 Welcome back to the nonprofit show. You know, I like to say welcome back because I just assume that you've all been here before, but if you haven't, we are thrilled that you're here for another episode. Today we have with us Barbara O'Reilly, CFRE. And Barbara, I'm thrilled to have you join us today. Barbara serves as the founder and principal at Windmill Hill Consulting. She's brought her soapbox with us. So if you looked at her LinkedIn profile yesterday, you saw that navigating declining donor rates is a topic she talks about every day that ends in the word day. So I absolutely love this because that means every single day of the week you're talking about this and you're on your soapbox. So before we get started to learn more from Barbara, we want to say hello to all of you if we haven't met you before. Julia Patrick is here, hello to you Julia. She's the CEO of the American Nonprofit Academy and I'm Jared Ransom, honored to play alongside day in and day out as your co-host Julia. I'm also the nonprofit nerd and CEO of the Raven Group. Together we are honored to have the continued support from so many of our amazing sponsors. So a shout out of gratitude to Bloomerang, American Nonprofit Academy, fundraising academy at National University, non-profit thought leader, your part-time controller, staffing boutique, non-profit nerd, as well as non-profit tech talk. Do yourself a favor and check out these companies because they are here to help you do more good in around and throughout your community. So they have helped us to produce a plethora of episodes, past 900, if you've joined us before and you can find all of them right here on these various channels. So you can find us on podcast, streaming broadcast and then if you want to, you can go ahead and scan that QR code, download the app and later today, you'll get a notification that this conversation right here, right now with Barbara O'Reilly is shared and uploaded on that site. So again, thrilled to have with us, I like to call it the hot seat, Barbara, but it's really not that hot because this is your area of genius. But Barbara O'Reilly CFRE joins us, she's founder and principal, Wind Hill Consulting, welcome. Thank you, Jared. Thank you, Julia. I'm delighted to be here and to be able to have a chance, Jared, especially, to extend our conversation that we started down at Raise in Nashville. I'm so glad you mentioned that. I teased it a little bit earlier, you're right. So we connected at the One Cause Raise conference in Nashville. We had you on for a little bit of a segment there at the conference as we are broadcasting live from the studio there on the conference floor. So hopefully our viewers and listeners got a little bit of a taste, but here we're gonna get a little bit more. So thrilled to hear from you about this because Julia, we've both been hearing this, especially about the GivingUSA report that donor numbers are down and this seems frightening. What does this mean, Barbara? Yeah, it's, you know, we've seen over the last year for sure this sort of, these mixed messages. So on one hand, we see, you know, record numbers of dollars that are contributed, right? And we, and especially GivingUSA has been tracking this for certainly the last easily 40 years. We saw, you know, the numbers from 2020 to 2022 increase. Each year was a new record amount, estimated amount that was contributed to nonprofits. There were headlines for this year's release when it came out in June that was saying, you know, philanthropy is down. It was down, but adjusted, right? From two record-setting years. And when we're talking about it, contributed dollars to nonprofits was about half a trillion dollars. So that's really not, that's not anything to worry about and think, oh my gosh, the nonprofit sector is at huge risk. Where we are at risk though is the declining number of donors. And so it feels a little bit incongruous. You know, we've got a, you know, these record dollars that are being given, but yet under the surface, the donors are declining. And this is a trend that we've been seeing for the last 20 years on, since for the last 20 years, we've seen the number of donors declining by about 20% willing to decline. We've seen this along the same trend lines with volunteers. And in fact, the Giving Institute has been working closely with the Get Generosity Commission to dive into this very, you know, this, the last time the Generosity Commission convene was back, I think in the 70s or 80s, there's quite a bit of time ago. And so it was starting to look at what are those underlying causes? Because it is, you know, while we are, you know, a strong sector, we are operating in the larger ecosystem of everything around us. And our societies have changed, our communities have changed. And in one part, I think the declining number of donors is part a factor of all of that. But I would also say it's part of what we're doing as nonprofits and as fundraisers to engage with our donors. And so part of it is not, is out of our control, but part of it is very much in our control of how we are connecting with our donors, keeping them around, and frankly paying attention to whether or not our donors are sticking around. So I have a question, and this is coming