Central to Your Success: Creating a MidLevel Donor Program

Have you ever looked at your institution’s gift pyramid side by side with a breakdown of the resources you put into each level? Chances are that the majority of your staff time and effort is devoted to major donors (cultivation, stewardship, travel) and the annual fund supporters (printing, mailing and marketing). However, you may be surprised to learn that the individuals whose gifts represent that vast real estate between the top and the base of the pyramid deserve significantly more attention than they’re getting. A 2008 study conducted by Sea Change Strategies, Convio and Edge Research revealed that annual giving donors of $1,000 to $10,000 represented only 1% percent of the donor population but were giving more than a third of the dollars.

“Fundraisers are finding that middle-level donors are immensely valuable,” says Mark Rovner, principal, Sea Change Strategies (www.seachangestrategies.com). “New donor acquisition has fallen every year since 2005, so there’s a growing interest in donor retention. The biggest risk in not paying attention to midlevel donors is a loss of a feeder track into the major-donor pipeline.”

Development officers can mitigate that risk by creating a midlevel donor program that serves as a moves management strategy for some of your most loyal supporters, many of whom fall between the cracks.

“I call them ‘the middle child of donors,’” says Emma Kieran, principal, Pilot Peak Consulting (www.pilotpeakconsulting.com). “They are ripe for retention and upgrading, and if you don’t pay attention to them, they might go elsewhere. If you continue to do business as usual, your major-gift pool will dwindle, and that could affect your sustainability.”

A midlevel donor program is a hybrid that combines aspects of major giving and annual giving. Development officers take on a portfolio of donors for whom they try to create closer relationships with the institution and encourage increased support.

“It draws on major gifts by keeping the focus on the donor,” says Rovner. “It provides a sense of exclusivity, access and special status. … From direct marketing comes a passion for efficiency and employment of analytics so the program can scale. It is possible to add a personal touch to the donor experience of thousands of midlevel donors and still reap enormous returns, but it requires the analytic discipline of a direct marketer.”

Any organization can create a program to focus on middle donors if they have the staff time, resources and the ability to live with delayed gratification. Results won’t happen overnight, but they are definitely worth waiting for.

Lay the Groundwork

The definition of a midlevel gift varies among institutions, but a range of $250 or $500 to $5,000 or $10,000 is typical. The size of a midlevel donor program will depend on the size of the organization and the staff, and is easily scalable. Larger institutions may assign portfolios of 100 or 250 individuals, but it is possible to do the same work with a portfolio of 20. Determining your pool of prospects can be time-consuming, but Kieran believes it’s worth the effort.

“These are the people who are giving decent-level gifts without ever being cultivated,” she says. “You have to do data mining to identify people with a high recency, frequency and monetary score (i.e., people who’ve given recently, who give frequently and who increase their giving). It isn’t anything other than obvious, but it takes a lot of time and dedication. I tell people to treat it like dating. You have to put a lot of time into it if you want to reap the benefits.”

It is also critical to set goals and make sure everyone, including your leadership, is on the same page. Although the long-range goal is to populate your major-gifts pipeline, this will not happen quickly. Agree on interim, quantifiable goals like qualifying a particular number of new major prospects; making a certain number of outreach calls; or increasing the number of new prospects who attend group cultivation events.

Make Contact

Opinions vary on how to alert donors to the fact that they are now members of a new donor group, as well as whether it is important to create a name for it.

“From an internal perspective, it’s important to name the group to give it the weight it deserves,” says Kieran. “It’s ok to have a name that is separate from giving levels … because multiple giving levels could be included in this group. The best way [to let people know] is to pick up the phone and say, ‘We’ve just created a new circle for people who have been our most loyal supporters, and we want to thank you and invite you to a special coffee with the president.’ Or you could invite them on a tour of your facility or to see your kids at work. You give them a reason to come and see who self-selects.

On the other hand, Kurt Worrell, senior vice president, donor engagement, TrueSense Marketing (www.truesense.com), thinks a name is unnecessary. “Recognition comes in the form of stewardship. We want them to feel like insiders, and we hope they recognize the treatment they’re given, and that prompts them to deepen their commitment.”

Worrell recommends an introductory phone call to say something like, “Hi, I’m your donor representative, and here’s my contact information.” “We also do a short survey of three to five questions that guides the conversation to focus on organizational priorities and determine donors’ interest. They are probably getting mail and phone solicitations from 15 different organizations, and we look at this as a way to help them distinguish where they want to give,” says Worrell.

Some donors may be curious about the new level of attention they receive, but Rovner doesn’t see this as an issue. “Any time you can give a donor more than is expected, you should,” he says. “Donors know the organization wants them to be loyal givers, but they still respond well to being treated graciously and generously. People who get a call to say ‘thank you’ appreciate it, and I think if you’re serious about treating your donors with respect, and not like ATMs, that will eventually come across.”

Cultivate Thoughtfully

The key to increasing your engagement with these annual-giving prospects involves creating more personal relationships that don’t require substantive one-on-one, face-to-face contact.

Although Rovner has no set formula on how to engage midlevel donors, he says, “It’s like business class in a three-class airplane. It’s definitely better than coach.”

In order to make this group of donors feel like insiders without reinventing the cultivation wheel, start with the slate of things that annual donors typically receive and then add to it. Make personal calls and send notes to thank them for their gifts, and provide opportunities and access they haven’t had before.

 “Invite them to an open board meeting to help them understand the organization’s leadership and strategy,” Kieran suggests. “Provide group time with leaders, like a special conference call with or a video chat with the executive director or CFO. The best way to treat or touch major prospects is one-on-one. With midlevel donors, it’s a lot of group touches.”

