Building Sustained Giving, Continuous Growth, and an Engaged, Loyal Donor Base: Don’t Make It About Money
There are hundreds of millions of dollars in philanthropic funds which lie on the sidelines each year. This is over and above all the millions currently in donor-advised holdings. Accessing these funds is possible for any worthy charitable organization. To do so, nonprofit leaders must first adopt the right mindset, as being truly successful in fundraising is 90% thinking and only 10% doing.
Larry C. Johnson is an internationally recognized philanthropy and fundraising thought leader, Larry trains the staff and volunteers of worthy causes to achieve real impact through the creation of reliable, growing revenue streams. He emphasizes principles before methods as the key to long-lasting success. He stresses the simple, the practical, and the joyful.
Larry is the Founder of The Eight Principles, the premier brand for educational products and services in relational fundraising and philanthropy. The Eight Principles provides digital education, live workshops, and structured coaching to nonprofit organizations.
Author of the award-winning book, The Eight Principles of Sustainable Fundraising, AFP named Larry Outstanding Development Executive in 2010. The Wall Street Business Network ranks him in the Top 15 Fundraising Consultants in the USA. Larry is a graduate of Yale University. Larry speaks widely and serves on numerous nonprofit and corporate boards, including The Philanthropy Council of The Carter Center, the philanthropy of the 39th President of the United States.
Read the Interview Transcript
Hugh Ballou: Welcome to this episode of The Nonprofit Exchange. This is Hugh Ballou. Almost eight years, 300 episodes, really good conversations with leaders from many areas of expertise, leaders that represent a lot of perspectives, a lot of wisdom. What I found is some of my wisdom comes from things I did that weren’t right, that some people call mistakes, but I call them learning opportunities.
Our guest today is a published author and expert in the area of fundraising. He is a CFRE, and he is going to tell you about what that is. We are going to delve into the eight areas of fundraising, which is what’s in his book. Larry Johnson, welcome. Tell people a little bit about who Larry is, and what is your passion for this work?
Larry Johnson: Hugh, it is a pleasure to be here with you, and to get quizzed and drilled by the audience. I’m looking forward to it actually. This is going to be fun. If it isn’t going to be fun, why are you doing this? That is my #1 statement.
Who am I? I’m a guy who was born in Nashville, Tennessee. Grew up there, went to school there, finished my schooling in New England. I worked in the Northeast for a number of years and then moved out here to the Rocky Mountains about 12 or 14 years ago. I love it out here. This is the Western lifestyle. My wife and I have trail horses. I have a Harley Davidson. I am enjoying myself immensely. I live in the Boise Valley in Idaho. According to The New York Times and the Wall Street Journal, this is a happening place, so I’ll take it for that.
What have I done professionally? I was in the corporate life for a few years. I am an engineer by training. I worked for a larger corporation, Fortune 50 company. I didn’t like what I was doing. I was involved in alumni affairs with my alma mater. Someone said to me, “You could make a living at this!” I said, “Really?” I knew nothing about that. It was all new to me.
Long story short: I was recruited by the then original Ketchum, which is the inventor of the modern capital campaign. It was the top of the heap for many years. One of the founders of the Giving Institute. They were very good to me. They trained me for a year and a half before I was really productive, and I learned a lot of what I know through them. It also influenced me later, which I will tell you about.
I went from there to higher education because higher ed generally speaking has the most sophisticated fundraising programs in the country, the ones that really generate money although that is changing as we can see. I was there for 15 years. I served four universities or colleges as chief advancement officer. Then I decided I’d had enough. I founded my own firm in 2007. I wrote the book The Eight Principles in 2012. The rest is history.
What I do now? I do what I really want to do. That is create an experiential training platform for teaching the fundamental principles of philanthropy. Few nonprofits really understand those, either deliberately or by accident. When you really understand them, that is when your fundraising explodes. It goes up and up.
I have people on the philanthropy side of the house tell me there are hundreds of millions of dollars, a billion dollars, in untapped philanthropy that is sitting out there. I don’t mean what has been accounted for in donor advised funds. No. We are talking about money that is just out there waiting to be engaged. The #1 reason? People haven’t really embraced a model that works with these people. That is what my goal is: to make this training available to people in an affordable way, to put it inside organizations so they can do it themselves and don’t need me. That is my passion.
