What’s an Oreo Cookie Without the Center?: What is Your Nonprofit Without Mid-level Donors?

Lori Skibjak: Good afternoon and welcome to What is an Oreo Cookie Without the Center? What is Your Non-Profit Without Middle Donors? It’s being presented by Jeff Schreifels. For more than 25 years, Jeff has been developing, planning, and executing strategic fundraising Read More

Lori Skibjak: Good afternoon and welcome to What is an Oreo Cookie Without the Center? What is Your Non-Profit Without Middle Donors? It’s being presented by Jeff Schreifels. For more than 25 years, Jeff has been developing, planning, and executing strategic fundraising and marketing programs.

He served as development director at several non-profits and was senior strategy director at the Domain Group, where he helped develop record-setting fundraising programs for the agency’s largest clients in addition to serving the community in a variety of charities. Before we get started, I just want to make sure that you all know to put your questions into the Q&A. If you haven’t heard it all day, you need to make sure that you put the questions there so we make sure we can answer them after the session. Jeff, it’s all yours.

Jeff Schreifels: Thank you, Lori. Glad we made it all through. All right, everyone, thank you for joining me. This is going to be an amazing presentation because I love talking about mid-level. Mid-level is something that we all need to know about and start working with. This will be fun. I’ve been doing this a long time for 32 years. I’ve worked eight years on the non-profit side as a development director, and then I worked for an agency for 12 years from a direct response agency, and now with Veritus for the last 12 years helping non-profits with mid, major, and planned-giving consulting and training.

A little bit about Veritus. Our company is passionate and donor-centered about fundraising. We’re grounded in a data-driven approach to fundraising applying that to mid, major, and planned giving. We’re like that because we’re direct marketers at our heart, but we took the discipline of direct response marketing and applied it to mid, major, and planned giving to what we call the Veritus way of doing major gifts.

It’s been an amazing approach. Our strategy is an approach that we’ve taken over the years. Everything that’s going to be in this mid-level presentation is all because we’ve been working with hundreds of non-profits over the last 13 years or so. We’ve worked with thousands of mid, major, and planned giving officers over that time. We’ve worked with thousands of fundraisers all over the world, training them through our online program.

We’ve heard a lot. We’ve made mistakes. We’ve honed strategy. Everything that we’re talking about today has happened. We’ve worked with hundreds of non-profits to make these strategies that I’m going to talk about today work. Here’s some of those non-profits that we worked with. These are just a smattering. Currently, we’re working with over 75 non-profits consulting. We’re working with hundreds right now on our online program, training people all over the world in how to do mid, major, and planned giving programs.

I want to tell you about some free resources that we have. Now that I’ve introduced myself and shared a little bit about Veritus Group, I want to let you know that one of the resources you can download is our mid-level readiness assessment so that you can begin identifying which areas you need to focus on as well as build and grow your program. Make sure you grab that at the end. You can also download our free white paper on cultivating mid-level donors for maximum results.

You can do that by texting “mid-level,” all lower case with a dash, to 267-544-1447. If you text that, you can get that free mid-level white paper. Everything we’re touching on today will go into greater depth in that white paper. You want to make sure that you get that because there’s a ton of information in there. We only have 50 minutes or so to talk about mid-level, so we’re not going to be able to get super, super in-depth, but hopefully enough that your interest will be piqued.

All right. Today, we’re going to be talking about why every organization should have a mid-level program and what you may be losing by not serving your mid-level donors. The first topic I want to speak to today is the idea that while you may think that investing in a mid-level program will cost too much, you are actually losing net revenue and donors by not having a mid-level program.

There are really two areas I want to talk about that relate to this loss in revenue. First, let’s talk about retention, which is one of the critical issues impacting your donor pipeline. Donor retention has been on a bad downward trend for years. Despite the magnitudes of articles, webinars, conference sessions on the topic, it hasn’t really gotten that much better. Non-profits are, on average, losing more donors than they’re retaining. There are a lot of ways that that could be corrected.

Now, donor attrition is probably the metric that you’re most familiar with, which is the percentage of donors you’re losing entirely each year. Donor value attrition is really an important metric that you need to pay attention to. This is where a donor is technically retained, but they’re giving decreases. So often, leadership and fundraisers, they’re focusing on donors who have stopped giving entirely and they miss the donors who had pretty significant decreases.

