[Music] welcome to another edition of around
with Randall your weekly podcast and making your nonprofit more effective for your community and
here is your host the CEO and founder of howlet philanthropy Randall howlet I can't thank
you enough for joining me for this edition of around with Randall today we jump into a couple
of scenarios that I've run into in the last couple of weeks that deal directly with donor relations
and talking about the nonprofit world two unique I'll call them conve
rsations that are isolated
but yet get to the same message in one case I have a client who is a university who is working
with a donor and they're asking for a very sizable gift and the donor is asking a lot of questions
about the financial situation of the university and more importantly why is it that they need
these kind of gifts to make the University not only work but work as they're talking about
it and it's in a state type situation long term with an endowment you know you got tuitio
n
why and in state support why are you bothered or concerned about flan therapy and why is this
such a big deal at the same time essentially I have a client that's dealing with a donor where
they're asking for probably the largest gift in the organization's history and this time it's
in healthcare and he's asking questions about why they need philanthropy at all aren't you
just a business you know no one helped me why do you need help both of these situations bring
me to this interesting t
hought process about not being defensive about nonprofit work and what we
do but to get on the offensive and explain why we do what we do and the value that it delivers the
problem or challenge that we have is every time we turn around we're being told as nonprofits and
if you're a leader you hear this well you need to be more like a for-profit business so Stanford
Innovation uh uh Institute has done papers on how nonprofits should be more like businesses
if you look at books out there ther
e are books that you can read that say how nonprofit Prof
can be more like and driven like a business so let's start with the concept of nonprofits
as businesses and I find myself in these discussions kind of reverting back to the basics
nonprofits or businesses like any other business the only difference is at the end of the year if
there's excess Revenue it gets put back into the organization in a for-profit business it goes
to the owners whether shareholders for a large corporation or if
you're a small company into the
individuals or partnership or sole proprietor into the person they get the they get the access but
all the other aspects of a job or an organization are almost as true in a nonprofit as they are in
a for-profit I remember a conversation I had when I was at the University Nebraska Medical
Center talking with a donor and they were challenging me about the need for philanthropy
not to the level that the other two situations were I described at the top of the pr
ogram but
they were saying you know the CEO gets paid X you know millions of dollars and it a couple
you're a nonprofit and I said I'll stop here let's do a fair comparison my boss oversees 15,000
employees a billion doll budget he's the largest non-government mental employer in the community
he has legal problems compliance problems Finance problems HR problems like any other
employer except with 15,000 employees it's on steroids if that person with the same problems
was working and leadi
ng a for-profit company he would be paid exponentially more have stock
options or profit sharing that when he left he would see dramatic retirement packaging put into
his particular situation so the question became as I asked this particular donor why would would
you take a nonprofit job for no money if you had all the same problems you do in your own company
now I didn't really sell the concept of nonprofit and the value that we delivered but it's an
interesting discussion if you're listen
ing to this we've you and you've heard other others of
my uh different podcasts subject matters we've talked about that gift officers in particular
but philanthropy in general should be as seen as a revenue stream we we're more like the surgeon
in health care than we are the nurse on for South but yet nonprofits are expected to take class a
video that I would recommend everybody go watch it's about 17 or 18 minutes done in 2012 or 13
I use it with boards a lot is a video by the with a gentl
eman by name of Dan palenta it's a TED
Talk Dan palenta and he talks about how nonprofits are viewed as well you got to be cheap and you
gotta you got to save money and you got to put all the money into but we don't invest enough
and we're not enough infrastructure there's no Capital infusion that allows it to grow so
it's worth from a broad perspective sometimes what we think of and hear about nonprofits being
cheap and hey let's get the advertising at you know 3:00 a.m. because it's cheap
then when
nobody's actually listening I think it's also important to note the value of nonprofits in the
United States and I'm talking about economically let's put numbers to it there are 12.3 million
employees that work for nonprofits that is about 8% of the entire Workforce is is related to in
some way shape or form nonprofit work that the total amount of buying power for what I'll call
stuff supplies whatever it is that nonprofits to use is more than a trillion dollars on an annual
bas
is it hovers around anywhere from 1.7 to 2.2% of gross domestic product meaning let's just
take the average a little less right now 2% of all the money used in the United States is used
in some way shape or form related to nonprofit work and yet if you look at the Census Bureau and
you look at Labor Statistics nonprofit employees for like jobs are paid about $7.20 less an hour
so salary you'd have to calculate it and nearly double that when you add total compensation
which includes bonuses