Here is the deal. Most people think fundraising is, “I’ve got a mission, a worthy mission, and I need money for it, so I’m going to get here and apply it.” No, no. If you want to be transformational, if you want to raise more money and do more things than you ever dreamed possible, and I’m serious about that, here is the model: It’s two parties coming together to do something that neither can do alone. If you think about that, you’re one party. The other party is the investors or donors. It’s the two of you coming together. When you really let that sink in, you realize you are offering something to your donors that they really want. They want to be a part of that. They want to see you succeed. You have to treat them as investors.
That was a long way, but you opened the door to that.
Hugh: That was a good insight into your passion and your expertise. This is a topic that everybody talks about, but everybody approaches in a dysfunctional way. The way we do nonprofit fundraising sucks. Suck is halfway to success. You get halfway, but you haven’t done it. I stole that from Jeff Magee.
Larry: I’m going to remember that.
Hugh: The Eight Principles of Sustainable Fundraising. Where was the inspiration? The subtitle for this is: “Transforming Fundraising Anxiety into the Opportunity of a Lifetime.” What I’m hearing is there is a paradigm shift. We use this word, and this word “nonprofit” sucks, too. It puts us into this scarcity mindset, this minimalist functioning. We think we can’t do things that other for-profit businesses can do. We are in a for-purpose tax-exempt enterprise where we generate proceeds. They are not profits for our pockets. We have to feed the cows to get the milk. We have to put gas in the car to drive the engine.
I want to go through the principles and ask you about them. I recommend this book to anyone working in the charitable realm, whether you are in a faith-based religious organization, education, membership group like a chamber, or a community-based charity. We get anxious about talking about money because we think it’s about us, and we don’t want to ask for anything.
Larry, you wrote this book. It’s a must-have book for anybody’s library. Why did you decide to write this book?
Larry: I originally decided to write it because there was nothing out there that really described this paradigm in a very simple, straightforward way. Let’s take boards for instance. For-purpose organization boards. I love that because “nonprofit” is simply a tax status; it is not a business model. This actually gives for-purpose organizations a leg up. They don’t have the burden of taxes.
To answer your question, there was nothing out there specifically for volunteers, i.e. board members, to understand what fundraising was about and their role in it. That was the original impetus for writing it because they can be transformative in an organization when they realize what is really going on and how their role in it unfolds. It’s written all in standard English. There are no fundraising terms in it. I didn’t dumb it down. For those of you who are Apple people, it’s like an Apple computer. It’s very sophisticated, but the complexity is behind the screen, not in front of it. That is what I worked very hard to achieve. People have told me that. I feel very gratified that I succeeded in that part.
As a result of the book, that’s when I decided to turn this into a training platform that can be replicated and scaled so people can take these ideas and put them in their organization. Until this came along with the ability to put it inside through a trainer that we train, the only way to get this information was either a white shoe consultant who could come periodically at a very handsome fee or one person to a conference periodically. That is not going to give you a paradigm shift in an organization. Maybe one time in 10,000, but that’s about it. I have been that white shoe consultant. I have been paid very nice fees, and I have seen some great work, only to see the same organizations back on the ropes two years later. What happened? Personalities changed. People changed. Attitudes changed. Nothing ongoing kept them on their straight and narrow.
Hugh: We are having some ongoing conversations about collaborations. We certainly want to make your tools available for the wider nonprofit audience that we have. Starting that with this interview today, just to let people know there is something of value here.
You’re right. I facilitate board retreats and such. People want the miracle retreat that is going to change everything. It’s an event, but it’s part of an ongoing process. You started it. This could be a pivot or the beginning of a transformation, but it happens over time. I find that if somebody wants to work with me in an organization, we need to work for a year in order to learn it, to digest it, to apply it, and then to make it permanent. We have had so much history that has led us in the wrong direction. We need the opportunity to change it. What you provide is ongoing resources for people. That is a way the whole culture can have continuous upgrades. Did I understand that correctly?
Larry: Yes. Absolutely. That’s what we do. It’s all done in plain language. It isn’t hocus pocus or acronyms.
Hugh: The expert comes in and throws around these acronyms, being important, and we get lost. Let’s unpack these eight principles. I love this subtitle. You start out right away with transforming anxiety. That’s rampant. I find everybody gets all uptight. When we present, we present like a corporate philanthropist. We treat them like an ATM because we don’t know what else to do.