from a little bit of the left field, and excuse me for the baseball reference, but my team is now going to the World Series. So I have to bring it up every day until the World Series is over. But my, you know, I think that the philanthropic actions of large donors, you know, the wealth market and corporations is so tied and so masterfully managed by PR. And so I wonder when the average school teacher, you know, middle-class American person keeps hearing about all these super gifts, if they're like, pfft, that's, I can't compete with that. That's being taken care of. They've solved a problem. I mean, versus that old school like March of Dimes, every dime counts, we all need to row in the same direction. That's just an observation. And I'm wondering if you have a sense of that as well or what that action or those actions might actually be doing to the donor environment? Yeah, I would say that's a really interesting question. And I moved two minds to that. So first I would say it actually doesn't, they're not related as much as we would think because we're looking at different paths to generosity that have really exploded over the last few years. So Facebook fundraisers, right, has raised, I think, seven billion, right? And that's gifts of all sizes, particularly the everyday and micro donations. There's GoFundMe, I think raised in 2022. It's several billions, several tens of billions of dollars, I think. I'm not gonna get the number correct, but it's an incredible amount, right? Yeah, it's a lot. So, and that's, again, everyday donors who are giving partly to nonprofits because I think about 50% of those who are giving through GoFundMe are giving to nonprofits. Other about 50%, 57, 60% of those are giving to nonprofits in formal groups and individuals. So it's an extraordinary amount of money. So people are still generous at the less mega donors, like mega amounts, than they are, than we think, right? So I think they're not being deterred necessarily, but there was, on the other hand, there was a study, and I can't remember where I saw it, that did ask that very specific question. And there was, to me, a surprising percentage of respondents who said that they feel like those larger gifts are covering it. Like there's no room for their giving. So I didn't, I don't remember where I saw that, but, and so I can't have a sense of what that sample size was, who they were asking, the specific other questions that surrounded that particular question. But I would say it's a point to keep in mind, particularly as fundraisers and nonprofit leaders, to evaluate particularly our time and focus. So we aren't getting distracted by the shiny objects of whoever we're defining as mega gifts, whether it is the true Mackenzie Scott's of the world, or our own orbit of mega donors, that we are really thinking about that whole community of supporters at every level so that they all feel included and welcome and valued. Yeah, I really appreciate that response. And Julia, that is a fantastic, interesting question. Never thought of that, of how PR goes into the mix. But Barbara, what about volunteers? Because the number of volunteers are also dropping. So, I mean, that to me just sounds like a recipe for disaster. Yeah. It can be for sure. And I'm not surprised that they're tied or that they're trending in the same direction as the number of donors declining. Because we see a correlation for sure, your volunteers are going to be the most likely to be donors as well. But again, many nonprofit leaders say, well, we can't ask our volunteers for financial gifts because they're already giving up their time, which is the worst perspective to have because they're the ones who are the most likely to say yes to making a financial investment in that organization. I think it goes back to how we as leaders and nonprofits are managing the expectations of our volunteers, how we're identifying what are the best uses of that volunteer time because there is sometimes a feeling of compulsion. Somebody has said, I'd love to help. How can I help? And then coming up with something to make use of that person's time when in fact it's probably not the best. And I remember talking years ago to a nonprofit who said, yeah, that fence over there, that's been painted 10 times in this year because we have all these employee groups that want to do something. And so we figure we'll have them do it, paint that white, I mean, it was a great looking white fence, but because it was painted like every other month. So I think there's that balance of are we giving enough, are we creating busy work for our volunteers because we feel like we have to give them something because they've offered. Are we, do we have the bandwidth to be able to figure out where is, what's the best contribution that they can contribute, whether it's expertise or other networks or other capacities of their time that are going to still provide them value and the nonprofit, we shouldn't feel as a sector that we have to come up with projects just because someone says, can I help? Because there's nothing worse than that volunteer saying, God, that was a waste of my time. They didn't actually need me, right? And then you've just lost that moment to create a really strong relationship. I