The Jesus Film Project started a midlevel donor program in the late 1980s and currently has 25 project reps and an internal team that is responsible for developing relationships with donors of $500 to $15,000, while the field reps work with the major donors. For supporters who give $500 to $1,000, a project rep calls to thank them for their gift; share a story about the organization’s work; and ask if there is anything the donor would like the organization members to pray for. Donors of $1,000 to $15,000 receive phone calls and other personal outreach four times a year and are invited to existing cultivation events.

“We used to talk about how Nordstrom overstaffed their sales force to give good customer service,” says Larry Buck, ACFRE, associate director of development, Jesus Film Project (www.jesusfilm.org). We started to put this program together based on the idea that when people start showing signs of capacity, that’s an indicator that we should begin to develop relationships with them. We live and die by the saying that ‘People give to people, justified by the cause.’ The project rep area supplements the overall fundraising program and helps us find people who can move up the pyramid.” After growing the midlevel program for 26 years, Buck reports that each project rep currently manages 200–300 donors, and the total revenue for the program has been between $8.6 million and $10.6 million for the past four years.

Listen and Learn

The increased level of personal contact on the phone and at events results in a significant amount of valuable information, according to Jeff Nickel, senior vice president, client development, also of TrueSense Marketing. “There’s a pent-up demand for attention. You’re giving direct-response (annual giving) donors the opportunity to say what they want, e.g., ‘I only want to give one time’ or ‘I don’t want to receive so much mail.’ You also discover all kinds of opportunities. One person might say, “I’ve wanted to make a major gift, but I didn’t know who to call,’ and you might ID some people as planned-giving prospects.”

When philanthropist Phil Knight pledged $500 million to the Oregon Health & Science University (OHSU) if the institution could match it within two years, that commitment provided part of the impetus to create a midlevel donor program and hire a new team to staff it.

Attribution drives competition between annual giving and major-giving staff.

“We had an incredible principal gifts team in place and an amazing annual appeal machine, but we weren’t cultivating the people in the middle as well as we should,” says Sarah Grace McIlveen, assistant vice president of development for OHSU (www.ohsufoundation.org). She created a special and major-gift team of early career fundraisers who were charged with focusing on three groups: recent donors who had given $1,000 or more; “long and loyal” donors who had made low gifts for the past three to five years; and LYBUNTS.

 “We did a lot of training to equip our newest gift officers with good tools, and we developed really good practices of having discovery conversations to discern people’s interests,” she says. “The major and special-gift officers would bring scenarios—either to prepare for a donor meeting or to replay how a meeting went—and role-play as a group with a trainer, someone from our leadership. Feedback came from the trainer and from the peer group.”

OHSU met the Knight challenge, which included a successful effort from the special and major-gifts team. “We made 772 solicitations, received 454 gifts, upgraded about 20% of the donors and had 50% LYBUNT renewals,” says McIlveen. “And we brought hundreds of names into our major-gifts pipeline that we wouldn’t have if we hadn’t created this team.”

Solicit Strategically

The fact that you have placed midlevel donors in a new group that merits more attention does not mean they should automatically receive personal solicitations or proposals. Although there is no set rule on midlevel donor solicitations, Rovner says the general trend is to send less frequent, more substantive annual appeals. That approach combines the content of major-gift communications with a direct-mail implementation.

Kieran recommends continuing with regular annual fund asks at the beginning of the program. “You cannot stop asking people in the way you’ve been asking them until you create a relationship and you realize they want to give in a different way,” she says. “People who want to do more will tell you that. For example, a donor who comes in for a tour may say, ‘I’d really like to make an investment in this program.’”

In addition to identifying potential new major donors, the cultivation and solicitation process is equally valuable in determining who is not going to move up your gift pyramid.

“This process is very similar to how you listen to major-gift donors,” says Kieran. “You may have someone who says, ‘No, I don’t want a tour, and I don’t want to talk to the president.’ Having a small group of people who really want to interact with you is much more manageable.”

Avoid Roadblocks

Perhaps the biggest challenge to getting a midlevel donor program off the ground is the lack of staff and/or time, but in that case, Nickel suggests taking baby steps: “Do it incrementally. Do one thank-you note a week. Make 10 phone calls per month just to thank people for their gift. Send a personalized email instead of mass-mailing. It will take longer, but investing your personal time does make a difference, and it will reap rewards.”

Unrealistic expectations, pressure and impatience among your leadership can derail a program before it even has a chance to succeed. Kieran recommends front-loading leaders’ expectations and telling them what you will be able to report, and when you will be able to report it.

“There is often a reluctance to put a program into place and let it simmer. It can take nine, 12 or 24 months to see results … so I always talk about metrics. It’s not just about numbers of gifts or increased gifts. It’s also the number of visits, number of calls and number of new donors in the pipeline,” says Kieran.

And fundraisers may (or may not) be surprised to know that internal politics can also impede progress, according to Rovner. “Attribution drives competition between annual giving and major-giving staff. In some organizations, annual giving could be under membership, with major gifts in development. In organizations that have engagement goals other than fundraising, it can get murky without people tussling over [donor] territory.” Although there is no silver bullet that can destroy silos and eliminate competition, a clear mandate from leadership and buy-in from all involved parties can help to smooth the path.

No matter how robust and stable your major-gift program is right now, you can’t afford not to take a long view and prepare for the future. “If you aren’t willing to focus on midlevel donors, you’re missing out on an opportunity to raise more money and get in touch with the hearts of the people,” says Jeff Nickel of TrueSense Marketing.