - this ties the endowment to your work Programs and purposes funded through endowment would not be possible without those funds
Making the Case for Sound Investment } Provide a public report on the endowment and its investment performance ◦ ◦ } Approach to investment management (allocation, risk) Investment firm(s) managing the funds Multi-year returns compared to indices Underlying growth of the endowment pool If you use a third party (like the Jewish Foundation) get the information from them and become familiar with it
Reporting and Sharing Results } } Center on Philanthropy high net worth study - 2010 Why donors give: ◦ Moved at how the gift can make a difference (72. 4%) ◦ Feel financially secure (71. 2%) ◦ Giving to an organization that is efficient (71%)
Reporting and Sharing Results } Annual endowment report ◦ Growth in number of funds and total value ◦ Investment returns compared to indices ◦ Impact of funds on mission, organized in sectors described above } Personal reporting to donors ◦ Small funds - endowment report ◦ Large funds - details on fund transactions, value, and impact
Reporting and Sharing Results } Public reporting about endowment ◦ Endowment report described earlier ◦ How the endowment functions, how decisions are made, how the spending policy is set ◦ How to create funds (and parameters for fund creation) ◦ One page report to use on donor calls and visits
Who Does What: The Stewardship Roles
The Role of the CEO } } } Most visible and powerful member of the nonprofit team Works with the board to set direction of organization - holder of the vision Roles: ◦ Ensure stewardship is a priority and that resources are devoted ◦ Shape the culture ◦ Write personal notes and letters ◦ Make personal calls 45
The Role of the CFO } } } Manages the financial data and ensures financial integrity Critical roles for long-term donors Roles: ◦ Prepare and publish annual financial data about the charity and endowment ◦ Prepare a simple one page report on endowment ◦ Be available to answer questions about the organization’s finances 46
The Role of the Development Director } } } Often small in size Responsible for overall management of the stewardship program and connecting donors Roles: ◦ Keep stewardship in the mainstream ◦ Ensure donors receipt prompt acknowledgements ◦ Ensure donors receipt appropriate communications from the charity ◦ Engage and manage volunteers to support stewardship 47
The Role of Volunteers } } } The leveraging factor for development staff Board members and other volunteers Roles: ◦ ◦ Write notes to thank donors for current gifts Make Monday morning calls Host events in their homes Open doors for calls and accompany staff on those calls 48
Create a Stewardship Plan That Is Right for Your Organization } } Adopt a written stewardship plan that reflects the touches and actions for donors for the year See page 24 - divide activities between print/electronic and person Set different standards for different levels of giving Set standards also for deferred giving 49
Tracking Results and Measuring Success
Track Stewardship Touches } Tracking stewardship touches requires three things: ◦ A clear stewardship plan with goals; ◦ The ability to track touches easily on the donor database; and ◦ The ability to generate a report from that donor database that reflects how well the charity met its goals 51
Track Stewardship Touches } Track: ◦ ◦ ◦ ◦ Prompt acknowledgement (average time) Letters to donors to thank them Calls to donors to thanks them Numbers of newsletters, updates (print or electronic) Number of events Number of mid-year letters reporting on the impact of gifts Events for Legacy donors 52
Track Donor Retention } } Donor retention rates for first year donors Donor retention rates for donors who have given two or more years Donor retention rates for major donors (first year and multi-year) Donor retention rates for donors who have made a deferred gift commitment 53
Track Donor Retention Rates 2006 2007 2008 2009 2010 2011 All donors, first year All donors, 2+ years MG donors, first year MG donors, 2+ years Deferred gift donors 54
Track Donor Retention } } } When you lose a donor, study patterns, make a call, and follow up Implement stewardship calls and letters to keep donors connected Measure the response rates of those who receive high levels of stewardship and those who do not 55
Track Gift Commitments } The gift pipeline is important for several reasons: ◦ It reminds you (and keeps in front of you) those donors who have made deferred commitments ◦ The pipeline shows future revenue - and reminds you of the importance of those donors ◦ The pipeline shows your progress ◦ The pipeline shows the value of your work in Create Your Jewish Legacy 56
Track Gift Commitments Donor Name Donor Age Gift Type Member Gift Amount Legacy Society? James Smith 75 Bequest $250, 000 Yes Donna Landry 54 IRA Benef. Designation $25, 000 Yes Sam Jones 87 Bequest Unknown Yes 57
Data and Records } } } Good data is essential. . but not enough You must also have the ability to generate reports from the data and know how to use them Data helps your organization: ◦ ◦ Prospect Steward Track Anticipate opportunities 58
Data and Records } The critical data: ◦ Donor name, address, phone, fax, e-mail, alternate addresses ◦ If corporate, the names of the key contacts and decision makers ◦ If personal, key family members and decision makers ◦ Dates, amounts, and types of gifts ◦ Donor’s area(s) of interest ◦ Records of points of contact ◦ Information on other charitable activities 59
Track Impact on Annual Giving Average Annual Retention Rate Number of Gift Size from Prior Years of Giving Donors who have made a known revocable gift commitment Donors who have not made a known revocable gift commitment 60
Final Thoughts } } } Stewardship is an important part of the giving and receiving process Not only an ethical obligation and duty, but increases satisfaction of donors and leads to longterm relationships Long-term relationships lead to long-term gifts that fund endowment Endowment provides the resources to ensure the strength of your organization well into the future. Make stewardship a priority! 61
Questions and Answers
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