This episode of The Modern Nonprofit Fundraiser features Larry Johnson, founder of Eight Principles of Sustainable Fundraising. Larry offers insights about donor relations, how to transform your relationship with money and so much more. The best part comes at the end, when he tells a story of a big gift donor who changed the way he saw donor relationships. You don’t want to miss it!
You can find more about Larry Johnson and his coaching by visiting his website.
The entire episode is worth a listen, but here are a few takeaways you can start applying today.
- You should treat your donors as investors. They want to see a return, they want to know that you’re doing the meaningful work with their resources.
- Transparency, especially as you start growing your millennial donor base, is essential. Now, more than ever, small gift donors want to know as much as the major gift donors.
- Your nonprofit needs a plan for scaling the highly relational connection to your donors as you grow.
- Change the way you look at money. If you see money as a tool rather than a goal, you can start to get creative with your resources.
- Your relationship with your donors after their donation is just as important as before they send their first gift.
Full Episode Transcript
Gabe Cooper: Hey, everybody. Today I’m really pleased to have Larry Johnson on the podcast with us. Larry is a fundraising professional. He’s a big believer in the power of relationships to drive philanthropy.
He’s also a philanthropy coach. He’s a thought leader. He’s an author. He wrote the award-winning book, The Eight Principles of Sustainable Fundraising, and I just found out that he’s working on a great new book for kids on giving in philanthropy.
Larry and his wife, Connie, live in Boise, Idaho. They spend a lot of their time outdoors, hiking, horseback riding, skiing, and who wouldn’t if you lived in Idaho? So Larry, thanks so much for joining us today.
Larry Johnson: It’s my pleasure, Gabe. Thank you for inviting me.
GC: Yeah, absolutely. So, I’d like to get just kind of a little bit of background before we get started, just to give our listeners context for how you got into fundraising. So, kind of give us your backstory a little bit. How did you get started in the world of fundraising?
LJ: Well, my first career stops were in corporate life. I did project management for Westinghouse Electric, and, but on the side, as a volunteer, I was involved pretty heavily in the alumni association of my alma mater, and at one point someone said to me, “You can do this for a living.”
That, well that was a revelation, and through a series of introductions I was introduced to the senior executives at Ketchum, which at that time was one of the leading fundraising consulting firms in the country. We had some conversations, and I had a wonderful opportunity laid before me. They brought me onto staff, and for the first 18 months or so I wasn’t even generating a fee, they were putting me in mentorship of some of the key and senior people. That has really shaped my whole view of philanthropy and how I do that.
And so, I worked for them for seven years before getting into higher education, where I’ve served as vice president, chief advancement officer for four institutions. I’d had enough of higher ed, founded my own firm six or eight years ago. I think it is now, six years ago, I guess. And now I’m building an educational platform now for nonprofits, and for nonprofit providers. I’m having a blast.
Donor Relations and Fundraising Changes Over the Years
GC: Yeah, that’s great, and it’s an amazing opportunity to actually, to start with somebody like Ketchum, to be able to learn under other good fundraisers. Most people in our space aren’t given that sort of blessing coming into it, so that’s amazing.
So, you’ve been at it for a while now. I’d love to hear a little bit about what fundraising was like when you first got started, and then kind of as a follow up to that, how you’ve seen it change over the last 15, 20 years.
LJ: Well it, you know, I think the biggest change is that the expectations at the top levels of giving, or what they were when I began, have now drifted down into the very modest gifts. Let me tell you what I mean by that. I did a lot of my work in capital fundraising, in the “major gifts world”.
I worked with some very significant people of very significant means and very serious motives about their philanthropy, and of course they were interested in outcomes. They were interested in the shape of what the effect their gifts have on others. And so, at that time you would begin to get those kinds of questions from donors if they were considering a gift of at least $100,000.
Now, what I’ve seen change over time is that those modest gifts, even down to $50, donors, especially the young donors, the millennial donors, are beginning to ask those questions and make those demands. And that is something that a lot of nonprofits, at the ones that I’ve seen, they’re totally unprepared for. Because their paradigm, the way they approach their giving, is very transactional, and as a result of that you’re seeing a lot of donor fatigue. You’re seeing people be, sort of change loyalties very rapidly, millennials especially are doing that.
And that’s, I think, the biggest change, is that the reasons for giving, the demands that are being made by donors have changed. Many times the nonprofit, although well meaning, is not prepared for that change.