and in insurance and and other type in uh additives that we
have in our in our compensation packages which means we're getting short changed
on cash and we're getting short changed on benefits all this is to say that going back to
our two initial situations that the two donors and I'm getting a sense this is coming up more
often view what we do as more for-profit like the world they live in rather than nonprofit which
brings us to the question of and this becomes the move towards tactical w
hat are we going to
do about it all of those things are true that I spent the first six seven minutes talking about
and they all are value you know how we're not being paid in the same how you know we fight for
the things that are important in terms of re and in terms of of the same problems and there books
being written about it what are we supposed to do here part of this I think is if I steal from my
dear friend as I grab his book Nathan Chappelle and my other good friend Brian kerman's
generosity crisis is I think that we are spending way too little time building deeper
relationships that actually explain why our nonprofits are a value which is what they talk
about in terms of radical connections we're transactional and so we're not maximizing giving
we can get someone to give us 50 bucks because you know people want to be charitable but you know
you get if you want to get the five or 10,000 it's going to take some time or 100,000 or 500,000
I've got a client that I'm wo
rking with where they're in a campaign and they're kind of still
in the silent phase and we're talking about the gift officer so they're still working at the
very top and they're really doing well but they're kind of beginning to set up that midlevel
giving before they go to the public phase and I'm beginning to meet with the gift officers and
I'm like tell me what your thought process is and they're literally telling me well you know
I don't have anything to ask for I'm like whoa wait a mi
nute we know that the that the top 15
donors are going to be closed in the next three months which means your time in these gifts may be
between aund 250,000 and maybe down to 10 probably closer to 50 so 250 to to 50 how many meetings
do you think that's going to take if it's you think it's going to take one meeting you're crazy
you should begin the process right now of having these meetings to build better relationships to
be able to explain the need which comes all the way back to our sto
ries they're going to run into
people that go why do you need the money and you may need time to build that and that goes back to
more radical connections how do we explain what we do so how do we do that well we have to start
with the idea of what makes us different and the difference starts right with our mission we are
not there to make a profit we are not there to make money any money we have left the end of the
year goes right back into the organization and most would tell you they're
running right on the
line or just under revenue from with expenses just being a little bit more which means they're
not making any money I absolutely am amazed in the two conversations that are occurring I
genuinely believe that in both circumstances neither donor has really thought about the fact
that at the end of the year the money doesn't go anywhere it's not pushed out to investors it's
not it's not to say that they are under kind of a a misapprehension of the facts I'm saying they
ha
v even thought about it how often do we actually start with the premise of what our mission is
and the Not only what we do but the fact that our finances are built to keep the money in the
community in the nonprofit to build it to grow it I'm kind of amazed that as I thought about
this podcast I dealt with these two situations kind of built bu into it I don't ever talk about
it and that's my mistake so missions first not only what you do but how you're set up because a
setup sets up the mis
sion the second thing is is that we our staff are generally motivated and have
different values they're motivated differently and they have different values the reason I know
that is is because we have people who work in nonprofits that are being paid in terms of pure
salary $7 less than the comparable person on the for-profit side if everybody was purely cash
driven they would leave the nonprofit world and go into the for-profit world and by the way
that's happening anyway then you add the
concept of trying to retire trying to save money put a kid
through college pay off your house excuse me I I would say that part of this is that when you talk
about compensation is a total being $13 less an hour and six of that is retirement Insurance those
kind of things if everybody was totally driven by money they would have left they'd have been gone
by now people in nonprofit world and you being hopefully one of them are there because you love
what we do and we kind of make a differenc
e at least we think we do and I tend to believe that to
be factual so the second thing is is that we have people dedicated in a different way to the mission
and the outcomes than we do in the for-profit world the third thing is is that we have what I
think of as outside influences and sources much more so than the for-profit world and the reason
why is and I read an article and I just looked at I said that is just totally wrong the article
said who owns a nonprofit no one and I went no the
community owns it it's through the representation
of the board now they may be good owners or representatives of the owners there may be bad but
it's not that there's no ownership the community owns it well that brings in outside influences if
you're the CEO of a of a a solo practitioner uh solo uh company meaning an individual partnership
or an L single person or a small Group LLC you can change what you do in a moment without concern
for what's going on in the outside world you try to do
that in a nonprofit and the newspaper's