love sadly the fence story. I think that is so relatable, and I have been in many organizations, I'm sure all of us have where it's like, oh, what are we gonna do with this 25 group, corporate leaders that are coming in next week? Let's just give them some more white paint and they can paint that fence again. Yeah, right, instead of sort of thinking about, are there skills or sort of technical expertise that we need, is there something, are there other gaps in our staffing capacity or in our wish list of it would be great to have that could be filled on a short-term or a longer-term basis by outsiders, outside volunteers who would have it. And then in fact, doesn't that change the way we think about who we're recruiting as volunteers? Absolutely, yeah, that level. So we've talked about donor amounts, that dollar amount is going down, volunteer engagement is going down, we have one more decrease, and that's the decline of donor retention rates. What is a current donor retention rate? Like what is it we're striving to achieve right now? So let me ask you both a question. Do you know what the hospitality customer retention rate is? No, I don't, but I love where you're going on this. I do too, I'm like... I know, I don't know it. Here on fire moment. Okay, let me, let us know because this is great. I thought the white fence was good. So the hospitality industry last year cited a customer retention rate of about 70% or something more than 70%. And many retail outlets, stores, online retailers have generally sort of an 80 to 90% roughly. The nonprofit sector, right? The sector that's really good, that's kind of an anchor in community services and in bettering the world has an average retention rate of 40%. Oh my gosh, that hurts, that hurts so bad. I'm just like sick to my stomach. And I'm sick to my stomach that I didn't know that. I mean, I know it's bad and I know it's a problem and we need to pay attention, but not to have a hard number, that's even worse. It's been going down. It was 50% at some point, not that long ago, I'd say probably in the last 10 or 15 years and it has been steadily declining. So it's somewhere between 40 and 43% depending on when you look at those numbers. But for those first-time donors and we saw a surge of first-time donors within the last three years, on average, only 20% of those are sticking around. So think about that churn. We have those first-time donors who are inspired by something they see. They make a gift of any size and 80% of them on average are not coming back. Now, of course, that wildly varies from nonprofit to nonprofit, but it's that churn of new donors who take that first step to invest in an organization. Those who have been around for at least two, three gifts who are majority 60% or so on average are not coming back. That churn is what is holding us as a sector back. And I would say that many nonprofit leaders and fundraisers are not designing their systems and designing their strategies to focus on that metric. And I get it. We're all focused on how much money do we need to raise? Are we hitting our budget goals? Because that's of course important. But are we looking behind under the surface to say where is that money coming from? And there are so many times when we're working with organizations and we start with that very metric to understand that. And if it's, yeah, we're hitting our dollar goals, great, but it's churn because they've got 30% retention. We got to fix that quickly so that those donors are sticking around and the longer they stick around, the more likely they are to increase if they feel like they're welcome and they're valued and their gift is doing good. And if we lose those donors, the chances of them coming back are slim. So we are, we've got to rethink our mindset around these donors so that it keeps them around longer. So Barbara, what is the hospitality industry and the retail industry doing differently than what we in the nonprofit sector aren't doing yet? So a whole lot of things. Clearly. That's another show. But I mean, yeah, I would love to know. I mean, because we don't think about this. Right. We don't talk about it. So think about like Amazon, right? Whether you love them or hate them. You go onto the app, it has been tracking your shopping preferences, it's suggesting stuff, it's making it super easy. So the user experience is easy because you can either do one click shopping or you have got maybe at most two clicks. It is providing recommendations based on what it understands. It has learned over time. So it's using data. It's looking at that end result of, I want to make sure that this customer comes back and has an easy and simple user interface with this platform, with what it's looking for. It has, it's using the tech and the automation and the AI, if you would, to understand who that donor, who that customer is. Think about Netflix, right? It's constantly saying, hey, you've watched this, maybe you would like this. Right. And so part of it is the actual process, the user interface of how you are interacting with whatever that retailer is. But it's the other of understanding who I am as a consumer. And we don't do that enough in our sector. Partly, partly it's resources. I completely just gonna