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Warren McFarlan: Effective Fundraising
That’s Warren McFarlan’s new book. It’s written for potential board members, but it’s a valuable study for those on the ground, doing the work.
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Transcript for 558_tony_martignetti_nonprofit_radio_20210913.mp3
Hello [00:00:09.59] spk_1:
and welcome to [00:00:10.46] spk_2:
tony-martignetti non profit [00:01:46.64] spk_1:
Radio big non profit ideas for the other 95%. I’m your aptly named host of your favorite abdominal podcast. Oh, I’m glad you’re with me. I’d be hit with like the Asus vulgaris if you drive me out with the idea that you missed this week’s show effective fundraising. That’s Warren Mcfarland’s new book. It’s written for potential board members, but it’s a valuable study for those on the ground doing the work. tony state too planned giving in the pandemic era were sponsored by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot C. O. It’s my pleasure to welcome Warren McFarlane to the show. F Warren Mcfarland is the Albert H. Gordon? Professor of Business Administration Emeritus at Harvard Business School. So F Warren McFarlane is the guy I’m talking to. Albert H. Gordon is the guy who endowed professorship He fr McFarland has spent the past 40 years serving on social enterprise boards, helping organizations find the right leaders advanced their missions and raise the necessary supporting funds. I don’t know anything more about Albert H. Gordon. F Warren Mcfarland is a retired esteemed professor. You don’t need a website. You don’t need twitter Warren, welcome to the occasionally crass [00:01:48.87] spk_0:
non profit radio it’s directly with you this morning. [00:01:54.74] spk_1:
What’s a pleasure? Thank you for joining us. Congratulations on the book. [00:01:56.44] spk_0:
Thank you very much it’s been uh [00:02:36.24] spk_1:
and you’ve written it for trustees are really potential trustees, but I think there are a lot of good lessons in here for for folks who are doing fundraising. So that’s why, you know, because our audience isn’t so much potential trustees, but it is fundraising on the ground in small and midsize nonprofits. So very apt subject. And I was glad to hear about your book. You Pretty much open with a chapter chapter #2 on governance governance. Why do you, why do you put governance ahead of getting into the fundraising topics in the [00:02:57.74] spk_0:
book? I think because governance sets the context for fundraising. The governor’s committee on the board, I think is probably the most important of the committees and they are the people responsible for identifying the people that will serve on the board. That will be able to help, uh, fundraising in one way or another, either personally or helping to make connections, general context and, and, and so forth. So that I really put it up because the three major roles of a nonprofit board, our number one approving the mission and the strategy of their uh, number two, hiring retaining and supporting the Ceo and certainly basically helping to secure the funds. And that’s a hard, difficult kind of things. My friends who head up nonprofits repeatedly say it’s 50% of their time that is spent on that. And it’s just hard, difficult kind of work. And that’s why I really, you wrote the book to help focus new board members attention on how vital their role was in helping to set the context for an organization to succeed. [00:04:00.94] spk_1:
Yeah, fundraising. So let’s give a shout out to your previous book, which dealt with those three topics, but this book fleshes out the fundraising that the third of Exactly yes. Your tell folks what your your first book was that had more focused on the first two of those [00:04:06.74] spk_0:
the [00:04:07.63] spk_1:
roles of the board. [00:04:26.44] spk_0:
The first, my first book was really aimed on governance of nonprofits, what a board member needs to know. And it really looked in a very broad kind of way. You’re focusing on mission structure, uh budgeting, planning and so forth. And that fundraising was one of the pieces in the book, but it was such an important piece. And I’ve been spending so much time working on it that I really felt there was need for another book to kind of taken and blow apart. Was one chapter in the other book into the, into this book. [00:04:50.04] spk_1:
Yeah, because we know fundraising is at least 50% of an effective ceos time spent. And you make that point in the book a couple of times, but give a shout out what’s the exact title of the previous book? [00:04:56.56] spk_0:
Uh Corporate Information Systems Management, I’m sorry? [00:05:00.07] spk_1:
No, no, that that can’t be a different book for a different, [00:05:11.64] spk_0:
I have to have to go back and think of something, but it was basically joining a nonprofit board. What you need to know. [00:05:26.84] spk_1:
Okay, so is that it joining? Okay, because we’re talking about effective fundraising, the trustees role and beyond. Uh, and, uh, okay. So the previous one. Okay, joining a nonprofit board. What you need to know? Exactly. Right. Well, I don’t know why I doubted the author of the book. Just you maybe a little nervous when you talk about corporate information systems. I don’t know. That’s a [00:05:35.79] spk_0:
different, wasn’t really part of my [00:05:52.64] spk_1:
life. It’s a different, it’s a different book. The man’s prolific. You know, he gets, he’s written so many books. He gets the book titles confused. That’s all right. All right. Um, I’m not sure that many of our listeners, again, small and mid sized shops have a governance committee specifically. What’s, what’s the role of that committee? They may be doing governance maybe in their executive committee. Perhaps it doesn’t get smaller, smaller and midsize or what’s the role of the governance [00:06:52.24] spk_0:
committee? It’s basically, it’s a nominating committee. Its role is to attract, uh, the right kinds of trustees to the organization to help talk them into doing it, to help get them, uh, slotted into the right kind of role. Worry about getting the right people and then helping them as when they finished their term to be involved in other ways because one of the critical things. And so I view that, uh, for for profit boys are very different. I’ve served in a number of them. They’re very exciting. And when you’re over the job is over. You’re gone for a nonprofit board. This is meant to be a lifelong relationship and one of the organization work. That’s right now why we’ve Now developed a committee of some, uh, 35 former board members. We have them sitting on various committees and so forth. And with that, they have stayed involved with the organization. And with it comes a philanthropy. They’re building willingness to keep people you involved. So is this an entirely different kind of concept? And it means that you have to that a nonprofit board is often less efficient because you have to deal with people’s idiosyncrasies in a way that you don’t in the for profit world because I’m not actually going to take a major donor who’s a little bit careless and sort of, you’ll cut them off too sharply. [00:07:39.64] spk_1:
Yeah. You make a good point about the trusteeship and the end of the trusteeship still being a, uh, warren, are you able to silence those? Um, that sounds like an email notification you’re getting. Are you able to, [00:07:51.97] spk_0:
I’m sorry. [00:08:25.04] spk_1:
Okay, no problem. Thank you. Um, the end of the trusteeship is just a continuation in the spectrum of the, the lifetime relationship with the nonprofit. I, I think a lot of non profit to make a mistake there and they figure, okay, the person served three years, six years, Hopefully not more than six. That’s another subject. But, you know, they’ve served their time. And, and now they just, you know, we hope they’ll continue to give. But that’s the end of sort of the, uh, it’s the end of the volunteer volunteering of the relationship. And I think that’s a mistake. Your, your former board members. You know, there may be an emeritus board or some kind of an advisory board or, you know, some other way to not lose that expertise that they gained while they were trustees. [00:09:18.14] spk_0:
Yeah, that’s, uh, that’s exactly the key point that I recall her often, a board of advisors or a corporation or two things that people, you know, calling for. And that was it. One of the jobs economic committee is to help figure out what the new, as somebody comes near the end of their term, how they will be able to be involved and get them involved in in the right kind of way now. And that basically tremendously increases your footprint. You must have term on that because you need to continually bring new people in while you’re bringing them and then in why taking care of the older people is, is, uh, can be, it’s, you’ve got a lot of value ideas and also philanthropy wise. [00:09:35.34] spk_1:
Yeah, yeah. Think through that, that post board member post trusteeship relationship, [00:09:57.74] spk_0:
I’m involved in four board, I’m involved in for nonprofit boys. Now, the links to them go back over almost 40 years and it’s evolved from one setting to another. And the power, you know, grows. And so that there was an annual giving then there was, uh, capital campaign giving. And at my stage in life now, why planned giving? It turns out to be a particularly important thing. [00:10:25.04] spk_1:
Sure. Yeah. You say the fundraiser is an educator of donors. That’s a, that’s a pretty, uh, basic lesson. But I want you to flush it out for folks because sometimes basic lessons are, you know, they’re foundational for a reason they’re worth revisiting and thinking about why, why do you say fundraisers are educators of donors? [00:11:50.34] spk_0:
It’s really helping somebody to understand how they can go about, um, contributing in ways they haven’t thought, I mean, they, that I’m working with somebody right now and they’re that some tragedy in their family. And we’ve been able to sort of help them think through how this new facility they’re building, is going to help the organization and help their grief and fill their needs. So that, uh, it’s, uh, it’s very important that when I go out and ask people from, uh, you know, for money, I’m not asking them for money. I’m asking for them to be able to contribute contribute to society in a way bigger than they can on their own. And it’s, it’s really opening up an opportunity for the person opportunity they often haven’t thought about in their, in their own ways. And that you’re one of the things that died. And I talked about this for trustees is that the first thing that I do is in fact, the trustee is you’ve got to believe in the cause and have made your own contribution because when it comes right down to crunch time and I’m looking somebody in the eye and they say warrant, what have you done first? You know, this is my number one or two financing and this is and here’s why I’ve done it. That there’s a credibility that that comes out of it. And the reality is that many donors, their lives are busy and they haven’t thought through the array of alternatives they can contribute to and how they can go about extending their leverage. [00:12:12.34] spk_1:
So the fundraisers job is to educate, educate them and educate about the work that’s being done also what those exactly those programs are doing. Um I I presume you’re a believer in 100% participation, fundraising participation on the board. [00:12:33.74] spk_0:
Absolutely. I mean on the one hand and say, and people give in relation of capacity, I was the chairman of the board of the hospital. I’m sorry. You [00:12:39.30] spk_1:
cut out a little bit there people [00:12:40.35] spk_0:
give chairman. I was a chairman of a border. [00:12:42.79] spk_1:
Wait 11 further step back. People giving what level, What did you say? [00:13:07.34] spk_0:
I say people, Uh, it’s not the level that you give your question. It was your your question was do I believe in 100%. I do, but I want to say at the hospital board share. I valued the $25 I got from the homeless mother in East Cambridge As much as I did. The 200,000 from the main present because she was the eyes and ears of the community. She gave enormous value and her commitment was to the institution. So that’s why I believe in the 100%. [00:13:30.14] spk_1:
Right? And, and of course for someone without a home, $25 as a stretch gift. So, yes. All right. And so you you would you go along the philosophy that there’s not a minimum giving level for for for every board member, every board member gives something that’s a stretch for their capacity, given their capacity. Is that is that how you would define it? [00:13:44.54] spk_0:
Or? The answer is yes. But uh, yes. Yes. But [00:13:50.98] spk_1:
that’s fair. Yes. [00:13:51.89] spk_0:
Yes. It is on the real high end gifts. I might be willing to be the number of four philanthropy. I have two or three situations I’ve been in where, you know, somebody has given me a sort of a go away uh, token gift to them which has actually helped the enterprise meets goals. They didn’t even know they could have. So, I mean, it’s one of the things that we find in uh, in 2021 is that the shape of the giving pyramid has really become much steeper and taller. And so therefore the people at the top of the uh, the Jeff Bezos, his wife Mackenzie and so forth. I mean they uh, a small gift for her is a transforming gift, you know, for the receiving your organization. So that’s, that’s kind of the exception that I was referring to. [00:15:04.24] spk_1:
And then after someone has given you, you talk about stewardship as you know, the engagement of past donors and trustees. And you say, stewardship is not an overhead item, but an offensive weapon. So let’s talk about stewardship. What, what, why? Why again, basic lessons. But, you know, I want people to get your perspective, ownership is a stewardship is so damn important, [00:16:29.24] spk_0:
um, that you give a gift, um, for, uh, let’s say for an endowed chair that you maybe do that if you’re in your fifties or sixties, that when they come back and tell you how that chair is performing, it’s an opportunity for them to engage your thinking on the next level and the next level that, uh, one of them is going through a very different situation hospital where they didn’t report how the gifts were doing. You know, for people they gave, and they were wondering why people were dropping off the whole notion of it’s a lifelong engagement. And when you come in to tell somebody how their, uh, previous investment organizations doing, there’s a lot of interest on that part of the person hearing, how did their money do, But you’re also there in the opportunity to talk about other kinds of things and opportunities and move the discussion forward. And it may have been that an annual fund gift around the class reunion that may in due course lead no to a capital campaign. You’ll give, you know, somewhat further on down the road and it may be a plan gift even, you know, you know further down the road. And of course the art of the question is when you’re managing these lifelong relationships, you have to be careful not to move too much clothes quickly because if you in fact uh, get the short term gift, you may also be turning off the long term relationship, which can be more important. That’s that’s why this is such an art to this, this fundraising. [00:17:19.84] spk_1:
Yeah. And and there’s a whole variety of stewardship methods, you’re focusing on reporting on the impact. But you know, if, if the first few gifts are, you know, in the 150 to $500 range, No, that’s, it’s hard to place impact, put impact upon that. But how, how would you steward those three and low four figure gifts? Uh [00:18:15.94] spk_0:
It’s actually your point is that one of the first things when somebody graduates from college is we have all kinds of incentives to just get in the habit of giving $50 for $100 you know, for each of the 1st 10 years and you have a 10 year giving club that has given 10 years in a row, all 10 years enrolled for a, somebody who’d gone for 22 to 32 doesn’t add up to a lot. But the habit of delivering the habit of giving the engagement and so forth. That’s what’s really laying the seeds for much deeper support of some of them. You’re further down the road. And [00:18:59.44] spk_1:
that makes me think of another stewardship method. You know, the recognition society, I think a lot of folks don’t think about having a recognition society based on longevity of giving. So you know, of course you’re using the, you know, 10 years, someone graduates from college if you can get them in a habit of giving for 10 years, there’s a very good chance unless you blow it That, you know, they’ll be giving for the next 40 and 50 years in increasing increments and in different ways and as as you’ve talked about. But that that method of recognizing giving for longevity, those folks who have been given to you for 25, 30 years and there’s longstanding organizations that have donors that do go back that far And maybe, you know, maybe maybe out of 30 years, the person missed two years as you give them a break or something, you know, but what you have, I mean, I longevity, not just the dollar amount each year [00:20:08.64] spk_0:
as you’re talking about a fearful reports from right to my mind where the little asterisks, beside the people who’ve given for each of the last 10 years and double asterisks for the last one and you actually look at it and that of course is, you know, one of the things that’s important is that development people want to a point that putting out development reports and give them reports and so Fort is very expensive and you really should do this on the web and on screen. The fact of the matter is when I’m at my most philosophic, I’m flipping through report and I’m saying what my classmates or associates did on, it’s an organization my Children involved, I may flick back down to another part of saying and it just turned out to be false economies and a lot of the people that have undone the paper stuff and brought online have had to back off the other way because discussions and ruminations which were important were taking place. [00:20:14.10] spk_1:
Yeah. You, you, you have some uh, anecdotes about that in, in the book which you know, we can, we can go, we can’t dive into all the stories. You just got to get the book. You just got to buy effective fundraising. So [00:20:50.94] spk_0:
just start, uh, it starts from the very beginning, I think for example, uh, as I entered Harvard College as a freshman And my second day there, I’m sitting with 1100 people in the room and somebody is talking right and left and those are the people that aren’t there because you’re there and you’re feeling pretty good. And the next comment he made blew my mind, he said, and every last one of you was on financial aid. Uh, my father did not communicate me, talked a lot about the expense and he said, you’re here because of the philanthropy and generosity of the generations that came before. But at your 25th reunion, you will have an opportunity, will pay that generosity and the numbers went something like that. That thing just slow across the room. And 1100 mines. A lot of it’s stuck there. And, and the 20th reunion, there was a $200,000 gift. And at the 25th, there was an 8.5 million and the 35th. It was a 25. And that the habit, you lay the idea down very early [00:22:40.24] spk_1:
On the very first day, they say 25th, he’s already got you giving to the 25th reunion. That’s right. Right. Right. All right now. seven. It doesn’t have to be a college. There’s there’s a very good lesson there. My synesthesia is kicking in. I’m getting goose bumps. Thank you. They listen talking about this. Uh, yeah, there’s a very good, you know, you get people in early and you and you and you cultivate those relationships. You cultivate that, that relationship long term from the, from the outset, You know, so, so for your organization’s, you know, take the lesson there. You may not, you may not be a school, you know, the first day of college, but you can be cultivating from the very early stages. Absolutely, a long term relationship. All right? Yeah, stewardship critical again, warren calls it an offensive weapon. Um, let’s talk about the head of the development Committee. This is something that I’m sure listeners do have. Even if, you know, even if it’s a small board, there’s at least a development committee of, you know, two, maybe three folks. But you spend time on the, on the, you know, in the, in the parties to the, to the board, talking about the head of the Development Committee and some skills that you like to see there. What what are you looking for in, in that position? [00:26:09.54] spk_0:
If somebody who’s got to be able to mobilize other trustees to come and join in the giving operation, the ability to reach out, uh, into the rest of the board, make them understand this is part of their job. They had somebody who, whatever their going out and talking about the organization. The organization is in their mind maybe to me don’t, but uh, Is a, it’s a job that’s 24 hours per day, seven days a week, and even more so for the development person. But uh, I just remember a situation that, uh, I was heading up the capital campaign for a religious organization, came out in the Boston Common in early january, you know, the temperature was about two degrees, the wind was blowing. It was miserable. I had 300 yards to go and I ran into one of my former students, uh going on, he stopped and said, what are you doing? I said, I’m going off, you know, to to join this. Uh this just felt me, this religious organization said, oh, you know, I’m a member of that religion, this is somebody who has, his wealth was considerable. And I just kind of stopped and said, well, you’ll tell me more. The temperature suddenly went up to about 60 degrees, the wind dropped down and I said, I was a senior warden of my church down in New Jersey. Yes, I said, but you’re not there anymore, So which church do you belong somewhere? I’m now up with the one in Wellesley. And I said, that’s terrific. And we disappeared out. I got to the office and sat down and he said, listen, this is what it is all about. And that my former student was in his office, you know, three weeks later for lunch and over lunch, you know why? That the head of the terrorist organization uh expressed an interest to actually see this person perform in the classroom. And so I never want to see me teach. But he went and watched this summer student of mine no teach. And that led to another nice consistent pro bono consulting assignment. And uh and Result of the whole thing was system is about $500,000 gifts that took place in such a tasteful way, you never even know what happened, but that’s something you just do recognize the opportunity and you have to stop, you know, put the thing together. You got to be creative and the head of the Development Committee, I want them there. They need to breathe and live the organization. You know, 100% of the time, it means they’ve got to have a close working relationship with the Chief development on Mr. They have to have a close relationship with the Ceo to make sure that they’re always always in [00:30:30.54] spk_1:
line. Great, great wisdom. Yeah. And uh, you say you want the person to be persistent and fearless and you know, that all that, that all is uh, epitomized by this story you just told that’s outstanding. Thank you. It’s time for a break. Turn to communications. They’ll help you find your voice and they’ll get that voice heard in the right outlets like The Wall Street Journal, the new york Times, the Chronicle of philanthropy, Fast Company Market watch many others where they have the relationships to get you heard. So what does this mean? Get your voice uh, find your voice and then get it out there. Well, defining the voice. They’ll help you craft your message. I mean, you’ve got your key points, but you want to make them cogently concise coherent. Look at that. Cogent, concise, coherent. Yeah, that’s what you want to do. So that when you’re talking to the journalists at these incredibly good outlets, You get quoted. That’s what you want. You want the quotes. I mean you know saying that you said something and then they paraphrase it. Yeah that’s pretty good to look. It’s your name, it’s your organization of course. But the quotes that’s the gold standard. Turn to will help you craft your message is you know what the message are. They’ll work with you to make it. What did I say? Cogent write, cogent, concise, coherent so that you get the quotes in these excellent outlets. So help you find your voice, they help you get that voice heard turn to communications. You know this your story is their mission turn hyphen two dot C. O. It’s time for Tony’s take two. I’ve got a free timely webinar coming up for you planned giving in the pandemic era. It’s graciously hosted by J. M. T. Consulting. I’m grateful for that. Their gracious. I’m grateful. We’re doing this on september 30th. From 2 to 3 Eastern