Thursday, December 08, 2011

80/20 in non-profit fundraising and a little local history

http://halfabridge.wordpress.com/2011/02/26/mars-hill-church-and-the-8020-rule/#comments
http://halfabridge.files.wordpress.com/2011/02/20110130_mars-hill-church-annual-report-fy10_document.pdf

Interesting detail from that FY 2010 report (for those who read it) the highest annual giving per adult per campus was Lake City which was near the bottom in terms of the number of giving households per campus. It also had a small gap between the number of households at the campus and the number of attendees on any given Sunday.  The Lake City campus got shut down and most of its members and staff were moved to Shoreline and the space has since been leased to an Assemblies of God church.  Considering that per capita giving at Lake City per adult was actually the highest of any campus at Mars Hill ever the campus shutting down because there weren't enough members to keep the place afloat needs some context.  Two assertive church plant projects, for instance. 

But, at another level, the donor base there was loyal and generous and at a practical level it would have made sense to shut the campus down to lease the property to another church and move those members remaining to places where they could be useful in other contexts.  The annual report would make it seem that the Lake City campus didn't need to shut down at all in terms of per capita giving but that it made sense to shut it down if a church was asking to lease the property for use when it was losing its building. Lake City, to go by the 2010 annual report, had the cream of the donor crop (or a good chunk of it) for those of us who have ever paid attention to non-profit fundraising and development aspects at Mars Hill. I suspect most of them are in other campuses and giving generously.  Most, not all.

Someone I know gave what was for him a sizable chunk of money to keep the campus going and then the campus was shut down anyway. To my knowledge he probably hasn't given any money to Mars Hill since.  After being willing to give sacrificially to keep the campus open and running, the decision to shut the campus down was effectively nixing the value of the monetary sacrifice for this person.  This wouldn't necessarily have been the first time in the history of Mars Hill members were asked to be generous to the church to back up something that wouldn't pan out.  There's the old capital campaign from 2005, for instance, which many of my friends and family gave to back when nobody bothered to investigate thoroughly the zoning issues for the purchased property.

A word of consideration for Mars Hill leaders, decisions like shutting down a campus with high donor loyalty "could" cause some members, even long-time members, to choose to check out of giving.  Just something to consider but no one has to take my unsolicited advice.  Talk about stewardship can't just go one way, from the top down.  I'm not going to soft-pedal this, the Lake City campus was a big reason I even stayed as long as I did because a lot of my best friends were there. 
By contrast, it would appear that about every other year (or every year?) Ballard has to get a talking to. One of the things that has consistently happened is that Ballard has the highest attendance but is generally most likely to run a significant budget deficit. In other words, donor loyalty at the churches that aren't Ballard is always fairly high, while donor loyalty at the central Ballard campus is spottier.  I don't see this as particularly surprising or ironic--the members at campus sites who have a personal connection to the campus pastor and a longer history at Mars Hill have more reason to give to the church and its mission.  The Ballard campus has historically been where people go because they're curious to hear Driscoll preach.  This has the upside of having steady attendance but the downside of being the campus that has what is considered, even within Mars Hill circles, a remarkably impersonal and inaccessible social atmosphere. 

Now the reason I mention all this is my MH member roomies brought home information this week that interested me.  When I compare the 2010 annual report to a recent document summarizing the FY2011 fiscal year the following changes appear in annual giving: 

The percentage of non-giving attenders/members has gone from 20 percent to 24 percent. 

The donors who gave between $1-$499 in a fiscal year dropped from 43 percent to 41 percent. 

The donors who gave between $500-$1,500 in the fiscal year wnet from 15 percent to 14 percent. 
(this could be accounted for, possibly, by switching to a $500-$1,4999 division)

Donors giving between $1500-$4000 (11%) stayed steady in the new $14000 to $3999 category

Donors giving above $4000 annualy went from 10% to roughly 9%

The newer figures include the following breakdown:

Annual giving range

$4000-$9999          737 people,   7 percent
$10000-$19999      185 people,   2 percent
$20000-$49999      47 people,     less than 1 percent
$50000-$99999      5 people        ditto
$100000+               3 people        I don't have to spell this one out, do I?

If we grant that the Pareto number applies in most non-profit fundraising settings it's no surprise that the upper 20th percent gives 80 percent of the giving.  They have the most invested in the church and its story, if I may be so bold as to suggest that. 

Now with the background I have had in non-profit development and fundraising reporting what this suggests is that there has been a shrinking of the major donor base relative to the overall size of the church, in terms of percentages.  This doesn't mean fewer people are giving and the FY2010 annual report didn't give a clear insight into the category breakdowns by number of members.  It did give a breakdown on highest per capita giving per campus, but this newer summary permits at least a comparison of changes in donor ranges.