put that out there. And this is not a criticism at all, but we have so many tech tools and AI capabilities at our fingertips now, more than ever, that are accessible and affordable. And so it's again, changing our mindset that using automation, using AI to understand a little bit more about who our donors are so we can offer a personalized communication with them. Even just at that baseline, that's what we're missing. We're not asking our donors enough about what they're interested in. We're not then collecting that information and using AI, using CRMs to say, that donor said they wanna learn more about our scholarship program. Let's feed them information about our scholarship program. Let's invite them to our scholarship recipient or award ceremony or whatever it is. That's where it's as simple as that. There's many more reasons, but at the base, that's what we're talking about. So we could talk to you, Jared and I are, we're lost. I mean, our time is almost up, which is shocking and sad, but because you've given me like at least three hair on fire moments, which that's a good rating. She's just having one, never three. So this is a milestone. Oh yeah, and so you can see what has happened with the hair on fire. It's turned my hair white. So much of this has to do with keeping the wolves at the door from the door. We're trying to protect our organizations. We're trying to raise money frantically, limited resources, we know the drill. But then we have this piece of customer service that we don't talk about. That's why I love that you let in with the hotel concept because we've all, we can understand what that experience could be, right? So how do we look at that donor experience versus money raised and stop the fear so that we can be thinking about that donor experience? I mean, do you have to get to a certain point where you can think about the donor experience or do you have to start with that and then hope that it raises the money? Check it out, right? Yeah, yeah, I think you need to, I believe that you need to start with the donor experience. You've got to understand what your donors are coming to you and sharing their generosity for, for what end, right? It isn't just your mission. They are, we've got these core human needs about being our best selves of having connection with each other, of being able to exercise our autonomy and our ability to feel competent and then being connected with others, whether it's other donors like ourselves who are passionate about the same cause, whether it's with the organization, whether it's with those who are served by the organization, all of the above. And without that donor experience front and center, the money will not come or will not come in the ways that we needed to. And it doesn't have to be, you know, I get, it doesn't have to be the hyper-personalized experience that, you know, I mean, there's a difference between walking into the Ritz and walking into, you know, a more budget. I mean, I just, I'm not gonna, I'm not gonna name any of the budget, but a budget hotel, right? Totally different experiences. And it doesn't have to be like that. It could be as simple as looking at, how do you say thank you? Do you write on behalf of the board of directors? If you do, that's gonna strike it from your vernacular because nothing says transaction than put me in, you know, face to face with your volunteer leaders. Again, no disrespect to volunteer leaders, but I'm giving to that organization because of the mission. Everything else around it that's related to it is not what's driving me. I'm not giving because, oh, I see those 10 people are on the board. I'm giving because of the cause. And so we've got to be thinking about how we keep our donors close to our mission through our communications and making it more personal. Something like that. Also seeing, who am I giving to? Why am I giving? Understanding that. Those don't cost a lot. They could be very easy, automated surveys, tech things, or even as simple as let's do an audit of all the ways we talk to our donors and do we sound like human beings who are writing this? Are we clear? Are we only talking about ourselves, or are we asking and creating and trying to invite a dialogue? That doesn't cost a lot of money. And that's where we need to really be thinking about how we rebuild the way we talk to our donors. I think, honestly, that is probably the biggest takeaway for people watching and listening. If you do anything, take a look at how you're talking to your donors, right? Like an assessment and audit. Barbara, do you recommend this annually, quarterly? I mean, hopefully we're looking at this as we're creating a piece. But if we have, and I know many of us do, a standard thank you letter. How often do we need to revisit this? Yeah, I think a standard thank you letter, it's good to have it revised. Now, ideally it's good to have it revised when you send out an appeal so that there's a link at least to the message that was in the appeal and what they get on the backend when they've made that gift. I get though that not every organization will have the capacity to do that. So at least a couple of times, maybe once a quarter, take a look at that. Or twice a year, take a look at that. But if you