If you focus on addressing the problem here, you can ultimately make a big impact on an overall retention. Now, it’s easy to think that only major donors need to be reported back to or told that they’re making a difference, but really all of your donors need to know that they’re making an impact. Too often, our donors fall into a red bubble area. They give a gift and when we don’t tell them that their gift did something, they leave and they give somewhere else.

This is especially true of donors in the mid-level giving range because we treat a mid-level donor much the same way as we do a $10 donor. We don’t report back and we don’t give these donors opportunities to be part of a bigger solution. Instead, in a mid-level program, we want to follow the blue bubbles and tell donors personally about their impacts so that they want to help again.

We really want to connect with donors and learn more, but I can tell you from experience, just this process of reporting back shows some really nice increases in giving. I can’t tell you how often we see a $1,000 mid-level donor suddenly jump to $5,000 to $10,000 just because they’re getting this personal information. In fact, with one organization we work with, a $1,000 donor committed to a $250,000 gift this year.

I want to tell you a quick story about how powerful it is to report back to donors. A few years ago, I had an executive director call me and say, “Hey, I want to tell you a story about one of our donors that I met with. Quite honestly, Jeff, it’s embarrassing, but I want to tell you this because I want you to tell this story to other people.” Bob, who’s the executive director of this non-profit, about a $5 million non-profit.

He’s out to breakfast with one of his donors. Out of the corner of his eye, he saw another one of his donors having breakfast with somebody else. After he was done with breakfast, he goes over to the other donor and says, “Hey, Frank, it’s great to see you. Haven’t seen you in a while. How are things going?” The donor was pleasant, but Bob could tell that something was wrong.

Frank wasn’t normally himself. Bob, being very intuitive, says, “Is everything okay?” The donor says, “Well, I don’t want to bring this up, but now that you asked, I gave a pretty significant gift to you a few months ago. I’ve never heard a thing. I got a thank-you letter, but I never heard a thing. What happened with that gift?” Bob was like, “Oh, my gosh, I had no idea.”

No one ever told Bob. Now, remember, it’s only a $5 million organization. A big gift is a big deal. The guy says, “It was a $25,000 gift.” Bob was like, “Oh, my gosh, how do I not know about this?” He goes back to the staff, goes back to the office, talks to his staff, and he says, “Hey, we got this $25,000 gift from Frank? What happened? I had no idea.” The staff was all like, “Yes, you’re right. It was over a really busy time. It basically got lost in the shuffle.”

They thanked him, but they never did anything back to tell what happened with this gift. Bob calls Frank back and says, “I’m really sorry, Frank. This is what happened. I apologize. I immediately ask my team to put together a whole thing about what happened with the gift and all of that.” The donor says to him, “You know, Bob, I don’t want you to feel so bad about this because when I gave you that $25,000 gift, I also gave eight other organizations a $25,000 gift. Only one of them told me how my gift made a difference.”

That one non-profit was a small food pantry in West Virginia run by an 80-year-old woman who wrote the donor a seven-page handwritten letter, telling the donor exactly what they did with that $25,000. Obviously, you know what happened the next year. That donor gave all $200,000 to that food pantry. That is just one story, but believe me, I have so many more like that of organizations who have not reported back to an organization or to a donor and the donor lost interest and went away. That’s how easy it can happen.

Let’s look for a moment at value attrition. When we’re assessing the impact of value attrition, we’re looking at donors who have reduced their giving to your organization year-over-year. These are donors who, technically, you’re retaining, so many organizations will miss out on this information. What we track is total giving in each year to see changes for that donor. Look at number three. You can see that donor gave $10,000 and then stopped giving altogether. That’s donor attrition.

Look at donor number four, gave $10,000. Then by year four, they gave $4,100. They lost $5,900 in value attrition over that time period. What happened? That’s the story. Why is that donor giving less by year four than they were from year one to year four? That’s donor attrition and many organizations don’t look at this. The reason most organizations never notice the loss we just talked about on the last slide is because their view of the caseload performance allows new money to cover up the loss.

Let’s take a look at the first view here. This is income from all donors giving $1,000-cume. If we just look at view one, then it looks like things are doing pretty well. You’ve had 21% growth, which is actually pretty good. This is how most non-profit leaders, development directors look at the strength of mid and major gifts. One year, this way. One year, we’re here. Next year, we grew by 21% overall. We’re good.

It’s not until you look at view number two that when you start to peel the onion back, you see a real problem. When you remove the new money, you see that the caseload donors who are in the caseload in year one decrease their giving by 49% in year two. That’s a pretty serious issue that really needs to be addressed, but it doesn’t because people are only looking at the bottom line, not the donors who gave last year to this year.