The group at the bottom has shrunk.  A person who gives $1-$499 in a calendar year got smaller.  Recessions being what they are this wouldn't shock me.  In non-profit fundraising thinking you don't necessarily worry about them.  They're at the bottom tier and you don't try to goad them into giving more or "being more faithful" in a non-church non-profit setting because even though the upper 20% give the most money it's really the bottom sixty percent or so that constitutes your real donor base overall.  So I'm not surprised to hear Driscoll and others have urged the 66 percent to be more generous.  But I would say that's not necessarily what they should try to do, at least based on the fundraising research and work I did back when I, uh, had a job. 

Why?  Well, because if they're committed enough to give $400 cumulatively each fiscal year that may be all they can afford and because there's no set of rules saying there's a bare minimum giving point, is there?  This is a non-profit, not a club membership.  There's no fees or dues that can really be pried from the $1-$499 crowd.  They're giving something, and in a recession that should be enough.  If we want to use wealth engine devices to suss out what probable income must be by ZIP codes we're operating at a domain of fundraising specificity that has jumped straight into donor prospect cultivation and major gift cultivation.  That gets to the upper 20 percent.

At least in my experience in non-profit work keeping track of giving patterns by demographics and gift-range categories, the upper 20 percent sure are cool in terms of their generosity but they can also be the most high maintainence to keep as active donors; they are often more likely to make restricted donations; and they tend to cost a bit more and require more personal attention to keep them invested.  No pastors will have to wonder how it is that this sort of giving demographic inevitably and eventually gains a great deal of power in directing a church. 

The major donors are the financial big guns you want to keep happy by letting them have a part in the story of the organization.  Then there are the mid-tier type donors, basically just about anyone who can consistently give at least $150 or so a month every month for a year.  These are the people who, though they aren't the 20%, are the ones you want to keep.  Over time there's a good chance their earning potential and assets may increase as they age (or mature ;) ).  They are the ones who may become future major donors. 

But then there are the people who give consistently but give small amounts.  Depending on age demographics here it's not a slam dunk to assume these people are just penniless college students, single mom, and the like.  A decent chunk probably would be at Mars Hill but I was asked by planned giving officers to keep track of donors who gave very small amounts but gave them on a very consistent basis.  Many of the most faithful givers actually give very small amounts because that's all they can afford.  These were people planned giving officers could want to meet with for estate planning and trusts.  Just because a donor does not have much by way of liquid assets does not mean the donor has nothing to give. But I doubt Mars Hill is going to set up a planned giving department just yet.  They're too young a church movement and do churches even have planned giving departments?  At the risk of being a bit snide, hey, it's part of legacy-building right? :)

My diffidence over time was that Mars Hill seemed capable of racking up expenses faster than its members could be mobilized to give.  If Mars Hill adds a campus or two that are given free that's not quite how it works in the real world.  The buildings at that point are cheaper to give away than maintain and so gaining campuses becomes gaining liabilities unless we're talking about cases in which the building and property were owned free and clear by the donor.  It would be tough to count those kinds of gifts in monetary terms because all of that stuff would constitute in-kind gifts, I think. 

I've rambled quite a bit here about non-profit fundraising stuff and financial reports and donor demographics.  It's all stuff I'm reminiscing on back from when I had a normal day job.  My impression is that at this point what Mars Hill may want to do, since the percentage of non-givers has increased, is to find a way to get them to give.  The way non-profits work is that even though non-profits aren't officially profiting they are, in their way, making a sale.  A sale constitutes demonstrating that what the non-profit does is important enough and worthy enough to warrant financial support.  The two basic ways this can be done is to invite the would-be donor to share in the mission and to share in the story of the mission.  The first is how you mobilize the rank and file donors, the second is how you can mobilize not only the rank and file but also upgrade mid-tier donors to major donors as time and resources move along. 

I hear there was a documentary film on the history of Mars Hill over the last fifteen years.  This is a shrewd way for a church, or any organization. to create a story with which a member/donor can identify.  It doesn't necessarily mean something skeezy or gimmicky, it's part of how everyone appeals to a donor or a client in for-profit or non-profit.  That's why a tagline like "God's work, our witness" becomes an important tagline.  The first phrase declares that the story is about God's work overall, but the sales pitch becomes "our witness".  That's the part where we play our role (or don't) in the witness to God's work.  I don't know if this will inspire the 24% who don't give jack to give jack but the move makes sense, from a fundraising standpoint.  As I have written a few times on this blog, my worry often was that Mars Hill was acquiring property and liabilities faster than it could cultivate it's donor base. 

To the extent that there's so often 1 of 4 members who give nothing I wonder if the fundraising analystis at Mars Hill may want to consider some possibilities here.

First of all, in any non-profit with a significant donor base there will often be a group of lapsed donors.  These are the people you want to keep, if possible.  Anyone who gives ANYTHING on a monthly basis, no matter how small, is not a donor you have to sweat about. 