Larry: Or a leper, and we’re afraid to get too close.
Hugh: Let’s hit this nail on the head. Give us a little context for each of these principles because they are all key points. We start with transforming fundraising anxiety. What are we going to learn there?
Larry: You’re going to learn that when you truly understand, and that’s different from giving lip service to it, that fundraising, and its mirror image philanthropy, are not about money, but they are about people, then you begin to understand that you’re not asking for money. You’re inviting people to participate in a project that’s much larger than they are. People who are generous by nature and want to be engaged, that’s the coin of the realm to them. That’s worth a lot more than their money. That is the key. When you figure that out, you realize you’re inviting, not asking; you’re giving them an opportunity. It’s like inviting people to a party. Not everyone is going to come for one reason or another. But those who do will be so thrilled and pleased that you’ve done it.
One of the things that nonprofits do when they make it about money, they go around collecting what I call hush and go away gifts. What is that? There is a lot of money out there. A lot of money. Much more than most nonprofit execs can even imagine. Truly. I’ve seen it. I’m not just whistling in the dark here.
When they go in with an attitude of fear, and they think about, “How much am I going to ask Hugh for?” I want a number that I’m comfortable with. Unless you’re one of the very few people running a nonprofit who also have an independent income, you’re going to think in low terms. I could ask for $10,000. Hugh belongs to the country club, and he is a wealthy attorney. I can do that. When I come to you and pitch you, “Hey, Hugh, I’m with the XYZ Social Justice Group here this year. You know what my drill is. I’m hoping you might participate. I’m going to ask you for $10,000 this year.” Here is the calculus you’re going through. “Larry just hit me up. He didn’t try to engage me, but it’s a worthy cause, so I don’t want to blow him off. I’m going to write the $10,000 because that is an absolute pittance of what I could do if I was engaged.” I’m just thrilled at my $10,000, and I run home thinking what a great deal I’ve done, and you’ve said to yourself, “Don’t let the door hit you in the rear when you leave.” One and done. That happens so many times.
When you invert that, you don’t even go in and talk about money per se. You get around to it because money is a part of it, but that’s not the deal. That’s what the first part of it is. Let’s go to the principles?
Hugh: Yes. Donors are the drivers.
Larry: Donors are the drivers. They are driving the philanthropic enterprise. They are the engineers of the train. They are running the locomotive. Why? Because it’s their money. They are going to be the ones providing the resources. Remember that money is nothing more than fuel. That’s all it is. In fact, that’s one of the things that holds most people back is they have a dysfunctional view of money. One thing we train people on is how to get over that. But donors are the drivers. They are in the driver’s seat. The very best you can do is be in the seat of the navigator. That is the very best you can do. If you are there as the navigator, they are your partner. A lot of organizations manage to get in the backseat, but you have to be careful because that’s backseat driving. If you really are not quite making it, you’re in the trunk. You don’t have any input. They throw money at you as they drive down the road. They are driving this train. That’s the first thing: It’s not about us. That’s the thing you have to get over.
Hugh: Two things: Let’s define philanthropy. It technically comes from two words, “love” and “humankind.”
Larry: Philos and Anthropos, two Greek words. Philos is brotherly love. Anthropos is the generic mankind, all of humanity. It’s literally for the love of humanity. That’s really what it means.
Hugh: It’s not about money.
Larry: No!
Hugh: It’s about purpose. We think philanthropists are only money people, but there is many aspects to it.
You haven’t figured out who this person is that you’re talking to. You haven’t respected who they are. They are in the driver’s seat. What you have encouraged me to do, besides doing your homework, besides learning about them, let them tell me something. As you noted when you introduced yourself, we find out things not written in people’s resumes when we do that. It’s much more fascinating.
Larry: It’s a lot more fun.
Hugh: Principle 1 is the donors are the drivers. That’s profound. The second one is begin at the beginning. What’s that about?
Larry: When you start this road of looking for philanthropic support, philanthropic partners, investors, that’s who you’re looking for. Not money. When you start down that road, if we were like a start-up in an entrepreneurial for-profit situation, you are looking for people who are going to invest in you for one reason or the other.
