If you’re old enough to remember the 1996 movie Jerry Maguire (which was nominated for five Academy Awards), you’ll no doubt remember the ‘show me the money’ scene. If you don’t know the movie, it’s worth watching. And, if you don’t know the scene, it’s on YouTube!
You’d think that fundraisers are pretty clear on the subject of our job – namely, raising money. But sadly, I don’t always think that’s the case.
I remember sitting on a national charity board several years ago. We had a new (well-connected) board chair who had the big idea that we should do a special event gala fundraiser. He insisted that he could fill a ballroom with well-heeled people and create a smash evening.
I’m afraid I was the only voice of gloom in the mounting enthusiasm for the event. I was drowned out and the event planning went on. Staff time became consumed in ticket sales, sponsorship roundup, catering details – all the stuff that goes into event planning.
About a year later, our board convened to do a post-mortem on the gala. The executive director proudly announced that the event was a sellout (at 800 tickets). She went on to tell us that we grossed $230,000 on expenditures of $150,000. Everyone grinned and congratulated the board chair who had hatched the idea.
Then I put my hand up…
I asked the executive director if staff time was included in her cost total. She told me that it wasn’t. I then put forward the proposition that all four staff members of the foundation had put at least a half a year’s worth of time into the event. She conceded that fact. I then asked if one-half of our staff bill for a year was somewhere in the ballpark of $120,000. She nodded her head.
I then had the temerity to point out that our event that raised $230,000 had actually cost us $270,000 – and that it had chewed up half our staff’s time for an entire year!
I’m big on being clear. If this event had been for awareness purposes – or to steward and recognize major donors, fine. But we planned and executed it as a fundraising event. And, as a fundraising event, it was an abject failure.
I know that some special events are very effective and efficient at generating net dollars – but sadly, most of them aren’t. They suck a lot of time, energy and cost – and often yield not much in the way of monetary returns.
Now, let’s look at another way to earn a huge return on your fundraising investment.
That way is legacy giving – without question, the richest source of potential new net revenue to many if not most charities out there today.
Let me give you a composite example based on several clients my fellow Good Workers and I have partnered with over the past 13 years or so.
My favourite fictional charity, Save the Pussycats Canada, has about 20,000 active donors. We show SPC staff how to select the most loyal quarter of that donor base and use them as legacy gift prospects.
We then design and execute a two-year moves management program where these prospects receive four pieces of donor cultivation mail. The fifth letter invites the prospect to reveal his or her current gift intentions or leanings. Those who don’t respond to the fifth letter get a phone call that also asks them to identify themselves.
In addition to the letters and phone calls, we work with the charity to create a beautiful and persuasive booklet on legacy giving – and then we replicate that booklet’s contents onto the charity’s website. We add a few more personalized touches to the client’s program here and there – and voila – we run a two-year cultivation-identification legacy program.
Now, SPC isn’t rolling in money – so they chose to run their two-year campaign over three fiscal years. This allows them to amortize the total cost of the campaign over three budget periods.
The total cost of the campaign, including all printing, phone costs and taxes comes to about $150,000 – or $50,000 per year. Now, I know you’re probably gulping right now and thinking to yourself ‘that’s not cheap’! And it’s not.
But, what’s the potential return on that big investment? In a word, it’s HUGE.
Let’s do the arithmetic:
- We start with 5,000 prospects. And, we invest the $150,000.
- After two years of campaigning, we identify 4% of this prospect group as being committed legacy donors. That means that 200 people confirm their intention of leaving you a bequest.
- At an average legacy gift amount of $25,000, your total revenue from these expectancies will be an even $5 million.
- (We know from Good Works donor research that only one legacy donor in ten will actually tell you that they’ve made the gift – so your real revenue will be much more than $5 million. But I won’t go on about that now…)
- Now, your $5 million will come in over about a generation – let’s say 20 years. You can expect increased net revenues of $250,000 per year for the next two decades!
So let’s look at how it all shakes down.
You invest $150,000. You make $5 million.
For every dollar you invest, you’ll make $33 dollars in return.
Or, put the other way, it will cost you about 3 cents to make a dollar.
Where in the world are you going to earn a ROI like that?
So folks, if you want to make the big money, I just showed it to you. Just like Tom Cruise showed it to Cuba Gooding Jr. in Jerry Maguire.
Go get ‘em!