Secondly, it may not be a bad idea consider if there any patterns in that 24 percent.  I don't mean some stock pattern that is assumed, like these are the "consumers" or these are the "bad stewards" or "financially irresponsible".  Driscoll, it seems, has recently said that there's no real danger of the Mars Hill denomination going under financially.  He wants people to not give with some goal to get something out of things for themselves, but also not to give out of some sense of guilt.  But here's the thing, Jesus said "Where your treasure is, there your heart will also be."  He said to not lay up treasures here on earth where the moth eats away and rust destroys, but to lay up treasures in Heaven.  In other words, even Jesus made a sales pitch based on things that a person can gain or benefit from by investing in the life and teaching of Jesus.

A professor I used to know said that one of the weird pious biases among some Christians is to say that we should not be thankful to God for His gifts or what He does but just for Himself.  He then pointed out, does this make any sense in light of any of the Psalms?  The Psalmists were thanking God for concrete things, gifts, and actions all the time!  If we're only supposed to worship God because He's so awesome, despite whether or not we get anything out of it, have we paid attention to any biblical texts?

By extension, if there is a mentality about church membership which states that one should not join a church and become a member because there's something in it for the member, but because it's good to obey Jesus, what kind of stupid sales pitch is that?  Now I'm not sayig it's exactly dumb to follow Jesus (though the Cross is foolishness to the Greeks, after all, so in all sorts of ways it really is stupid).  What I'm getting at is that if you want people to sign on as members and give "God's money" to you the sales pitch for them doing this wouldn't be well-served by just saying, "IF you really love Jesus you'll do this."  I worked at the Salvation Army at one point and had to prove to auditors and accountants that money was responsibly directed and spent (I actually loved that part about my job).  I was glad to be able to demonstrate that the money went where the donors asked us to put the money. 

All of this is why I found it sad that Driscoll claimed that in 2008 1,000 members left because of doctrine.  That's not why all those people left, after all.  It was for any number of reasons, one of which was a disappointed realization that the leaders we trusted to investigate all the legal and financial issues of investing in property for church expansion did not do as good or responsible a job as we assumed they would. Now for folks still in the denomination the reply will be, "Oh, things have changed a lot in the last few years. The leaders have matured a lot and grown a lot."  Sure, but that's what we all told ourselves when we gave to the capital campaign, too.  Now, obviously, I've made it clear throughout this blog I've landed at a Presbyterian church.  I'd like to be in a position to give and haven't been.  Being unemployed for a bit more than two years can put you in a spot like that! 

Well, anyway, this has been my rumination on non-profit fundraising and some Mars Hill annual reports.  It looks like there's no worries about overall giving but there's that 66 percent of people who don't give more than $500 cumulatively this or last fiscal year.  I don't think that's the main concern in the end.  In a recession with the possibility of more economic downturns be thankful that people are even in the cumulative range of $1-$499.  Back in my Salvation Army days we sent receipts and thank-yous to even those people rather than asking them to give more all the time.  I would even code donors to not get any mail when they let me know they were going to give anyway.  That was "good stewardship".  When you know certain people will give what they can you don't get after them to give more. 

Naw, it's the people who give zip that would be a concern and if possible the concern should be not merely to suggest they please God by being obedient to Jesus and giving.  It might involve asking why they haven't given and not working on the assumption that the reason must reflect badly on them.  If a person is at the church but has lost all his/her friends, hasn't made new ones, and doesn't find any real community in community groups but shows up and attends then to suggest to this person they are a consumer won't win them over.  A basic reason this tactic may backfire could be summed up by its opposite, an idea my pastor shared in a sermon a few years ago, the measure of a real shepherd is his disposition toward the sheep he can't get anything out of.  If the only sheep you pay attention to are the ones that will be useful to you then you have the heart of the hired hand and not a shepherd as the biblical authors describe the true Shepherd.

Which is to say that it's necessary to remember that there's always more to a "consumer" mentality in churches in America than than just attenders. There are people who don't give because, maybe, they should be at some other church but haven't figured that out yet.  Driscoll was happy to say 1,000 members left over doctrine years ago, would he be happy to say that 2,400 members left because they realized that Mars Hill wasn't really the place they wanted to give their money to because they didn't feel a sense of family or fellowship there, or because they realized that secondary issues like complementarianism might not be something they could get behind? 

In any event, it's those non-donor members (not even the non-giving attenders) that are the mystery demographic.  You don't need to worry about people already giving.  Donor loyalty and donor retention aren't things to worry about for anyone who gives a steady amount over two or three years unless you end up doing something that might cause them to lose faith in your handling of money.

One thing I can be certain won't motivate them to give--if you want them to give, don't treat them like they're people with outstanding debts because they don't love Jesus enough and you're the collections agency.

And you probably don't want to send Trogdor, the Burninator, either. :)
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