Begin at the beginning is you have to craft a message that will be understood by those from whom you intend to seek support. Think about that. Not in your own terminology, not in your own lens, but what’s their lens? How are they going to perceive this? You can go to nonprofit website after nonprofit website after nonprofit website, and they read like IRS instructions. Talk about boring. It’s all this text. They have gotten a little better. But you have to figure out who is going to naturally support you. That’s a different principle; we’re getting there. But first, you have to craft that message and put it in their vocabulary, not yours.
Hugh: The next one is leadership leads. A pivot in the early 1900s is Napoleon Hill’s book Think and Grow Rich. He lists the 13 attributes of wealth. Money is the last one because it’s the least important. There are many other factors that lead to it.
We step up as a leader, and a leader is a person who makes things happening. Leadership leads. What’s that about?
Larry: It’s really the leadership of the organization. It’s primarily the governing board. There is a lot of dysfunction with charitable institutions’ governing boards because either it’s not clear what they are supposed to be doing, or they are not properly charged or properly chosen. There is a lot of what I call patronage or category recruiting. That’s not what it’s about. Board membership is a responsibility, not a reward. You should have all the features of the professions and skills that you’re looking for represented in that group. They are the leader. People look to them.
The outside world looks to them. They want to see who is on this board. Do I know anybody on there? What is their reputation? What are they doing?
That’s why there are only three things that charitable institutions’ governing boards should be doing: 1) Setting policy; 2) Promoting and advocating for that organization to everyone they know; 3) Providing adequate resources to deliver the mission. In most of these charitable organizations, some of that involves fundraising. There are other revenue streams. That is where they need to be. People will follow the leader. If the leaders aren’t committed, if they don’t demonstrate that commitment or passion, then no one else will get excited about it. They won’t put their money in it.
Hugh: That’s exactly why I started SynerVision Leadership Foundation. We have to equip leaders to raise the bar on their own performance. We’re presenting to people who have been successful. These resources we’re asking for didn’t jump in their pocket unless they inherited it. They have a business ear and eye. They are looking at you through that lens. If you don’t have a high-performing, fully active and donating board of directors, that’s a barrier, isn’t it?
Larry: It’s a key barrier. I mentioned donors being investors. They are investing in your cause or your cause. Not the reason you might think. It’s not about you. They are investing for their own enlightened self-interest. They want to see certain things happen. They want to have a certain impact. They want to participate in that impact. So they are looking for that return. In the for-profit world, for sure, it’s very easy to measure that return. It’s financial. It’s time-based. It’s all defined. In some ways, it’s simpler to deal with. When you are dealing with a philanthropic investor, your goal is to figure out, either as a group or individuals, what they are looking for in return, and then give it to them in spades. If you can do that, you will have more resources than you can possibly ever use. I’m not kidding with that.
Hugh: Framing it rather than as a return on investment, it’s a return on impact. It’s what is going to happen that will change lives. We are really in the transformation business. We are transforming people’s lives through the work we do.
Larry: Let’s get up to the higher levels. You ask someone to help you build this certain program. You ask them for such a lowball number they know you can’t do it for that. They won’t invest in that. That says to them that you’re incompetent. They know what it’s going to cost. Or if they don’t know, they have a pretty good idea. When I was in institutional life, that was always my barrier: not getting donors to think in high-enough terms, but getting the internal people to think in high-enough terms. That was the real obstacle.
Hugh: I see that over and over, Larry. It’s this minimalist thinking. “We can’t do that.” “Why not?” I hear what you’re saying from many professional fundraisers. The private foundations and high net worth individuals have lots of resources ,but they can’t find a worthy place to leave them.
The next principle is learn and plan. Oh wow.
Larry: First, you need to learn who is naturally going to support you. What is the profile of your ideal donor? This is where a lot of tools can help you, tech tools, but also something simple like interviewing people and asking them what they will or won’t support. But you need to learn what the profile is first, and then plan on how to reach out to those people. How many organizations do we know that treat fundraising as buck shot? Blast it up against the barn and see what sticks. That is incredibly expensive, and it is inefficient. Now in these days, you are getting <1% return on that kind of thing. It’s some list that you blast out there and hope for the best.