That’s the key and that’s what we want to try to alleviate. This is a really easy-to-see example from one of our assessments we actually did. As you can see in this chart without accounting for new money, it appears that giving has increased by almost 17% overall, which looks pretty great. When you start peeling back the layers, this is what you can see. When you analyze individuals and organizations, we found huge losses by class year.

This ultimately amounted to a total loss of revenue of $9 million for this organization. Remember, they grew by 17%, yet they lost $9 million over this time period due to value attrition. When we presented this to the executive director of this organization, they were completely astounded. Remember, their total revenue was roughly $20 million each budget year and they were losing on average about $3 million each year.

I remember the ED saying if they could just reduce the loss in half, that would be another $4.5 million that they could put back into programs. They weren’t paying attention to value attrition. That has a direct impact on the ability to fulfill their mission. For most organizations, these kinds of issues with value and donor attrition mean that your donor pipeline is not flowing correctly.

This visual is meant to represent the ideal for your donor pipeline and how it should flow. As you can see, you’re starting with acquisition efforts that move into general cultivation, which is a one-to-many approach. As the donor moves up the pipeline, their giving increases and their level of engagement grows as well. For most organizations, attrition is causing donors to leave or have stagnant giving.

We also see that most organizations, they have a pretty clear– what we call a clog in the donor pipeline. Before I dive into this chart a bit, let me take a moment to explain what we’re looking at. This chart is specifically showing the percentage of donors who are moving up into the next giving level. The rest of the donors at that giving level are either staying at that level, which we refer to as getting stuck or are actually decreasing their giving or no longer giving at all.

Here, we are looking at one particular organization’s giving-level data. We highly encourage you to do a donor file assessment for your organization to identify where your clogs in the pipeline is. What happens with many organizations like this one is that they have a direct response program but are left constantly searching for new major donors. As a result, they begin looking outside of the program because they conclude that there simply are not enough major gift prospects in the organization.

The reality is, is that most prospects are getting clogged at that one key point in the pipeline. Looking at this chart, you’ll see that there’s a substantial clog at the $1,000 to $2,499 level. The way to consider this is that it has the lowest percentage of donors moving up to the next level, which means that most of the donors at this level are getting stuck or they’re decreasing their giving or no longer giving.

Often, donors at this level are loyal and might include a number of monthly donors as well. Clogs in this pipeline like this are really what is causing fewer major donors to move up. If you’re able to unclog your donor pipeline and get more donors moving through the giving levels into major gifts, you’ll see that it isn’t as hard to find new major donors after all. Based on the clients that we worked with, we find that organizations without mid-level programs move 0.2% to 1.2% of donors to major gifts each year.

By having a mid-level program that is retaining your donors and gets your donor pipeline unstuck, you could see 3% to 3.5% of donors moving to major gifts this year. This means you’ll be better retaining revenue from existing donors and increasing revenue from your major gifts program because you’re moving qualified and engaged donors into MGO portfolios.

The next major area I want to focus on is related to creating a mid-level program and that your mid-level donors are often some of your most loyal and are your pool for future major donors. A mid-level program that we’re discussing will cost more, but it’s worth every penny. Because when cultivating a mid-level donor through high-touch direct mail, there are things you might miss out on by not actively and personally working with this group.

First, this is mostly a one-way dialogue. I’ll dive into this more in a minute, but what we know is that in this scenario, you miss the opportunity to deepen the donor’s connection to your organization. You won’t learn the donor’s passions and interests or develop a system and structure to document them, which we believe is the absolute key in deepening that connection and retaining the donor.

Your organization will also miss completely the opportunity to streamline the qualifying process for major gifts. Mid-level takes the load off your major gift team by providing qualified donors to them to put in their portfolios. This can allow your major gifts officer to put more focus into working with their caseload donors, which is ultimately the goal for them. It also is much more economical to have a mid-level officer qualifying donors instead of your MGO.

The worst-case scenario when you aren’t properly cultivating your mid-level donor is that you lose the donor. Let me show you with one example. We worked with a small organization that started a mid-level program. They had an incredible direct mail program and very strong and they’re really good at putting new donors in the mail stream. When they started a mid-level program, they hired a great mid-level officer who really worked to learn the donor’s passions and interests.