Donor Relations Best Practices with Millennials
GC: Now, that’s amazing. So much of that stuff is what we’re preaching week in and week out, but man, I think you’re absolutely right. Especially the millennial donor, not only do they want that level of transparency to the impact that’s happening in the field, the way that only maybe a $100,000 donor would 20 years ago, now the $50 donor wants it. But then they want to give more than just their money, now, too. They want to give their time. They want to maybe post something on social. It’s a way more sort of all encompassing deal.
So, anyway, I just wanted to reiterate what you said, because I think it’s, nonprofits have to get this if they haven’t already.
LJ: Well, and it’s why I tend to … the language I use now, I do use the word the conventional language, but I try to use words like, for instance, investors as opposed to donors. People are investing in you, and they’re expecting a return, it’s just not a financial return. There’s the difference. Nonprofits don’t understand that a lot. They see it only as a monetary transaction, and that’s not what it is.
And the case in millennials, they want to be more than investors, they want to be your partner, as you said. They want to be doing stuff, as well as giving resources. It’s a partnership that they envision. The nonprofits that are doing very well with millennials have learned this, and they’re incorporating them in a way that’s meaningful.
And, you know, I did a lot of my work with volunteers at Ketchum, it’s how I got started, and volunteers are very powerful if they’re used in the right way. But many, many organizations are not prepared for that. They much prefer a staff driven approach, and this is also one of the points of friction.
GC: Oh, that’s great. You know, this is even a little bit kind of off script for what I wanted to talk to you about, but what have you seen in terms of what organizations have done well to begin to create that transparency that you need, and to begin to communicate those outcomes to even millennial donors? Have you seen anything that’s worked at organizations that sort of creates that culture shift?
LJ: Well, an organization that comes to mind whenever this question is asked is one that’s fairly new. It’s only about, I guess, 20 years old now. But it was started by a young person, a new college graduate who came with no resources of her own to the picture.
She a concept, and she went about it in what I would call the classically good way to do it. She surrounded herself with a small group of very committed people who had both influence and some resources to help her start. And then from that she reached out, always maintaining that highly relational model, and today it’s grown into a very successful, nationally known nonprofit, and you would know it as Teach for America.
LJ: And Wendy Kopp started that concept. She never approached it from a transactional piece. She always approached it from an inside out, what Seth Godin would call permission marketing piece. Then a lot of her donors are also the people who start as being people in her program, who actually go out and teach, and then they come back, and they do other careers, and they become donors.
I mean, she’s almost been in it a generation now. So, you know, this thing is generational. Once you’ve been into it 20 years, you begin to really reap some of the benefits of all the seeds that you planted. That’s when a large gift program, an asset giving program, really begins to take off.
GC: No, yeah. That’s amazing. It’s a great example, and I think organizations, like Teach for America, that have done a good job keeping a very short distance between their donor and their program, and the two just blend together sometimes, it completely changes the nature of fundraising, especially in 2017. So, I love that.
Innovations for the Future of Nonprofits
GC: Okay, so I’m kind of interested a little bit in hearing what you’re working on now. I know you got a couple of cool projects underway, not just writing, but some more tactical, hands-on stuff. So, can you tell me a little bit about the stuff you’re working on right now?
LJ: Well, what we’ve been doing, I guess, for several years, is, and it’s beginning to come to fruition now, is we’re building an educational platform for strategic fund development. In the space now you have the tools people, that would include Virtuous people that provide tools to do things with. Then the other side you have the traditional consultant, or coach, that usually is a in-person or through a telephone connection, where they’re giving you guidance day to day.
But there, and then there are a handful of what I call academic fundraising type programs. But there’s really nothing in the space that seeks to grow this paradigm in a very participative way, in how adults learn, and that makes it accessible to both volunteer and professional alike.
So, I think, I like to think what we’re doing is building that platform so that we’re making it simple, but we’re not removing any of the sophistication. It would be much like sitting in front of your Apple computer, and there’s this beautiful Windows display. It’s very intuitive, and very easy to use, but all the complexity is behind the screen.
And so, we’re beginning to build that platform. We have a full blown online digital training platform now for those. It all mobile-y adapts. I’m always focused on the young people. And then we have a series of very highly interactive workshops that would be be delivered by a consultant, by us. Or the organization itself can get the license and do it on their own to build their own culture.
And so, and then I have one other project that I can’t quite speak of yet, but it will go live in the spring, and I’m pretty excited about that.
But what I’m trying to do, ultimately, is what I would call democratize fundraising. When I worked for Ketchum, you know, I learned very quickly that it’s more about the way you’re thinking than what you’re doing to be successful. People pay a great deal of money for the large consulting firms to come in and more or less tell them that very same thing. And then, unfortunately, their fee structure, their price point is at a point that it eliminates all but 5 or 6% of the nonprofits.
