2. From the Annual Fund to Major Gifts Jesuit Advancement Association Conference June, 2007

3. Lawrence Henze | Page #2 © 2004 Blackbaud Donor Development Here We Go – Our Agenda  Overview of prospect/market research  Research and Annual Giving –Segmentation –Direct Mail and Telemarketing –Transition to Major Gifts

4. Lawrence Henze | Page #3 © 2004 Blackbaud Donor Development  Major Giving –Understanding propensity and capacity –Moves management Cultivation and solicitation Stewardship and recognition  Planned Giving –Characteristics –Marketing Here We Go – Our Agenda

5. Lawrence Henze | Page #4 © 2004 Blackbaud Donor Development  Integration of Development Functions –Bringing it all together into a cohesive effort  Summary and Questions Here We Go – Our Agenda

6. Lawrence Henze | Page #5 © 2004 Blackbaud Donor Development Underlying Assumptions (Overview)  We need to understand our constituencies  Effective prospect research depends on: –Understanding key segments –Thinking “out of the box”  Each organization has multiple donor profiles –Key to effective cultivation and solicitation –Understanding non-donor segments

7. Ultimate Giving Mining your Database to Maximize Gift Potential

8. Lawrence Henze | Page #7 © 2004 Blackbaud Donor Development Traditional View of Donor Development Prospects (Database) Donors (First Time or Sporadic) Major Donors Planned Givers

9. Lawrence Henze | Page #8 © 2004 Blackbaud Donor Development True View of Donor Development Prospects (Database) Donors (First Time or Sporadic) Loyal Donors Planned Givers Major & Planned Donors Major Donors

10. Lawrence Henze | Page #9 © 2004 Blackbaud Donor Development Ultimate Giving  Everyone on your database has an ultimate gift  Ultimate gifts may be of any size or type  Data mining will help you to determine the ultimate giving potential of your prospects  Once you know the ultimate giving paths on your database, you may develop cultivation/solicitation strategies suited for gift maximization

11. Lawrence Henze | Page #10 © 2004 Blackbaud Donor Development Definitions  Market Research (The Market Research Society) –“ A systematic way of finding out what people believe, think, want, need or do.” –“…and establish policies matched to the public’s needs.” –A.k.a. survey research, social research, and ‘prospect research’

12. Lawrence Henze | Page #11 © 2004 Blackbaud Donor Development Definitions  Data Mining: Investigating and discovering trends within a constituent database using computer or manual search methods  Predictive (Statistical) Modeling: Discovery of underlying meaningful relationships and patterns from historical and current information within a database; using these findings to predict individual behavior

13. Lawrence Henze | Page #12 © 2004 Blackbaud Donor Development Applications of Market Research (NonProfit)  Targeting donor prospects  Test new solicitation strategies  Evaluate program performance  Evaluate solicitation performance  Assess prospect interests  Benchmarking  Monitor constituent satisfaction

14. Lawrence Henze | Page #13 © 2004 Blackbaud Donor Development What Works for You?  What do you analyze? –Do you know what is effective? –Do you know what non-donors think?  Do surveys work for you?  What are you doing online?

15. Lawrence Henze | Page #14 © 2004 Blackbaud Donor Development Predictive Modeling – Who Uses It?  Finance  Insurance  Meteorologists  Political Pollsters and Campaigns  Retail  E-commerce  Thousands of Nonprofits

16. Lawrence Henze | Page #15 © 2004 Blackbaud Donor Development Nonprofit Uses  Higher Education –Recruitment, matriculation –Retention, graduation –Fundraising  Other Nonprofits –Fundraising –Membership –Interests/marketing/readership

17. Lawrence Henze | Page #16 © 2004 Blackbaud Donor Development Prospect Screening  When to use?  How to use? –Have an implementation plan! –Secure commitment from all players! –Use it! Evaluate it! –Do something different!  Use alone or in combination? –Comprehensive to focused, or vice-versa?