After a year, this organization was able to hire a halftime major gift officer who walked into a qualified caseload of 75 donors. The MGO knew their interests, their communication preferences, and could now see how their giving increased in the mid-level program. The reason you’re risking losing the donor here is because when you treat a mid-level donor the same as you would a $10 donor, you’re not serving that donor or honoring the impact that they’re making because your donor doesn’t feel connected or know they’re making an impact.

They’re more likely to leave, which can significantly hurt your pipeline in the long run. It’s really important to keep in mind that we find that mid-level donors are often some of your most loyal donors and they’re your future major donors. When we think of the vision for a mid-level program, it really is focused on giving the donor a glimpse at what a deeper relationship with the organization might look like.

A chance to crack open the door a little bit for the donor and see how they could really make a difference through your organization and how your organization sees donors as a partner in their work. When you leave it all to direct mail or online or any of those direct response strategies, a donor doesn’t have the chance to have that experience. We touched on this earlier, but let’s talk briefly about some of the big differences when you compare a direct response program and how to cultivate a mid-level donor and how a mid-level program might do that.

First, a mid-level program focuses on beginning to uncover and learn the donor’s passions and interests. Direct response is a one-to-many approach. The donor is most likely getting little to no personal customization on the messaging and offers they receive. While mid-level programs still rely on direct mail, they can begin to start sharing information that’s aligned with the interests the donor has expressed.

This deepens that connection and helps them see their impact more directly. Just to state it more clearly, we do not recommend removing the mid-level donors or major donors from a direct response program at all unless the donor has specifically requested a change in the communication. Next, a mid-level program provides a structure for the organization to identify which donors actually want a deeper relationship.

Making a gift of $5,000 or $10,000 or even more does not mean that the donor wants to have a personal, meaningful connection with a gift officer at your organization. A mid-level program is designed to have various touchpoints with donors that will help the mid-level officer identify those donors who definitely want that kind of communication and those who don’t. In direct mail, there’s very little to no structure for learning and identifying this. You can improve retention through a mid-level program by really caring for your donors.

Now, mid-level programs are much larger than major gifts or planned giving caseloads. You aren’t having that level of personalization, but you can begin to draw more direct connections between the donor’s gift and the impact. You can make adjustments to how the donor prefers to be communicated with and you can share more specific program information as you learn more about the donor.

All of these things will help the donor feel like they’re making a difference and that they want to give again. Many people from our team, including myself, we’ve come from a direct response background, so we definitely see the great value and impact that that kind of program can have. We do believe that in order to strengthen your pipeline, you cannot rely exclusively on direct response strategies to help donors move up from mid-level into major and planned giving.

It’s important to us to not just talk about the impact with your donors. We are ultimately working toward a goal of greater net revenue and improved donor and value retention so that you can achieve your mission in partnership with your donor. I wanted to take a moment to actually show the results we’ve seen with our clients. The first year of your mid-level program is really a building year as you grow through the introduction series and begin connecting with donors.

In just that first year, you can see average revenue growth of 15%. Here’s what’s really exciting, though. As the program continues to grow, that average increases to 23% by year three. There are other benefits, including, of course, more donors moving in the major gifts. Let me share a quick story that highlights this just for one donor. We worked with a mid-level officer who was rather uncomfortable with phone calls but has kept working to grow and develop the strength in doing that.

Recently, he connected with a donor by email as part of an intro process that we do and asked for a Zoom meeting. In that meeting, this mid-level officer, Jordan, shared his story and they shared their story as well. Their largest gift had been in 2005 and it was about $5,000. In the last three years, their giving had been $400, $1,100, $2,600. In that call, the donor shared that a couple of years ago, they tried to give a substantial gift to the organization.

No one followed up with them, but they said they were still interested and mentioned being interested in a capital-level gift. They even said that they can give a low six-figure gift, not seven figures. They shared how they helped in a major capital project for another organization. The mid-level officer figured out they really like brick-and-mortar, start-to-finish projects. He sent proposals with three unique projects and they chose one, and then guess what? That project fell through.

They didn’t like the other two, so the MLO had to present a brand new project. As a result of that communication, they committed to a $290,000 gift. Now, this only happened because the mid-level officer listened, was intuitive, and didn’t let a roadblock stop him. Now, this is just one donor. When you really focus on your mid-level donors and bring them into your story, it won’t be just one donor that’s committing to a deeper or more meaningful relationship with your organization.

To illustrate this, I want to share some highlights from one of our clients. We work with this client in both our mid-level and major gift programs. As you can see, they’ve had some tremendous growth in their organization. Overall, since we started partnering together, you can see they’ve doubled their major and mid-level growth. When we look just at the mid-level program, you can see that we’ve worked with this client to increase the number of mid-level officers in their program and the revenue has increased too.