And what I want to do is make that way of thinking, making that approach available to virtually everyone, because it’s not a question of whether you’re the big guy or the little guy. Everyone starts as a little guy. The question is, what attitude, what approach are you bringing to the table? And that will determine your level of success.
So, that’s really what I’m about. And so, yeah, I’m working on, we got the Mook thing going on. We got the live workshops. There’s one other project that I, that’s going to hit the street in the spring, and I’m really excited about that, so just stay tuned. We’re trying to disrupt the market a little bit, and make things more available, and do things in a different way.
GC: Yeah, that’s, I can’t tell you how big the need is for the kind of stuff that you’re doing. It’s painfully obvious, if you get a job as a development rep for the first time at a smaller organization, because you’re right. Basically, you can learn this stuff working at a really big agency, or not learn it at all.
I mean, just to go Amazon and Google, you know, books on fundraising, and there’s, you know, people read the same three title, and they’re not bad books, but the same three titles that they’ve been reading for the last 30 years. There’s really no, like, modern, democratized learning platform.
So, if you get in one of these jobs, you’re kind of hosed unless you came out of one of the big agencies. So, it’s just, it’s a massive need.
LJ: Yes, yes. We’re trying to meet that need, quite frankly, and it’s exciting.
GC: Yeah. Yeah, I love it. I love it.
Mistakes Development Officers Make with Donors
GC: Okay, so you’ve been sort of talking to a bunch of different organizations, obviously learning on the agency side, within the organization, kind of working from the inside out, and then now trying to educate. So, just for our listeners, because this would be helpful, what are the most common mistakes that you’ve seen a lot of your chief development officers, you know, VP of development, these kind of guys, what are the big mistakes that you’ve seen them make over the years?
LJ: You know, I think they’re pretty consistent. When people are having trouble raising money, there are usually two or three things that are operating.
Number one would be they see it as a transaction versus a relationship, and what I mean by that is your donors are really your investors, and they are looking for a return, it’s just not a financial one like it would be in the business world. And if you’re not providing that return, especially in today’s very competitive market, with short attention spans, you’re going to pay that price.
And then the other thing that I see, which really affects the large gifts more than anything, is, it’s not a question of what your mission is, or how worthy your cause is, or anything like that, it’s really the way you’re relating to these people with resources, is that many of those in the fundraising those, and I guess I was no exception to that until I was enlightened, we come to the table with what I would call a dysfunctional view of money, and that’s harming the way we interact with other people. It’s really stilting it.
We often bring moral qualities to money, or we have an emotional content to money. Money is simply a tool. It’s value free, and when we can extract ourselves from that, and then approach the individual as an individual who’s seeking to achieve an outcome, then a whole new world opens.
And so, I’d say it was those two things consistently, whether, and I’ve seen large programs be this way, where especially, you know, you get into these large programs that have many, many calling officers in the field, they’ve got very high productive, production requirements, it’s all focused on money, and it becomes a race to the bottom. This is not good, and donors are getting less and less patient with this approach.
GC: Yeah, absolutely. Absolutely, and it’s, you know, it’s, honestly, donors get fatigued, but it’s no fun if you’re a fundraising professional either. I mean, it’s just a … the transactional side, it’s, this is why, you know, fundraising professionals average lifespan is 18 months, or whatever it is now. It’s just exceptionally low because people get burnt out just chasing transactions as opposed to actually making a difference and building relationships.
LJ: Well, what better profession could you be in than to be able to help someone, and I mean a donor here, not your organization, achieve personal fulfillment.
GC: That’s right. That’s right.
LJ: What joy that is to see that happen. Let me give you one example. I worked as a calling officer with a founder of one of America’s leading tech firms. You would know the firm, and probably the name, if I mentioned it.
I met this man when he was near the end of his career, and we got to know one another. He knew why I was there. I was there to work with him for a major investment in his alma mater, and we got a good relationship going.
But at one point he said to me, “You know, I have a real problem with giving you a significant gift.” Well, when someone says that to me, the conventional thoughts are okay, so I’ve said something wrong. He doesn’t like the president. There’s the student newspaper, all the conventional sorts of reasons why a donor wouldn’t do this.
I said, “Well, so can you tell me why?” And his answer absolutely bowled me over.
He said, “I’m afraid if I do this you’ll never come back and see me again.”
GC: That’s great, and that speaks to the heart. Man, that’s great.
LJ: I mean, this is a man who had incredible resources. I was invited to his home. He invited my family there, in Silicon Valley, and you, but my point is, that wasn’t really his need. His need was for a relationship.