18. Lawrence Henze | Page #17 © 2004 Blackbaud Donor Development Custom Modeling Applications  Annual giving propensity  Target gift amount  Major giving propensity  Planned giving propensity –by planned giving “type”  Membership propensity & levels  Direct mail vs. telemarketing propensity  Acquisition vs. retention

19. Lawrence Henze | Page #18 © 2004 Blackbaud Donor Development Modeling Direct Marketing Data

20. Lawrence Henze | Page #19 © 2004 Blackbaud Donor Development Wealth Screening – Hard Data  Wealth ID  P!N  WealthEngine  Target America  Marts & Lundy  Grenzebach & Glier

21. Lawrence Henze | Page #20 © 2004 Blackbaud Donor Development Wealth Screening – Breakdown  Stock holdings  Real estate holdings  Business ownership  Large asset ownership  Income  Corporate and foundation executives

22. Annual Giving It is the cornerstone of most successful major and planned giving programs

23. Lawrence Henze | Page #22 © 2004 Blackbaud Donor Development Annual Giving – A Working Definition  Solicitation efforts designed to: –Promote introductory giving –Promote loyal giving –Reach larger groups of individuals –Be efficient and cost effective –Minimize the intrusion on the donor’s life

24. Lawrence Henze | Page #23 © 2004 Blackbaud Donor Development The Relationships Between Donor Types  Is annual giving the basis of: –Major giving success? –Capital campaign success? –Planned giving success?  If yes, are there exceptions?  Do we underestimate the value of the $20 annual donor? –Do we over-solicit these individuals?

25. Lawrence Henze | Page #24 © 2004 Blackbaud Donor Development Annual Giving Applications  Annual giving propensity  Target gift amount  Membership propensity & levels  Direct mail vs. telemarketing propensity  Acquisition vs. retention

26. Rating Propensity Who is most likely to contribute?

27. Lawrence Henze | Page #26 © 2004 Blackbaud Donor Development Annual Giving Model

28. Lawrence Henze | Page #27 © 2004 Blackbaud Donor Development Annual Giving Scores

29. Targeting Right Direct Mail with a Purpose, or Looking for Love in all the Right Places

30. Lawrence Henze | Page #29 © 2004 Blackbaud Donor Development Creative Challenge #1  A public university sends one undifferentiated letter to all of its 40,000 non-contributing alumni

31. Lawrence Henze | Page #30 © 2004 Blackbaud Donor Development The Letter STATE University Dear Graduate: Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime. Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000…

32. Lawrence Henze | Page #31 © 2004 Blackbaud Donor Development But… STATE University Dear Graduate: Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime. Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000… But, prior to 1957, it was “State College and Agricultural Institute.”

33. Lawrence Henze | Page #32 © 2004 Blackbaud Donor Development However… STATE University Dear Graduate: Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime. Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000… However, until 1987, they were known as the “Red Indians”

34. Lawrence Henze | Page #33 © 2004 Blackbaud Donor Development Unfortunately… STATE University Dear Graduate: Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime. Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000… Unfortunately, in a nightmarish record of futility, they lost all of their games between 1974 and 1987 (perhaps prompting the change to Red Rabbits)

35. Lawrence Henze | Page #34 © 2004 Blackbaud Donor Development Abandoning the Nest… STATE University Dear Graduate: Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime. Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000… The Raven’s Nest was abandoned in 1993, and the site now features a tattoo and piercing parlor

36. Lawrence Henze | Page #35 © 2004 Blackbaud Donor Development It is Not “Happy Days”… STATE University Dear Graduate: Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime. Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000… And even if it were still open, who calls it a “malt” anymore?

37. Lawrence Henze | Page #36 © 2004 Blackbaud Donor Development All Alumni Are Equal… STATE University Dear Graduate: Like me, you probably look back fondly on your years at State University. Cheering on the Red Rabbits to gridiron victory. Enjoying a malt at the Raven’s Nest. The friendships and romances with your classmates, which, in many cases, lasted a lifetime. Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of $1,000… Do you really think a 30 year old and a 50-year reunion class alum should be asked for the same gift amount?

38. Lawrence Henze | Page #37 © 2004 Blackbaud Donor Development Improvements… STATE University Dear : Like me, you probably look back fondly on your years at Cheering on the to gridiron victory. The friendships with your classmates, which, in many cases, lasted a lifetime. Today we are launching a major endowment campaign with the goal of raising $50 million. And that is why it is so important that we receive your gift of … Using strategic customization, we can isolate variables that impact response rate and reflect “predictors” from statistical modeling

39. Lawrence Henze | Page #38 © 2004 Blackbaud Donor Development Improvements… STATE University Dude: Was college great or what? I’m still partying man! You knew this was coming, didn’t you? That’s right, we’re asking for money. Welcome to the real word! But the thing is, it’s not really that much. And by giving $50, you could be helping some slacker who has even less money that you did when you were 18. With much less complexity, we can mail two or three basic versions of the letter, testing dollar asks based on age or other financial/class year criteria.