By staffing the mid-level program properly, they’ve been able to improve retention and move more qualified donors into major gifts. Now, let’s take a moment to put everything we just talked about back into perspective around the misperception that mid-level programs cost way too much. The truth here is that a mid-level program will cost you more money than you’re currently spending. Based on the data that we’ve seen, you’re probably spending about $12,000 or $20 per person to send direct response strategies, direct mail or email, to the 600 donors who would most likely make it to a mid-level caseload.

They’re bringing in about $500,000 on average, those 600 donors. A mid-level program adds about $75,000 to $100,000 in cost, which is focused on cultivating those donors who are currently bringing in about $500,000 to reduce value attrition and donor attrition to this vital group, and then moving qualified donors into the major gift program which has incredible benefits for the organization overall, by allowing your MGOs to focus on cultivating their caseloads and donor relationships, and then increasing net revenue through proper cultivation of mid-level donors and promotion of your major donors.

Mid-level program is an investment, but that investment will yield more net revenue for your program. Your ROI for these 600 donors might come down a bit, but you will see the benefits of that in your net revenue and long-term in the donors who are moving into major gift portfolios, which leads us to the next obstacle that could be standing in your way. To summarize what I was just sharing, your best major donor prospects are donors who are already giving to you.

This is true because these donors are already passionate about your cause. They’ve already chosen your organization to support and are already knowledgeable to a degree about what you already do. Now, the final area I want to discuss today is that the key to a thriving mid-level program is implementing the right system and structure that will allow you to better retain your donors and create a healthy pipeline to increase net revenue.

First, I want to speak to some of the things that non-profits get wrong so you can avoid these common pitfalls. Number one thing here, you don’t identify the key metrics for reporting and build them into the database. That’s one of the things that we see non-profits do wrong with mid-level. They don’t develop the materials that the mid-level officer will need to be successful.

To cultivate donors, to report back an impact, think properly, you need those materials for them and many non-profits don’t develop those things. A lot of times, major guest comes in and scoops up the best mid-level prospects before they really should be in major gifts before a mid-level program gets started. They’re not ready. Those donors aren’t ready. The other is that they hire someone who doesn’t understand their role and/or is not a good fit for the role for mid-level.

Major gifts in mid-level is different and sometimes, “Oh, we’ll just get a major gift officer to come down to do mid-level.” That doesn’t always work. The other thing is non-profits expect results immediately and that doesn’t happen right away. It takes some time. As you see, at the end of a year, you can see the benefits, but it isn’t going to happen in a couple of weeks. Those are some of the things that non-profits get wrong.

The structure of your mid-level program is designed to address two key areas: keeping the pipeline flowing and beginning to provide donors that are previously receiving one-to-many communication with some more personalized focused communication as you work to qualify those donors. The key components of a mid-level structure is this, having a dedicated, major, mid-level officer who’s working with a caseload of donors to learn the donor’s passionate interests qualifying ultimately to secure net revenue.

We recommend that caseloads be between 500 to 700 donors. We do not recommend starting with a caseload of 700. We have this range because mid-level requires flexibility and fluidity in the caseload number. There are many times that can impact caseload numbers. There are many things that can impact caseload numbers such as donor pool size, mid-level officer experience, the ability to execute touchpoints based on the donor database and integration models. It’s better to start small and build.

Lastly, your mid-level officer should be creating a 12-month communication plan that is layered on top of the direct response program. We do not recommend moving donors out of direct response. I’ve said that already once, but we say it twice because it’s very important because some non-profits we’ve come across have taken them out of the direct response program and they’ve lost hundreds of thousands of dollars in doing that.

The introduction series is a critical part of the process as you start working with donors in mid-level. It’s important to remember this process takes time. In fact, this process can take almost the entire first year of your program to complete in full. The first three components of the series are the period where you’re really doing the introductory phase of the process. After that point, you’re moving more into a touchpoint engagement strategy to build relationships and learn what your donor’s interests are.

Something that you must keep in mind as you’re setting expectations internally and with your mid-level officer is that it can be really challenging to reach only voicemail inboxes or to hear, “No,” many times. If you have the right expectations about donor engagement and how many donors will respond, then it’s all in the right perspective. This is what we found. In general, we find that one in three donors will say yes and engage with you.