Let’s face it. Not everybody is going to support your wonderful organization. That doesn’t make it any less valuable. It just means that not everyone will do it. Even generous people. There are plenty of generous people that will say, “No, thank you.” It doesn’t make them ungenerous. It just means that what you do isn’t in their passion set. You need to figure out what that profile person is. There will be people who will support you. But you want to know who that person is, and then you can go and create a plan that makes sense to reach out to those people.
Hugh: Amen. I’m a conductor. I don’t step on the podium without that piece of paper, which is the plan. It’s a musical plan. It’s an engagement tool, but it lets everybody know how to play into that space. We undervalue that. It’s so essential. There isn’t a bad one here. They are all powerful.
The next one is work from the inside out.
Larry: Fundraising is really a top down, inside out affair. What I mean by that is you have to start with the leadership at the top of the pyramid. As you build your support, you build it in concentric circles. You focus on what you know you can influence, not what you are concerned about. Focus on the center. With the center, as you secure that circle of influence, you continue to move it out over time. That is how you build an unbeatable machine.
Notice the title of the book: Sustainable Fundraising. I’m not talking about once and done galas or gimmicks or tricks or raising it for a once and done hurricane. Those are all things that raise money for various reasons. I am talking about creating a program that sustains itself, grows over time, and is literally impervious to economic downturns.
Let’s go back to the pandemic. Perfect example. If you were an organization that was in up to their eyeballs in what I call transactional fundraising, traditional event fundraising, you were in a bad way really fast. If you look at the organizations that did well during that period, even prospered, it was those people who already had built a program like the one I am describing.
Hugh: Transactional fundraising.
Larry: Quid pro quo. You ask for something; I give you something.
Hugh: Very fragile, isn’t it?
Larry: Yes, it is. It’s very susceptible to any sort of economic downturn. When we had the collapse in 2009, I was working with a client, very high-profile client. 60-70% of their income came from an annual wine auction. Yikes. What happens when the stock market goes south? How many $2,500 bottles of wine is someone going to buy? Not many. If that’s their only connection, there you go.
Hugh: You will drink the old wine out of the cellar before you buy any new wine. The next one is divide and grow.
Larry: This is essentially the principle that says treat different donors differently. The differences between donors are their life experience, their likes and dislikes, their income level, how much they like you. Those are all the variables that go into this. People go through natural stages in life. They go to college, they may get divorced, they have business failures, they have kids. They have different interests. How clearly do they align with you? Once you figure that out, there are plenty of tools that aren’t that expensive these days to help you do that. Then you can create a program. We have a course we talk about this called Creating the Pathway.
I knew this anecdotally for years, and then the research was done at Texas Tech a few years ago by Russell James that demonstrated this numerically. When you create a metaphorical path that brings your donors closer to you emotionally—notice how I emphasize that word—their emotional connection with you, to the point where they have made at least one gift out of an asset. It could be a small gift, as opposed to simply out of income. When you get 20% of that baseline that does that, that is what sets your program into an upward trajectory, sometimes with exponential growth, over time.
It explodes on itself, and it also creates an incredible resistance to economic downturn. But you purposefully have done that. That is what divide and grow is. You are looking for high levels of renewability. You are looking for growing their connection to you over time, raising their level of giving to their natural capacity. This is all what that does.
Hugh: In the book The Art of War, it says in there, “Know your enemy.” If you use that principle, “Know your donor,” with some donors, it’s business-like. You make an appointment, go in there, sit down, “Tell me what you want.” It’s bottom line. Boom. Other people want to talk about family, how you’re doing. There is a relationship piece. They want you to earn the right to ask. How do we know the difference between those two distinctly different personalities and approaches?
Larry: I go in specifically to learn what interests them. in fact, as an example, I worked with a donor who is actually a board member of the university. He qualified as a curmudgeon. He really did. He had this radar out there about people asking him for money. He was a very well-off, just retired CEO, stockholder, held utility. Even though he was on the board, and I was the chief advancement officer of the university, it took me six weeks to get an appointment with him.
I finally got in there. When he realized I wasn’t in there to ask him for money, then we could talk. I said to him, “Bernie, I’m not here to ask you for money today. I want to get to know you.” I simply threw the question out there. You never know what you’re going to get back. “Bernie, here’s your situation in life. I know you’re a generous guy,” even though I thought he was really damn stingy. I said, “You’re a generous guy. What do you want to accomplish? What do you want to do?” I just threw it out there. That opened a whole door for him. No one ever asked him that question before. All he got was come-ons. I just left the door open, and he started talking.