40. Lawrence Henze | Page #39 © 2004 Blackbaud Donor Development Alternatives  Letter 1 to graduates of less than 10 years  Letter 2 to graduates of 11-25 years ago  Letter three to graduates of more than 25 years  How do we use differences in their experiences, ages, to create messages more appropriate to them?

41. Lawrence Henze | Page #40 © 2004 Blackbaud Donor Development And the point is…  Graduates spent 4 (or more years) becoming individuals  Lived in different times at school with varying world events  Totally different life stages, from finding a first job (or second) to pondering retirement  So why use the same letter with the same ask?

42. Major Giving Everyone wants major giving success, but are you willing to walk before you run?

43. Lawrence Henze | Page #42 © 2004 Blackbaud Donor Development Major Giving – A Working Definition  Solicitation efforts designed to: –Promote significant giving –Promote loyal giving –Reach one donor at a time –Develop a personal relationship –If desired by the donor, to publicly recognize their special commitment

44. Lawrence Henze | Page #43 © 2004 Blackbaud Donor Development Propensity & Capacity LIKELIHOOD AGL, MGL & PGL CAPACITY- TGR & WealthPoint Projects Upgrade Top Prospects Low Yield

45. Lawrence Henze | Page #44 © 2004 Blackbaud Donor Development What Do You Know?  If you have propensity and capacity? –Segmentations –Messages –Frequency of solicitation –Exclusion/inclusion –More than giving history and wealth tells you

46. Lawrence Henze | Page #45 © 2004 Blackbaud Donor Development Model - Major Giving Propensity

47. Lawrence Henze | Page #46 © 2004 Blackbaud Donor Development Why Capacity Matters?  In the giving equation, is it less important?  Three reasons people do not give: –Not asked –Do not support your mission –Not asked for an appropriate gift

48. Lawrence Henze | Page #47 © 2004 Blackbaud Donor Development Target Gift Model

49. Lawrence Henze | Page #48 © 2004 Blackbaud Donor Development Target Gift Distribution

50. Lawrence Henze | Page #49 © 2004 Blackbaud Donor Development What Can You Avoid?  Over-solicitation  Ineffective solicitation  Short-term needs vs. long-term prospects  Minimizing lifetime value  Projection of your opinion

51. Moves Management Building Relationships That Last a Lifetime

52. Lawrence Henze | Page #51 © 2004 Blackbaud Donor Development Defining Moves Management  Correspondence  Phone calls and meetings  Visits to organization/volunteer activities  Proposals and concept papers  Ask for involvement Strategically developed, personalized activities designed to cultivate and strengthen relationships:

53. Lawrence Henze | Page #52 © 2004 Blackbaud Donor Development Or, More Simply Put… CRM CRM Database Prospect Research Moves Management Actions Feedback Constituent Relationship Management Solution People CRM Database Prospect Research Moves Management Actions

54. Lawrence Henze | Page #53 © 2004 Blackbaud Donor Development External Prospect Research Electronic Screening On-Line Traditional Wealth identification Influence and power identification Generic modeling Custom modeling Lexis-Nexis Hoovers.com Bizjournals.com Bigcharts.com tenkwizard.com Google.com Historical review (affinity) Public records research Peer group evaluation Development officer feedback Surveys

55. Lawrence Henze | Page #54 © 2004 Blackbaud Donor Development Not All Prospects are Equal A development officer’s pipeline is established by identifying, rating and ranking a prospect’s:  Wealth indicators  Improvement  Capacity and propensity scores  Responses to personal interactions

56. Debunking the Myths of Planned Giving Myths, Mysteries, and Meaningful Planned Giving Research

57. Lawrence Henze | Page #56 © 2004 Blackbaud Donor Development Sharing Knowledge  Planned giving facts  Methodology of determining donor profiles –On your own –Market research  Understanding the Donor Lifecycle –Annual, major and planned giving  Understanding Planned Giving Behavior –Myths and realities will be addressed throughout