One in three will not respond at all and one in three will, over time, say no. Remember, not every mid-level donor or major gift donor for that matter wants a deep relationship with your organization. Another part of the structure with mid-level is tiering the mid-level caseload. Tiers are fluid and your fundraisers will have donors moving up and down in tiering as they get to know them, make updates to contact information, and begin identifying their Tier A group.

The mid-level officer Tier A will have the fewest donors and will be where they spend the greatest amount of time. If you download that white paper, it goes into much greater detail of how many donors should be in each tier. Now, here’s an example of a 12-month plan by tiers for a mid-level caseload. There’s a lot here, but I wanted to give you a visual of what this looks like as it’s a key template in our recommended system for mid-level.

You’ll see that there are longer periods of time, 60 to 90 days for multiple attempts and outreach, regular cycling through types of communication and that there’s a difference between the level of engagement and personalization at Tier A versus Tier C. To bring this all back together, let’s talk through the objectives of your mid-level program. We’ve talked about the system and structure and how we do mid-level and this is why.

Your objectives are to learn the donor’s passions and interests, increase net revenue from mid-level donors, disqualify donors, and qualify potential major donors. All of the work you put in now to start your program with the right data and with clear set protocols will be a service to this goal. It will allow your mid-level officer to efficiently and effectively implement the structure.

Hopefully, by now, you’re seeing why the non-profit story has to include mid-level donors. If you need a little bit more convincing, here are some key reasons we see for creating and growing your mid-level program. Mid-level donors are some of your most loyal. Gifts at this level are still significant and meaningful for the donor. These donors are often very passionate and committed to your cause. Mid-level donors are the highest net-revenue producers in your organization.

Again, mid-level is typically $1,000 or more. Sometimes as much as $25,000 for large organizations, or their steady monthly donors even. Even with a mid-level program, the cost of managing these donors and cultivating them toward larger gifts is low enough that they will continue to represent a significant portion of your fundraising net revenue. Simply put, your mid-level donors are your future major donors. As we mentioned earlier, the best major gift prospects are donors who are already giving to you.

You need to not look further than your mid-level donors. Additionally, by investing in the mid-level program, you can retain thousands, even millions of dollars by dramatically improving donor retention with a key part of your donor file. This is the promise I make to you. If you commit to creating a mid-level program where your donors can thrive, you will absolutely see increased retention, a stronger donor pipeline, and more net revenue to your programs. I hope this has been helpful and now is a great time to be taking questions.

[pause 00:38:01]

Lori: We’re ready for some questions?

Jeff: Yes, let’s do it.

Lori: Okay, great. We’re going to get started. I’m going to head down to the first one. Lucinda asked, and we’re going to go back towards the beginning because she said and this is probably the million-dollar question, “What’s a good way to define mid-level donors? Obviously, it will be different for different-sized organizations.” I know you just went through the whole presentation, but there’s always going to be a question of, “What about my organization?” because mine might not be the size of yours.

Jeff: That’s correct. Here’s what we’ve seen. As you said, every organization is different, but sometimes we’ve seen a mid-level program as low as $100 to $999. Typically, we see from $1,000 to either $4,999 or $1,000 to $9,999 and then $10,000 and above is major gifts. We’ve seen mid-level programs start at $500 and go to $2,499. There’s all kinds of different ways to cut it, but it really comes down to looking at your data and looking at your cume levels and how many donors are in each of those cume levels.

You’ll be able to see a huge area that you will see a clog. We see it often in the $250 to $499 level. We’ll see another one right at the $1,000 level and then the $5,000 level. It really will depend, but you should have your data person run a pipeline analysis of looking at cume levels by giving and the number of donors and the amount of revenue. That really gives you a clue where mid-level should rely.

Lori: All right, so we have some coming in as I’m scrolling. We did have a few questions about some of the reportings and how do I find them and things like that in DonorPerfect. Jeff, I apologize. I’m plugging the power session that comes after yours because that’s the goal is for them to see it in DonorPerfect and what they can run. That’s going to be right after this.

Jeff: Perfect.

Lori: Alana says, “I would like for Jeff to review the graphs that demonstrated donor attrition. It was the first set of graphs with year one and year two, and he said he showed the analytics to an executive director and they were astonished with the results.”

Jeff: All right. Back to that. Here we go. Here was the first graph we showed them. This was bottom-line revenue of their mid and major gifts. In year one, they brought in $20 million. By year three, it went up to $23.3 million. They grew over that period, 16.71%. The next– Oops, sorry. Then we peel back the onion to what we call it and we look at each giving year because we’re not just looking at the bottom line. We’re looking at the donors that gave in year one.