I learned things about him I never would have learned about him otherwise. I learned that both of our dads were firemen. I learned that he had a severely disabled daughter who was living at home, who was an adult. That was his real concern and passion in life. I didn’t even know that. The president of the university didn’t even know that. Then he had the proverbial golden parachute. He was all exercised over tax avoidance and what to do with it. He’d hired this battery of accountants and attorneys. He actually felt trapped by these people. When I said to him, “Bernie, these people would do anything you tell them to do. They’re working for you,” think about this. This is a man whose whole career was telling other people what to do, yet he felt trapped. This is how a lot of people with means are. They feel trapped. They want to have impact. They want to make a difference. They don’t know how. When people come at them with these come-ons, immediately the walls go up.
Hugh: This is good stuff. Your new board position that you don’t have, that you ought to have, is the curmudgeon. We have two more: renew and refresh.
Larry: There is a little quote at the beginning of each chapter. Read the quote for that one.
Hugh: it says, “Love me tender. Love me sweet. Never let me go.” Elvis Presley.
Larry: Elvis Presley. That’s renew and refresh. We ought to be loving our donors tenderly, sweetly, never letting them go. People will die. People will change interests. You will have to replenish over time. Refresh is donor acquisition in the technical term.
Think about this. The overall first-time renewal rate—that means if I made a gift this year to your charity, I do it again next year—is under 40%. That is pathetic, Hugh. Let’s compare that. The first year renewal rate in the consumer products world is 95%. Think about that. I tell people the individuals are more loyal to their toothpaste than they are their charity. P&G has got it figured out. They know how to keep a customer. They know how to do that. I tell these wonderful charitable organizations take a page out of Proctor & Gamble’s book. Look at what they do. See how they do it.” It ain’t rocket science. Part of it is simply treating people with respect and including them in what you do.
Hugh: The problem with common sense is it is not very common. Warren Buffett said, “Anything not worth doing well is not worth doing.” The last of the eight principles is invest, integrate, and evaluate.
Larry: You have to invest in your program. You have to put money in there, but in a strategic way, not a haphazard way. Too many nonprofits see the funds that go into their fundraising program the same as paying the utility bill. Those are two completely different things. Utilities are expenses. Fundraising funds ought to be investments. You ought to be able to measure that. There are quantifiable returns on the different methods. You should know what they are.
Integrate. Your loyal supporters, what they need from you is a single unified message and approach. Keeping them part of the fold. Don’t come at them from six different directions at random times. You lose their attention. They get weary and confused. Probably independent schools are the worst at this. They solicit their parents every three weeks for something. They nickel and dime them to death. The ones who have this figured out are the ones raising all the money. Being asked too often or inappropriately or at the wrong time is the #1 negative.
The last one is how many people I have worked with who say to me, “We have always done it that way.” My response is, “Why aren’t you defunct already? Why aren’t you extinct?” That is the prescription for death. You have to be evaluating. Did this work? It goes back to something we talked about at the beginning. You need to be willing to take calculated risks that will not deliver what you’re looking for. That is not how you’re going to get better.
There is an organization that does this very well. They are a charity that does portable water projects. They post their failures on their website. When they first did that, their board and staff were going into apoplexy. You know what happened when they did that?
Hugh: Their donations went up?
Larry: Tenfold in two years. You know why? It said to the very serious investors, “These people are trying everything to get better. We want to make sure they succeed.”
Hugh: Transparency and vulnerability are two very underutilized leadership resources, right behind listening. You’ve given us the prescriptive to change our future in organizations. What is the primary limiter for organizations’ fundraising efforts? What’s stopping them?
Larry: I mentioned it earlier: it’s a dysfunctional view of money. They attach all sorts of qualities to it that it doesn’t have. They are afraid of it. They think it’s good, bad, evil, I don’t want to deal with it. It’s simply fuel. That’s all it is. The people who are in a position to invest, with disposable income, at any level, and who are going to be philanthropic at any level, they see it like that. They see it as a way to help you, or to help what they see as an important thing to do, not you personally, not even the organization necessarily.