can't remember the last time you updated your thank you note, update it now. And also think about particularly those first-time donors, that retention rate statistic should be extraordinarily shocking to people that on average, 80% of first-time donors are not coming back. So think about that onboarding. How are you welcoming them? How are you telling them, you made a great decision to invest in us and we're gonna tell you a little bit more about ourselves and we wanna know more about you so that we can make this a really strong partnership. Touchpoints, surveys, videos, all of those things that we already have at our disposal and package that so that they feel that they're welcome right from the beginning. Barbara, I feel like I wanna have you back on and do an entire episode about the hospitality and retail industries, how we can learn from these industries because that's an experience we've all had. And you're so right. We can go at the five-star experience. We can do a budget experience. There's no right or wrong. There's certain touchpoints or certain experiences through both of those opportunities. So I don't know about you, Julia, but I think that's something we need. Yeah, I mean, I think we don't use the word customer service in the nonprofit sector. And yet at the core of it, we say, oh, we want our donors to feel valued and listened to and connected and all that. But really when you think about it, it's a customer service issue. And if we started using that vernacular, we might understand how we can do thoughtful, low-cost issues or programs that help foster that because it's definitely a missing point. And I suspect that on both sides, the donor and the nonprofit, they don't realize what's happening. They can quantify it, but they can't qualify it. They can say, wow, this is what occurred. And this is what we could do to change because we've all talked with disgruntled or not even disgruntled as much as non-plus donors that are like, yeah, I don't think my donation meant that much to them. Oh, yeah. And that's the reason that the donations are declining is the report shared that the donors don't really see the impact of their dollars. They don't know that it's making a difference. And so why would we continue? And that's part of doing that comms audit is to look at not just the language, are we talking in a way that reader feels, wow, this was written for me. Not tailored for every single donor, but it has to be as if it's a human exchange. You wouldn't write to your grandparents and say, on behalf of my mother and father, thank you so much for your Christmas talking. I mean, who would write like that? We've got that human element into our communications, but especially, Jared, to your point about impact, are we sharing points in our communications, whether it's an e-update or an actual impact recorder or just a quick update letter or note, are we sharing it in a way that shows that before and after? Doesn't mean volume of numbers of stats and progress. It's a before and after of a life changed, of a community turned around, of a student who has a different trajectory. Those stories are what are in fact going to stick with us more than the data and the metrics and the stats. That's important too, but we're gonna remember the stories. Like you're gonna remember the white picket fence story and the other stats because that's how we're hardwired. Oh my gosh, yes. I think that's where we have to, when we're thinking about our audit of communications, are we sharing in a way that shows it before and after and so the donor sees, oh, if I contribute at any amount, if this organization is gonna help move the needle and whatever that causes. Right, well Barbara O'Reilly, CFRE, founder and principal of Windmill Hill Consulting. You have been a gem. We've really enjoyed this. I'm so delighted that you were able to jump onto the broadcast when we were at the RAISE conference in Nashville and then to get you on full-time. It's been a real pleasure. It's been a delight. And I think Jared's right. We need to explore a little bit more with you and get you back on to another episode of The Nonprofit Show. Again, I'm Julia Patrick, CEO of the American Nonprofit Academy. Been joined today by the non-profit nerd herself, Jared, our ransom CEO of the Raven Group. Again, we have amazing partners and they include Bloomerang, American Nonprofit Academy, your part-time controller, non-profit thought leader, fundraising academy at National University, staffing boutique, non-profit nerd, and non-profit tech talk. Hey, everybody, this has been a great episode. I say that a lot, but I really believe every day I'm super energized and I learned something new. This was really fun, Jared, because we can see this shift happening, but sometimes we don't know how to articulate it or to correct it. And so Barbara, you gave us some actionable ideas and things to really pursue when we look at how we can make this process better for all concerned. Hey, everybody, as we end every episode, we'd like to end with our mantra, if you will. And that is to stay well so you can do well. We'll see you back here tomorrow, everyone. Ladies, thank you so much. Thank you, Barbara. Thanks, Jared. Thanks, Julia. Great to be here.