What did they give in year two and year three? You can see in year one from individuals, they gave $10.5 million. Those same donors by year three were now giving $7.5 million, or they lost over 30% in revenue over that time period. Then the next year, donors that hit the thousand-cume level at equal $3.1 million, those same donors gave $1.78 million the next year or lost 44% of their value in just one year.

Some donors went away. Some donors gave less. They lost that much revenue. Then they looked at organizations and they lost 36%, and then they lost 39% overall the next year. Altogether, this organization, even though they grew by $3 million, almost 17% lost $9.1 million from donors who gave one year and then they gave less the next year. What happens is most non-profits don’t look at this.

They only look at bottom-line revenue. They don’t look at the donors they give in one year and how those same donors give the next year. The reason they don’t see it is because new donors come in and mask the giving behavior of the older donors. This is why the CEO was astonished [chuckles] because he’s thinking, “Hey, we’re growing by 17% and I had no idea we also were losing $9.1 million overall.”

Lori: All right. Chris says, “How much should a charity be raising in order to invest in a mid-level strategy that will get an ROI? I volunteer for a lot of charities that don’t make more than $100,000 a year, which in context is a lot for them, but should we even bother with defining mid-level?”

Jeff: Probably not. I would have to look at how many donors make up that $100,000. If they’re only $100,000 in total revenue, my guess would be that you need a major gift program [chuckles] and cultivate the donors that make that up. Then as you grow, perhaps you can have a mid-level program. When you only have a few donors and the total revenue is only like $100,000, then I would say you’re sending out an appeal, but you’re also then trying to make connections with one-on-one with those donors that make up the $100,000. With a group that’s small, probably not. It doesn’t work.

Lori: Okay. All right, so this is Joseph. He’s asking, “Do you need a dedicated resource as a staff person to accomplish this type of program?”

Jeff: It depends on how many donors and how much revenue those donors in the mid-level space are making up. In some of the organizations that we work with that are smaller, they have a halftime person working on mid-level because they only have 300 mid-level donors that bring in about $300,000. They can’t really justify a full-time person just on that, but they want to start a mid-level program, so they can move more donors into their major gift program. They have a halftime mid-level person that cultivates about 300 donors instead of 600 donors or so for a full mid-level caseload that we’d like to see.

Lori: Diana’s asking, “This was more about the why than about the how. Can you give some examples of mid-level programs?”

Jeff: Examples of mid-level programs?

Lori: Yes, or give some samples.

Jeff: Samples.

Lori: Examples, mid-level programs.

Jeff: I’m not sure how to answer that question. If you contact us directly, I can definitely talk you through that. Gosh, of the 70-some clients, we have about 20 that we’re running mid-level programs for. We can definitely walk you through exactly what those programs are, but the structure that I talked about is essentially it. We’ve looked at their data and we’ve created caseloads of 600 donors in each of those caseloads. We’ve tiered those donors A, B, and C, and then we’ve created communication plans for each one of those tiers that overlays on top of the direct response communication they’re getting.

You saw that introduction series. That’s all part of it. That’s where they start. The mid-level officers reaching out to these donors, trying to understand who they are. For that Tier A, they’re really starting to understand what their interests are and start developing a relationship because the ultimate goal for that group is really to move them into major gifts. That structure that I talked about is exactly what we do with all of those mid-level programs from all the clients that we work with. If you go on our website, we have samples of those. We have case studies of those as well. You can look at that and how they grew their programs.

Lori: Okay, I’ve been to your site. I’ve been to your webinars. If any of you have not been, I suggest you attend. I’m thinking that this came in from the chat and it was probably somewhere around the beginning. I think what you just said now, but it says, you said 500 to 700 mid-level donors on a caseload. Is that for full-time staff? I know that you mentioned part-time earlier or somebody mentioned part-time, but depending on how many.

Jeff: That’s right. Yes, a full-time mid-level officer can handle between 500 to 700 donors. Typically, when we start, we like to be somewhere in the 500 to 600 range and then grow it as they become more familiar with how to do mid-level and get to know the donors, but that’s usually the makeup. On average, the starting value of that 600 donors is around $500 million.