I’m a boomer. Our parents especially gave because it was the institutional thing to do. That’s not the case anymore. People are much more focused on specific outcomes. It could be organization A, B, C, or D, depending on who is doing the best job.
One of the things we do in our workshops, we have an exercise that measures cynicism related to money. It can be very eye-opening. If you’re cynical about money, it will really adversely affect your ability to raise money.
Hugh: You have said it twice before. What is the biggest limiter for fundraising?
Larry: Having a dysfunctional view of money.
Hugh: Yes. It’s a money shadow. It’s one of the big myths. The other myth is we can’t spend money on marketing, development, or salaries. We take risk. We have all these myths. You’re losing a little money in a project, and everyone gets a hissy fit. When Disney has a flop, it’s $200 million down the drain. That’s the old numbers. Nobody blinks. We have all these myths that we have embodied. What you have done is address those not as myths but in a substantive way to rethink all of this and to build skills to access what is available. God has given us abundance. We think in scarcity. What’s wrong with that picture?
Larry: I’ll tell you what’s wrong. I also work on the other side of the fence on the philanthropic/wealth side. I have a couple friends who are philanthropic brokers? What is that? It’s an individual who has a business, and their sole business is to manage the philanthropy of the people who want to give their money away. This is not donor advised funds. This is direct. They tell me that there is an estimate of between $500 million and $1 billion additional that are simply sitting on the sidelines because nonprofits don’t have the imagination or the skills to engage the people who want to give it.
I had one of these men challenge me. He said, “Larry, you can’t find a nonprofit executive with enough imagination to ask me for this money.” I was able to find one. Only because he challenged me. I normally don’t get involved in matchmaking. That’s my point.
Last year, $4.5 billion was given to philanthropy, and that included all the money that was committed in donor advised funds. Imagine another billion dollars, 25% on top of that. It simply is sitting out there.
Hugh: Besides the limiter of the dysfunction, there is also the limiter of lack of capacity of the leader to lead and the board to be the board. There is a functional limiter that we can’t see. It is the same functional limiter that is in major corporations that costs them $500 billion according to the Gallup survey in lost profits. It’s invisible in their operations.
I want to ask you a tip you want to leave people with. Before we do that, what is the long-term and short-term outlook for philanthropy in North America, where we are?
Larry: I’m not a very good prognosticator, but I will certainly- I have my own bias, as everyone does. Short-term, you will see the numbers continue to go up albeit not as much as they could. Long-term, I’m hopeful. I’m hopeful that you are going to see a resurgence of more relational fundraising. The reason I say that is you look at the younger generations, and this is something they really crave. They want to be connected to you.
When I was first getting into this business several years ago, you never got an involvement question out of a donor unless they were talking six figures. You never got that return question. You get that now for a gift of $50 from a millennial. They want it in a text message, too. How about that? That is an adjustment for yours truly. I try to adjust with the times. I’m not using DOSS or anything like that. I am actually all Apple here. All of our platforms are built on Apple. That is what I would be hopeful for.
I think you’re seeing a blowback, a pushback already with what is known as philanthrocapitalism. Not so much in this country, but you will see it soon. For those of you who don’t know what I’m talking about, I am talking about the super-wealthy who want to come and impose their idea of a solution using their money. Top down. Gates, Bezos, these kinds of people.
One of the things I didn’t mention is that next year, we will be going into India. Human nature is universal. They have a growing philanthropic sector there. Just about three months ago, the Indian Parliament passed a law that eliminated that kind of money. They don’t want Mr. Gates’ money anymore. They want their own money to develop it. You will begin to see more pushback on philanthrocapitalism.
Hugh: Wow. That is a big deal. That is such a massive deal. Larry, you sit in a very unique seat in your history, perspective, skillset. We have rank and file nonprofit leader clergy sitting there, taking this in. What is a tip you want to leave people with? What do they need to think about going forward?
Larry: When you don’t embrace the real joy of this, and project that to others, think about what you’re cheating donors out of. That’s what I want you to leave with. You’re actually cheating them when you recoil back and don’t approach it with joy.
Hugh: Profound. Larry Johnson, you have been a wonderful guest today, given us stuff that is so applicable, relevant, and reasonable. The book is just the beginning. We will be sharing what Larry is doing, so stay tuned. Thank you so much for being our guest today.
Larry: It’s been my pleasure.
