Used Car Sales? Or a Service Department?

I had the opportunity to build a relationship with an individual who owned and operated one of the most successful Cadillac dealers in the Midwest. And he said something enlightening to me one day. “Mick,” he said, “my service department sells 10 times as many cars as my sales department.”

Wow! And how equally important to the nonprofit marketplace. So the question to you, as a nonprofit leader, is, “Are you a salesman, or are you in the service business?”

For example, when you view the role of fund development purely as the process to sell a “product”, you tend to get a perspective that can be frustrating, counter-productive, and misunderstood by your donors. Examples of these strategies might include:

• An over-reliance on broad-based marketing strategies to sell “products”
• Setting “prices” for a variety of sponsorships and giving levels, then asking people to “buy.”
• Creating systems to tell people about the organization
• Developing a series of very logical reasons to make a gift, and then repeating these characteristics very systematically and repetitively

Granted, there are a lot of successful car dealerships and car salesmen, and there are a lot of effective fund development operations who embrace these strategies. They can sell a lot of cars (raise a lot of money), and they sometimes produce and create a wonderful image for the organization. However, I always question how solid their return on investment ratio might be (repeat customers?) and, more important, how rewarding is it for the employee to work within a system like this?

So rather than considering the fund development process as “sales”, consider it as a “service” of your organization – and a personal calling for you as a leader of your organization. First, utilize the discipline, structures, record keeping, and other sound practice of an effective sales-force to economize your efforts. Second, focus on serving the needs of your donors, not selling them products. This can be done through a variety of paradigm shifts, such as:

• Targeted relationship-building strategies rather than broad-based marketing
• Understanding that transformational gifts are not about dollar value, but about what that gift will accomplish
• Create systems to listen to your donors, not talk to them
• Understand the underlying emotional reasons why people contribute to your mission
• Consider your organization as a conduit for your donor’s philanthropic goals, rather than a container for them to put money into.

And after having been in the position to do both “sales” and “service” fund development, let me assure you that the latter is a much more fulfilling – and radically more effective – than the former.

The 10 Most Remarkable Donor Statements

1. 1. “Making money is easy.  Giving it away is the most difficult thing I’ve ever done.” It’s ironic how thousands of  resources exist to teach people how to make money.  Yet where does a person go to learn how to give it away?  That, my friend, is OUR job!  Consider yourself to be a “Giving Coach” first, and an agent of your organization second.
2.  “I don’t expect to know your Board.  But I expect them to know me.” This statement came from a mega-donor to an organization at an event who watched Board member after Board member walking past her without even so much as an acknowledgement.  Don’t ever let that happen to your donors – or your Board members!
3. “Visit me monthly. Call me weekly. Think of me daily.”  In response to the question, “How often would you like me to keep in touch with you?”  Her response should become the theme of your fund development efforts.
4. “Why does this have to be so complicated?” I was with a planned giving officer who was trying to explain every detail of a charitable gift annuity to an elderly couple in their 80’s. My response: “Would you be more interested in simply making an outright gift?”  Their answer: “Of course!”
5. “I don’t need it.  I don’t want it.  They can spend it better than me.” A retired teacher, while donating a sizable investment account, clearly understood what so many of us in the fund development and financial services industries fail to comprehend:  The insanity of the estate planning process is to build up more than you can ever use, only to give it away at the time of death to those who never needed it in the first place.
6. “Here’s the rest of the money to finish your project.” Oops.  My original ask was WAY too small!
7. “You can’t think your way into acting. You have to act your way into thinking.” From a CEO of a major corporation who was frustrated by all the planning, planning, and more planning.  He needed to see some action from the organization before he would make his gift.
8. “If I gave you a big gift, I’m afraid you’ll stop visiting me.” From a 93 year old widow who was living alone.  In other words, do you really care about me? Or are you just in it for the money? Let there be no doubt.
9. “ I wanted to encourage you in your efforts.” From a note enclosed with a check from my very first major gift!  He knew – well before I did – that this process is about the building of a relationship much more than financial transactions.
10. “How much do you need to stick into one of those charitable trusts to make it work?” The technical response: About $100,000. Correct?  WRONG!  The real answer: “What is it that you hope to accomplish?”

Email some of your stories to me at mkoster@spi-pcs.com. They might end up in a future blog post!

Survival vs. Sustainability: The Doyle Alexander Lesson

For most baseball fans, Doyle Alexander was a good but not spectacular pitcher who had a couple of decent years in the 80’s.  If you’re a fan of the Detroit Tigers (like me!), he is the personification of what NOT to do for your nonprofit organization.

In 1987, the Detroit Tigers were in the midst of an ultra-competitive playoff race with the Toronto Blue Jays. Just before the trading deadline, the Tigers dealt a young minor league pitcher to the Atlanta Braves from an aging yet still effective Doyle Alexander. Alexander proceeded to win his next 9 games in a Tigers uniform, and the Tigers went on to win the division. 

That’s great, right?  Wrong!  The young minor leaguer the Tigers traded away was John Smoltz, who became one of the most dominant pitchers in the major leagues for 15 years, won the World Series, and is a certain Hall of Famer.  Alternately, the Tigers slowly slid backward, experiencing one of the most dreadful 10 year stretches in the history of professional baseball.

In difficult economic times, I see similar decisions being made by nonprofit organizations.  Trading their “future” for short term returns.  This mentality can take many forms, such as:

• Losing a major funding for a specific program, but refusing to close that program because “it does such good work.”
• Asking major donors for a gift before they’re ready. Unfortunately, they respond with a gift that’s smaller than they’re capable of.
• Stopping the promotion of your endowment fund because “we need the money right now!”
• Ending your planned giving program.

When finances are tight, it’s only human nature to think in short units of time.  As an executive leader or board member, I strongly urge you to resist that temptation.

And if you have trouble doing that, post a picture of Doyle Alexander on your wall.  If you need one, let me know at mkoster@spi-pcs.com and I’ll get one to you.