When we see value attrition rates from that $500,000 group, that’s 600 donors in the 40% range and when you put a mid-level officer on those 600 donors and it shrinks down to 20% or 15%, a lot of revenue is retained, but then also is growing as well. The retention rates go way up when you see a mid-level officer working a caseload. Most importantly, that 3% to 3.5% of those mid-level donors are moving into major gifts and already qualified into major gift portfolios. That’s a huge benefit to the organization.

Lori: Okay, so let me see here. Another one that came in was, “Can you clarify whether it is recommended to take mid-level out of direct response?”

Jeff: Yes, I can clarify. Do not take mid-level out of direct response whatever you do. They have been cultivated through direct response. The mid-level program we’re talking about overlays on top of direct mail, online communication. Remember, we’re starting to introduce the donor to a more one-to-one relationship by introducing that mid-level rep into it.

We’re not taking away the opportunities the donor has through your direct response program because they’re going to give to that. The mid-level officer also is going to have the opportunity to solicit the donor based on the donor’s passions and interests, but we find that the donor gives to a proposal that the midlevel officer gives them and also to the direct mail, so do not take them out of the direct response stream of communication.

Lori: Okay, let me just see what else we have.

[silence]

Lori: Okay, so this might be helpful. Somebody is asking, “Can you explain more about what you’re considering a clog to be? How do you see or uncover a clog?”

Jeff: Okay, I’ll give an example. I just looked at a file today and we looked at all their donors and all the cume levels. At the $1,000 to $4,999 level, they had 4,000 donors that made up that number of donors, so 4,000 donors that were giving between $1,000 and $4,999 cumulative a year. The next level of donors, the $5,000 to $9,999 level, 270 donors. They went from 4,000 donors who were giving in the first $1,000 range, and then only 200 and some in the next level.

That’s a clog. We see this very often. We see it at that level. Sometimes we see it at the 100, the 500 level. This case, we saw it at the $1,000 level, and then the $5,000 level was a massive drop-off, so something is not happening there and they didn’t have a mid-level program. That tells me why. When I see a good mid-level program, that clog is broken up. We don’t see that huge discrepancy in a number of donors in one level of giving to the next level.

Lori: Okay. Kristen’s asking, “Does the mid-level donor program typically only include individual donors or can it also include businesses, community groups, and places of worship?”

Jeff: It definitely could. I look at all of those as the way we would treat an individual, church. It’s really on their giving levels that you would look at as a mid-level. Yes, I would treat the church just like as an individual, corporations, any foundations the same way.

Lori: Okay, so Tristan’s asking, “Is the intention with a mid-level officer to have them directly solicit gifts from those mid-level donors via phone calls and/or face-to-face or to use channels such as direct mail, an email to solicit those gifts that runs parallel to the general direct response program?”

Jeff: It can be both. It’s, “Yes and,” so they’re doing both. Sometimes they can alert donors that something in the mail is coming and to look out for that. That’s a strategy that’s been employed, especially for the aid level where there is a direct solicitation from the mid-level officer. Yes, it’s, “Yes and.”

Lori: [chuckles] Okay, I’m not sure if this will be the last one, but we’ll see. Heather’s asking. She says, “Currently, my DM firm sends proposals mass-produced with your format. You are recommending personalized proposals to our donors?”

Jeff: For the mid-level, especially the Tier A level. If you had 600 donors, let’s say 100, 125, or you’re in Tier A, those are the donors that the mid-level officer is really trying to know who they are, what they’re really interested in. Yes, absolutely. If you’re sending out proposal-type mailings, there are ways to make it more personal based on their interests, who they are, definitely personalize much more in the content of the proposal. Yes, that’s what we’re doing. A lot of times when we have clients send out those kinds of things, they will hold back the A-level people and the mid-level officer will send them out directly themselves to those 125 or so donors.

Lori: Okay, all right. I think that will be it for the questions. We’re going to get ready to close out, so we can let the attendees hop into the next section.

Jeff: All right, awesome.

Lori: Next session, I should say. I do appreciate your time today, Jeff. Thank you so much for presenting.

Jeff: Thank you.

Lori: I want to thank everyone else who has attended today. We do have coming up next– Let me see here. Next is our power session that we have going on. Let me see here. I’m on the wrong one. Hold on. Oh, my goodness. Okay, so my assumption is you’re going to all be hopping into the power session. I apologize. I lost my schedule here. We have a power session coming up on donor tiers and reporting and a presentation on appeal maker. Again, everything’s being recorded, so you won’t lose any of the content. We hope you’ll stick around as we head in the final stretch of day one.

Jeff: Awesome.

Lori: Thanks so much.