GC: Relationship, that’s right. No, I love that. Yeah, and that is so often, it all bleeds together through donors. It’s the relationship with who you know at the organization. It’s your relationship to people impacted by the organization.
We always say think of the last four or five times you gave to charity, and I can almost guarantee, in every case you knew somebody who worked or volunteered at that organization, or you have a very personal connection there.
GC: That’s just what drives giving. It just does, and that’s not bad. I mean, the fact that we give-
GC: … to things close to our heart, and that we’re relationally connected to, that’s just how we’re wired. And so, it’s okay to embrace that.
LJ: Fundraising is very much a flesh and blood enterprise. The tech tools help, but they don’t replace it.
GC: That’s right. No, that’s right.
Lightning Round Questions
GC: Okay, this has been incredibly helpful. I think our folks are going to get a ton out of some of your insights here. I do like to finish these out with kind of a little lightning round of questions, so I have a couple questions I want to blow through really quick with you. Is that okay?
GC: All right. Let’s do it. So, typically, if you’re in this world of fundraising, it’s running really, really fast, and you get burnt out really easy. So, how do you kind of stave off burnout? What do you do to keep yourself sane?
LJ: Well, first of all, you know, it’s a physical, mental, spiritual triad for me. Do my morning devotion. I am always up at the gym early. For an old guy, I think I’m doing pretty well. In the last year, I put on 20 pounds of muscle.
LJ: I have, I do a lot of reading. One thing I discovered with donors is they’re voracious readers, especially the high end donors, and I read a lot of fiction as well as non-fiction. And then I, it’s a keeping everything in balance, and remember that I just have to stop at some points.
GC: Yeah, no, that’s hard. It’s easier said than done to stop.
LJ: Yes, it is.
GC: What do you do when you’re not teaching fundraisers, when you’re not kind of doing the work around philanthropy and thought leadership? What do you do for fun?
LJ: Well, what I do for fun, I love having people over at the house. I’m a cook. I have a motorcycle. I have Harley. It’s a Fat Boy. That was one of the things I promised myself when I moved out west. It’s great. I love it. I have a motorcycle buddy, and we take multiple week trips all around the Rockies together.
And then I, my wife and I have trail horses. We go up into Montana, and then, of course, into central Idaho with those.
And then I’m lucky to live in town, but I have enough property, I have a nice big tree house in a century old willow, and I like to get in there on an afternoon and read a book. And then, of course, at 5:00 is cocktail hour.
GC: I think you may have just described my perfect day. That sounds amazing. That’s pretty good.
LJ: I’m not a golfer, sorry. Some people like golf, and in April here, in the valley, you can ski in the morning and golf in the afternoon. That’s really what it’s like. We live in a … what’s known as a high desert, so we get 300 days of sun a year, even though we do get four seasons, and I’m within two hours of Sun Valley, the ski resort.
GC: Wow. Yeah, that really sounds amazing at every level. That’s pretty great. Okay, just last one real quick here. Best book, you’re a voracious reader, and so, best book and/or podcast that you’ve consumed in the last year?
LJ: Best book? I just am thinking, well, I would think it has to be a business book called Simplify, and it’s written Richard Koch and Greg Lockwood. He talks about how the most successful businesses in the world have, what they’ve done is they either simplified the price through different ways to production, or they’ve simplified the proposition, meaning that they changed the way things have been delivered.
Two proposition simplifications that come to mind would be both Apple and Uber, and a price simplification would be McDonald’s. But it’s fascinating that people strive towards simplification, and one of the things that frustrates me about my business is that there’s a whole sort of sector of my profession that relishes in complexity. That really drives me nuts. It just drives me nuts, because what we’re doing is not complex. It can be pretty sophisticated and nuanced, but it’s not complex.
GC: Yeah. That’s great, and for nonprofits, they, a lot of times there’s no market forcing them to say no to things, and so-
GC: … there’s, you know, you can just keep adding, keep adding, keep adding, and before too long you don’t know who you are, your donors don’t know who you are, and you’re sort of not even serving the purpose anymore. And so, I love that idea of just forcing functions to make you make hard decisions — to make the complex simple. And so that’s, I think that’s a great book.
LJ: It is. It’s a good read, too. It’s well written. It’s not full of a lot of jargon or techno speak.
GC: That’s great. Well Larry, it’s been a blast having you on. I really do think so much of what you think about and talk about is so close to my heart, and the heart of our team here. And so, I think it’s going to be huge for our listeners, too. So, thanks so much for joining us today. I really appreciate it.
LJ: It was my pleasure, Gabe.