58. Lawrence Henze | Page #57 © 2004 Blackbaud Donor Development Planned Giving Facts  Wealth transfer (Boston College study) –$41 trillion to be transferred from one generation to next in 50 years –Estimate that $6 trillion will be given to charities

59. Lawrence Henze | Page #58 © 2004 Blackbaud Donor Development Planned Giving Facts  NCPG research - 42% of Americans have wills o8% say they have charities in their wills o97% do not revoke charitable will provision o14% say that they have considered this provision without being asked –89% of planned gifts are bequests –73% do not inform charities of will provision

60. Lawrence Henze | Page #59 © 2004 Blackbaud Donor Development Planned Giving Facts  Why people give –97% say they care about the charity –87% desire to do something special –35% tax planning –22% know charity’s representative

61. Lawrence Henze | Page #60 © 2004 Blackbaud Donor Development Planned Giving Facts  Extremely passive solicitation methods  Appeals are broad based and require request for more information  Expectations are unreasonably low –Far less than 1% give using this methodology

62. Lawrence Henze | Page #61 © 2004 Blackbaud Donor Development Age Distribution – Major Giving

63. Lawrence Henze | Page #62 © 2004 Blackbaud Donor Development Age Distribution – Planned Giving

64. Lawrence Henze | Page #63 © 2004 Blackbaud Donor Development Planned Giving by Gift Type  Each “type” has different traits –Annuities –Charitable remainder trusts –Bequests  Mass Marketing – one to one –Opportunity to target planned giving prospects

65. Lawrence Henze | Page #64 © 2004 Blackbaud Donor Development Planned Giving Propensity

66. Lawrence Henze | Page #65 © 2004 Blackbaud Donor Development Variables and Planned Gift Types?  Age?  Wealth?  Credit Usage?  Past Giving Behavior?  Type of Organization?  Relationship to Organization?  Marital Status?

67. Lawrence Henze | Page #66 © 2004 Blackbaud Donor Development Direct Mail  Remember importance of annual giving –Multiple opportunities to spread the word  Set sights on higher response rate –1% unreasonably low  Direct mail is passive by nature –Plan follow-up for highly-rated prospects  Information vs. solicitation –Asking is not the sole purpose

68. Lawrence Henze | Page #67 © 2004 Blackbaud Donor Development Telemarketing  Personal, relationship building calls  Use as a follow-up to direct mail  Thank you calls as cultivation tools

69. Integrating Development Functions

70. Lawrence Henze | Page #69 © 2004 Blackbaud Donor Development Integrating Development Functions  Having a plan for all of your constituents  Communication among entire staff  Tracking Results  Analyzing Results  Being an Instrument of Change

71. Lawrence Henze | Page #70 © 2004 Blackbaud Donor Development What You Can Do  How many “we have always done it that way” programs do you have?  Evaluate the success of each of your direct marketing efforts –Cost per dollar raised –Upgrades –Response rate –Retention rate

72. Lawrence Henze | Page #71 © 2004 Blackbaud Donor Development What You Can Do  Do your direct mail letters really speak to your constituencies?  Do you contact your best prospects too frequently?  Do you manage your vendors and consultants? –Do their strategies match your institution? –Custom vs. cookie-cutter approach?

73. Lawrence Henze | Page #72 © 2004 Blackbaud Donor Development What You Can Do  Review your prospect assignments –How many assigned? –Is the number of prospects reasonable? –Are prospects being moved through the stages? –Are prospect contacts being tracked? –What are you doing with unassigned major gift prospects?

74. Lawrence Henze | Page #73 © 2004 Blackbaud Donor Development What You Can Do  Is your planned giving program too passive?  You do not need to wait until you have a planned giving officer to have a planned giving program!  People skills vs. technical skills

75. Lawrence Henze | Page #74 © 2004 Blackbaud Donor Development What You Can Do  At the end of the day: –Have a plan for donor retention –Have a plan for donor acquisition –Have a plan for moves management –Have a plan for reaching everyone on your database oIncluding ‘no contact’ individuals

76. Lawrence Henze | Page #75 © 2004 Blackbaud Donor Development What You Can Do For You  Remember the mission  Take chances to grow professionally and personally  Be passionate about your work  Have fun

77. Summary & Questions Cary Colwell Cary.Colwell@Blackbaud.com 1-843-216-6200