writing about it and everybody's now involved because they have ownership stake and even a
large corporation if we take Jamie Diamond at City he has immense power given to him by
his board and the only people he's really got to worry about are those board members and
if they're okay he can s the rest of the people who don't like whatever City's doing Dro dead the
power that comes from leadership in the for-profit world is reduced dramatically in many
regards in
the nonprofit World particularly if you want to do something Innovative back to that video Dan
Penta creative trying to do something different so we have these outside influences we've got
staff who are aligned differently and we have a mission that's really based on the finances being
the money stays here to make a difference what's going on in the community the last thing I'll add
is is that nonprofits are built to fill holes in the community and that applies to the museums
wh
ere art is something that the government is probably not going to be involved with most of
the time they fill that hole for those that love art music theaters things of that nature healthc
care can you imagine our country if there there was no nonprofit Healthcare education can you
imagine the country without higher ed being nonprofit all these failures in the for-profit
higher ed world there's a reason so all of these things align to the last tactical piece so first
thing is talking about
how we're different the last thing is all about stories after you talk
about the idea of you know the outside sources and a lot of political issues the staff are
driven differently our mission and finances to to to fill these holes it's all about outcomes
why is it that a hospital is nonprofit because the law says when somebody comes into the Ed
you have to take care of them whether they can pay you or not and the for-profit hospital
will triage it just enough and then put you out on the fr
ont step an interesting comment
was made from the potential donor he kind of chuckled and saidwell does that mean I can just
cancel my insurance and the response should have been yeah the difference is is that you can
afford it and we are required to take care of them and by the way we want to because if you
don't have this you have people dying on the streets in education if we don't have nonprofit
education meaning investment into the future knowledge into Research into training the next
generation of leaders then we have no hope no future data and outcomes help and remember when
you talk about facts talk about it locally and nationally Health Care on a local level we take
care of this many people per year that can't pay you might have donor say well that's
their problem no it's really our problem because if we weren't here doing this they're
on the street now what kind of community do we have what about the concept of Education if
we don't have a hope of a future with the
next generation of leaders and Technical Innovation and
the research that goes on then what kind of future are we going to have it's a challenging time with
people's economic position people are concerned about where the economy is at you add Politics on
it and I'm not going to talk about politics here it just gets crazier what I want to get to is as
the last piece that kind of Builds on all of this is tell the story of why your mission is important
tell the story of the outcomes explain h
ow you're different explain that you have two people a 100
people a thousand people that are staff leaders who are taking less money on average because they
believe in what's going on and make this making a difference in the community and that to keep
this going we need philanthropy to be more active in the finances of our organizations to ensure
that we're here and that we can continue to do good because the other option
is the government takes care of all of it I've seen the government
w
ork not not the most Nimble group of people nonprofits are built for these holes
are built for these holes in society where people fall and things that we love fall
but we have to have the financial support and here's how what we do to make that work
value is what we should be talking about and you can't get to Value transactionally it
only gets there with deeper relationships take the time to build them it may
take longer but it'll be moreth more worthwhile don't forget to check out the bl
ogs at
Hallet philanthropy.com two a week or so just on different things I see 90 seconds a piece and if
you're interested in contacting me or talking with me or giveing me a suggestion or want to make
a comment say you're crazy Randall happens all the time at home they don't even have to email me
email me at podcast atal philanthropy.com it's an important time for us to invest in ourselves in
our organization some of that is monetary some of that is just the ability to overcome obstacles
and challenges in the office out in the community what I want you to know is you're doing great
things it's hard it's not easy but boy is it rewarding and I hope you feel that little of
that reward and my idea of this podcast is is a 20 minute classroom on something that gets you to
possible thought process for Solutions that's why I give it away hopefully you find some value in
it and I appreciate that if you do don't forget my favorite saying some people make things happen
some people thi
nk watch things happen then there are those who wondered what happened the end of
the day we're people who make things happen we partner with those donors who want to do the same
for the things and the people that are wondering what happened and that's the value of nonprofit
work go sell that to your community and you'll be much better off than just asking for money
I look forward to seeing you next time we're right back here on another edition of a round
with rainbow and don't forget make
it a great day
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