time. I’m going to talk about what planned giving is who your best prospects are. Where to start your program and how planned giving fits in our pandemic era and of course you got to have the all important Q. And A. That’s where the focus goes on what you’re thinking what what is on your mind. I can only channel so much of you. I need you to fill in the rest. So that’s the all important Q. And A of course plenty of time for that also. So you have to make a reservation, it’s free. But you got to reserve, you go to J. M. T like Juliet mike tango from the old Air force days. Military folks will appreciate that. Also private pilots, JMT consulting dot com then events and then expert speaker series. That’s the only category they have. I would have put me under something like middling speaker series or lackluster speaker series. But alas, they don’t have those categories there. Of course. The problem is not going to create a category just for me as well. Just stick with their default category of expert speaker series and squeeze me in there. So that’s um, that’s where, that’s where you go. JMT consulting dot com events, expert speaker series. It’s all on september 30th two to three Eastern. I hope you’ll be with me for planned giving in the pandemic era. That is Tony’s take two we’ve got boo koo but loads more time for effective fundraising with Professor Warren Macfarlane. Another another part of the part of the board is the board chair. The chair and the Ceo the chair Ceo relationship that that’s critical. I’ve I’ve seen very dysfunctional relationships where there was micromanagement and you know, too much in the details. But I’ve also seen very healthy relationships where it’s it’s it’s supportive and collegial between the board chair and the ceo talk about that relationship please. [00:33:47.34] spk_0:
It’s the most sensitive one. You know, in the, in the organization that the ceo is that it’s first of all, it’s peculiar to nonprofits. This is not known in the for profit world. And for that, the notion of an unpaid non executive chair of the board uh working with a paid seal. Uh the first problem is people have, coming from the private sector, have trouble understanding how that system works, that it means that the two have to be in public very much. It’s a Pataca. I can remember that, you know, one board that I chair, that the uh CEO and I would fight furiously but always 10 miles or more away from corporate headquarters. But when you’re there with the board and with the stamp, the hands around each other’s shoulders of the, like the jokes were going back and forth and you made sure you couldn’t put a slim nail you in between the two of us. I mean, that relationship is just an absolutely critical kind of one. Now, what’s also interesting courses, in some cases, why the chair maybe a very much of a development uh project, that there was a wonderful book that was just written by one of my former students said, hey Jim, who is a uh investment maker in in new york, he is chairman of the University of Russia’s Sir board of trustees. And his book describes, you know, how when he was asked to do that job, he said, I just can’t do it because I’m amazing. I need Rochester’s short of money. We need somebody to really raise the money and the president just kept working on. And finally my friends, these types of books, just what is the largest gift that’s ever been given To Roger? So it was back in 1926. George Eastman gave $26 million dollars and uh, he spent some more time and money and his family said Rochester did so much for me. We’re going to do a little bit more than that. Now that’s the chairman who, I mean, he gives with his treasure, he gives his time and his block and he’s a, he’s a remarkable person. He was an orphan basically from orphanages from the time he was age seven to age 16, and one in ROTC scholarship out of the orphanage, you know, into uh, into Rochester. But the whole notion behind that in terms of how our chairman can support is really, it’s, the chairman must be philanthropically oriented, must understand the development mission, must be able to uh, work around the strengths and weaknesses, you know, of the Ceo [00:33:55.34] spk_1:
uh, fill me in a little inside baseball on corporate boards. What what’s the role, what is the role of a board chair on a corporate board. [00:34:22.84] spk_0:
Um, the, in the, in the ideal world, the board share is a sports chair and Ceo and you have a president and chief operating officer boy. So the board share it, Uh, it’s basically, it’s, it’s the Ceo job. Now from time to time with emergence, You may have somebody left over from emergency you need to send with, so you may make them sort of a non executive chair of the board and give them a nice office about 10 miles away from corporate headquarters and the three years work while you work your way through your retirement, earn out and so forth. [00:35:16.74] spk_1:
Okay. So it often is the, it’s the chairman, Ceo chair chair and Ceo. Okay. All right. So going back to nonprofits, what’s your advice warrant on fixing the relationship? I mean, if I think CEOs would know if they have a dysfunctional relationship, whether it’s micromanagement or maybe the board chair is too hands off. Maybe he or she is not a strong leader of the board, not a consensus. What, what advice do you have for the C. E. O. S. Two improve the relationship with the [00:36:15.53] spk_0:
board chair? Well, there, there’s several things, you know, the first one is that The length of tenure of the board share, uh, is often just 2-3 years And if you want people to rotate through that. But the critical person, this is again, is the head of the governance committee that the head of the government’s committee is one of your wisest, most senior atrocities and their job is to make sure that that relationship is working. And if it’s not working to find a way to sort of you move the thing along, it’s a it’s just it’s a terribly difficult and awkward thing and of course it’s complicated because you know, people have tremendous egos, it’s alm except that uh the people amass the well father to do these jobs, they don’t suffer from an underdeveloped of self concept. And so how you deal with their he goes uh is very tricky, [00:36:29.43] spk_1:
right? But so what, you know, what what specifically I mean, do we have a heart to heart conversation with them and say look, you know, I think, you know, and I know, you know, this relationship is not ideal. Can we can we talk about it or you know, or is it just, I mean, I hate to leave folks just wait until the board chair’s term has ended and then, you know, we hope to do better in with their successor, [00:38:16.52] spk_0:
their to their to their their two or three different ways. The first one is uh the question is whether it’s the board chair problem or the C. E. O. I mean, this is of course, you know, one of the problems because in fact the paid Ceo does report, you know, to the board and to the board chair. So the the power actually lies on the on the other uh side that the question there that they’re all they’re all kinds of consultants who can come and help, you know mediate these things. But when you get to that level, it’s already broken in a distaste away and the hardest problem is to try and avoided getting in it at the beginning and that has to do with how you pick the people, you know, in in, in the roles and that uh, sometimes we was in a very difficult situation from your skull were uh, the new board share uh, just almost immediately immediately started pushing things in that as he learned about the organization, uh, he came up with a strategy just wasn’t going to work for them and we had to reach in and in the most tender way, get him out. But then this is because uh, to get him out knowing he could also be a supporter of the organization. And so it was just about as complicated as you can say to get the dirty deed done, but we love you, we need to and can help you and the boys a lot of scrambling and a lot of stomach just turned around and came to a happy ending on on that part of it. But if the strategy that was would not have worked and would have actually driven the organization the bankruptcy, [00:39:08.72] spk_1:
you have to be very, very careful about circumspect about who you put in the board leadership, you know, if even even vice chair because the presumption is that the vice chair is gonna become the chair, assuming he or she is, you know, competent. So you have to be careful there and and other board leadership positions to its it’s very important and you you you’re right, I mean you can end up with uh it’s something that really is is detrimental to the organization and you’re stuck, you know, for two or three years. [00:39:30.42] spk_0:
Well. And you know, this is of course why it goes back to your very first question when you asked me, you know, why did I pick the governance committee to start? It’s because that’s the place where these issues get sorted out and need to be sought on the strategic way. Mhm. [00:39:31.32] spk_1:
Yeah. Put put time into thinking about these things and planning, planning, succession planning, I presume you have a succession plan for for the ceo you know, there should be succession planning on the board as well. You know, we talked about as people leave the board, but succession, [00:40:09.31] spk_0:
oh we know the slots that you’re needing to recruit for. I always need to have a couple of uh potential board chairs ahead of the Finance committee, one or two heads of the development committee and the job, it’s a delicate because when you who clued somebody onto the board, you often have a view as to what role they’re going to be best set. They may not, however, understand that and they may be so excited to be on the board that they want to sort of dive into some area or they have neither skill nor So it requires some discussion to sort of make it that make that work out. [00:40:58.01] spk_1:
Yeah, I was invited to be a board member once and I I turned it down because I didn’t think the organization had really thought through what benefit I could bring to the border. You know, why I’d be a good board member. Um, it was a smaller organization and I was supporting the work. But I I didn’t I just didn’t feel that they had done their due diligence around me and you know, why they wanted me. It was just, well, you’re a supporter, you know, you’re you’re in the area. So, you know, would you like to be a board member? And [00:41:00.97] spk_0:
I mean, [00:41:02.86] spk_1:
time, time constraints went into it also, but I didn’t, I didn’t feel and I continued supporting the organization, but I didn’t feel they had they were really taking board membership as seriously as they should, even as a small organization. [00:41:18.91] spk_0:
Yeah. You never know until it does man, you got mixed into all these things and it can turn so bad, so you’re just much better to not get started and getting into one that doesn’t fit [00:41:47.81] spk_1:
right. And then, you know, the embarrassment of you have made me having to leave before your term is over and then there’s bad feelings there, and I just Yeah, so think through, you know, be careful about, be thoughtful, be circumspect about who you invite on your board, [00:41:49.02] spk_0:
That’s [00:41:49.65] spk_1:
two or three years can be a long time with the difficult board member or a couple of board members. Two or three years can be a long time. [00:41:58.11] spk_0:
Yeah. And a lot of them maybe, uh, sits here so [00:42:09.60] spk_1:
well. Yeah, that’s a, that’s a long, that’s an awful long term. Six years. I mean I’m all for, you know, maybe extending for a second term, two or three years and then, and then the second term. But [00:43:13.60] spk_0:
I remember this battle that I lost some years ago when on sports share and that uh, this person had endowed a new athletic field for one of the universities in the area. And we needed a new athletic feeling a little bit around the edges. Often I said, uh, I need him on the board. The head of the company said one, this isn’t going to just fit this question, but I’ll make sure he sits beside me every meeting, I’ll keep him under control. Said one even got two more years left, he’ll be here afterwards and we didn’t do it. Somebody else got the gift. But I’m pretty sure it was the right one because that they, there is a culture that you have to deal with. And that’s that if you have overtly disrupted people that can, in fact, that’s just supposed to people who have good clear ideas, well reasoned that are different than yours. That’s a whole different topic. But uh, loosely cannons learning around can can cause all kinds of difficulty. [00:43:41.60] spk_1:
I think it sounds like you were wise to uh, to take the advice of the person and not bring that member honest, but that’s a very good point. You know, warren, you’re only gonna be here for two more years, they’ve got years after that and you know, and really, how well are you going to be able to constrain them? You know, if, if these, if the person becomes obstreperous in, in a, in a board meeting, are you gonna be willing to, you know, put them back in their place publicly in front of the rest of the board and maybe there’s staff in the room at the same time and that could have been ugly. So you were wise, I [00:43:52.60] spk_0:
didn’t feel wise this time, but the way you describe it, you’re absolutely correct. [00:44:20.59] spk_1:
Yeah, okay, we’ve said enough about how bad it can be. Um, so hopefully you have a good board chair ceo relationship, it’s, it’s supportive, its collegial like you said, you know, you, you couldn’t drive a thin nail between the two of you in public but you have, you have things out in private and, and, and there should be a lot of communication and I think a board chair and see, you know, they should be in touch. I don’t know what’s a week or so. [00:44:22.25] spk_0:
It takes a month, right? It takes a lot of time. Uh, the ones that I was working on recently, it just turned out that uh I was taking 40, 30 to 40 hours a week of the chair. And that means you got to make sure you have the time uh to put into that [00:45:14.59] spk_1:
too. Yeah, and the person that you’re asking has the time. Yes. All right, so I’ve been I’ve been looking forward to talking to you about planned giving. Yeah, because you have a chapter on plant giving and foundations, and I’ve been making a living a plan giving for A good number of years, 2400 years. Uh and your plan giving donor, it sounds like uh so and you’re you’re playing giving chapter, you spend most of your time, and it’s just, you know, it’s one chapter and you make the point that playing giving could be a series of books. And indeed, I have [00:45:21.00] spk_0:
a I [00:46:13.88] spk_1:
Have a 400 page treatise on planned giving, you know, on my shelf that I hardly ever have to refer to, but when I do it’s comforting to know it’s there. Um so, you know, your your chapter is an overview of you talk about iras and trust, different types of trusts and uh charitable gift annuities. Um um My focusing planned giving is now, so I I I I am a startup plan giving consultant. I I initiate the kickoff launched programs. Um So my focus is mainly on Will’s because I think that’s the place to start a plan giving program. Um but again you’re doing an overview, You’re not talking about starting a plan giving program. Your your chapter gives an overview of playing giving, but I’ve still been anxious to talk to you about it, especially, you know, because you’re playing giving donor to what what do you what do you see as the role of planned giving, how critical to you is [00:49:23.97] spk_0:
This to me? It’s uh that it’s as you pass by a certain point in your life and I don’t know whether it’s 60 or 65 uh that the actuarial tables begin to sort of uh well differently. And that uh somebody uh is looking at once to make a meaningful gift and they may be worried about, you know, the cash flow and something like a channel remainder trust or channel annuity is that the donor life, the fact they’re able to give a big number And they in fact, no, they’re going to live for another 40 years. And so it’s a big deal that you and the other side, you know, the end is much closer than the dome. So it’s a very happy kind of situation. Uh And what it really does is that people who are going to worry about end of life expenses are able to use this set vehicles and there are all kinds of tax incentives. I mean the one I personally caught my attention was the I. R. A. I’ve spent 30 years of my life you know building that up at every step along the way for retirement income. And that somebody had developed wants to sit down and said that you do understand you know what the tax implication is when you die of the I. R. A. And by the time you look at he said this is actually free money because you’re not taking very much away from your kids and you’re giving a lot more you know to the charity. And so those discussions can be just enormously beneficial and it’s uh but you bring it up with sort of the right point in a person’s Your life at Harvard. We never heard about a charitable annuity at a reunion before the 45th reunion. And by the time becoming the 60th that’s all you’re hearing about these vehicles. So that that that that there’s a time and a place for it. And it also of course comes back to our earlier discussion of the of the uh the annual fund giver. The trustee who becomes a trustee emeritus contributes to a capital campaign. And then plan giving comes right on. And as you get into the habit of giving through the other things you become more receptive, You know, nor philanthropic about these later on in your life kinds of up to us. And that what you need there is you need people who are really specialists like yourself because there are 1000 ways you can put the thing together. And I picked just about six or seven or what are the most common ones to, to make them the point. But those are the ones which, uh, your hospitals and museums and college so forth. You tend, you tend to use. [00:50:28.46] spk_1:
Yeah. And I see it as essential to the stewardship of donors. You know, you want that lifetime relationship. It’s, it’s stewardship over a long period. But in the, in that period there are, there’s cultivation and solicitation, you know, for the next gift. So as your stewarding over a lifetime, you’re cultivating and soliciting for different, different phases, you know, the annual, the, the major, the capital, the, and, and, uh, ultimately the planned gift. Um, so it’s, uh, so I’m interested in, you know, you as a, as, because I worked with a lot of plans giving donors. Um, I’ve worked with thousands through the years. Uh, but you know, I don’t get to have the conversation with them that I’m, you know, on the same level having with use. I mean, so I, I have to sort of suss things out a little bit. Uh, it sounds like for you, the tax advantages of, of the Ira, we’re appealing [00:50:29.99] spk_0:
Well, but [00:50:31.61] spk_1:
that tax advantage was moving for [00:50:33.94] spk_0:
you when I looked at, I said, this is, this is a very inefficient way to distribute the IRA and my kids, I can, [00:50:42.21] spk_1:
they’ll be taxed on. [00:51:25.56] spk_0:
Exactly. And so therefore this is money that I can get much more leverage. And by giving out to the outside so that I’ve been really hammering at people that for the last uh, five or six years. Then you come back to the notions of, uh, where you want to make a really significant, you know, impact. And this is where charitable remainder trust uh, can be really helpful so that you want to sort of make a half million dollars million dollar gift. But you have to worry about keeping the food on the table through your declining years. And there, Oh, that uh, that you put the money inside for that trust. And it takes care of the income to your life or your life and your spouse’s life. But there’s a big number that goes to the, uh, the museum of the university of what? Not at the end. And then of course it becomes particularly interesting is still Harvard uh, does it very nicely, is that you can designate up to 49% of it to some other organization. And [00:51:57.59] spk_1:
right, well, Harvard, Harvard is an outlier there because they have the Harvard Management [00:52:00.88] spk_0:
corporation. But what that does [00:52:11.85] spk_1:
just, that was just for your trust, most, most nonprofits can’t do that. And, you know, the trusteeship ends up being with the, with a Fidelity or Schwab or, you know, some, some financial institution. [00:52:16.41] spk_0:
But what it does is it, uh, in that case it allows organizations that don’t have very sophisticated plan dealing. And you really worry about the investment advisors, they’re using uh you can sort of put that underneath the same, I’m broad and the fidelity to do the same thing. [00:53:01.85] spk_1:
Your larger point that one remainder trust can help multiple charities. And yeah, I know you make the point in the book that Harvard Management Corporation allows that. So as long as I guess, I guess as long as 51% goes to Harvard 9% can go to other charities. Uh, But if it’s an outside manager and some some financial institution manager acting as trustee, then uh oh there is unlimited ways you can divide the, but then the lots and lots of charities from one single trust [00:53:25.85] spk_0:
as somebody who makes a living designing these things. Of course, your greatest single friend of this is the U. S. Congress because the laws change. And just as soon as you have finally tuned strategy in one place, you’ll go off change and then you have to come back and you re think about it. So it’s it’s a it’s a it’s a continual ideally, once you getting along you can’t just do it right. And it’s done. [00:53:54.05] spk_1:
Yeah. But this the significant tax code changes only come like every 15, 20 years or so. Yeah. So you’re you’ll go through a couple in a career. Uh, But again and again, you know, my work is mostly at the at the formation of planned giving level. I mean I’ve I’ve done $25 million dollar lead trusts and I’ve done multiple remainder trusts and hundreds of gift annuities, maybe thousands. I don’t know hundreds at least. Um, but my work is mostly at the formation stage, getting folks getting nonprofits set up with [00:54:10.24] spk_0:
just how to do [00:54:35.44] spk_1:
it. Let’s start asking with because let’s start asking for bequests simple gifts by will. Let’s start there. That’s the foundation. Uh, I believe of of any planned giving program is, is just a simple gifts by will. Um, and then in years later, you know, you may graduate to the more sophisticated gifts depending on the size of your organization. You might not, you might just, you might just be content with doing requests indefinitely and you’ll capture most of the plane gifts anyway because that they’re always the [00:55:03.44] spk_0:
the most common comment is powerful. The will is, is the first place. And then of course, uh, way way back when that I can that I remember somebody, uh, one of, one of my ancestors uh, basically uh, was going to give a gift of, Of a, of a certain percentage of first stage and the other as you know, I don’t want to do it that way. You want to make sure that uh actually gets a specific money. And so instead of the percentage putting what you thought was a huge number, which was actually 1/10 of what we had it gone the other way. So you have to have all sorts of funny kind of twisted thinking that you have to sort of unravel that process. [00:55:59.74] spk_1:
You, you flush that story out in the book. You tell that one in a little more detail in the book. So folks got to get the book. Um, warren, let’s, let’s leave folks with just, You know, you’ve got these 40 years of experience, multiple, multiple board memberships, board chairmanships. You’re a donor in your own right through times, decades and decades. Leave folks with some, some fundraising wisdom, please. [00:58:02.02] spk_0:
I think that uh, philanthropy is fundamentally a very satisfying activity that basically you’re helping to move social causes along along that I next, of course, is the whole power of the nonprofit sector is that I have there there’s almost a spiritual aspect uh, built to it. I, I enjoyed my corporate boards. We make changes things that nature new parts or what, but there’s something different. There’s something different in the nonprofit and when you’re trying to sort of move society along in some ways that you think are, are important and uh, that what you have to learn is that all you have to educate people on the opportunities. Uh, that the book was originally with basically the nutritious e right after a lot of them are asked to be trying to be, the first thing they say is do you have to ask people for money because I’m not good at it. And the answer is yes. You are going to have to ask for it and we can train you how to ask for it. And it starts by, you’re basically making a major commitment because that gives you the passion and so forth to move the cause forward. But it’s uh, it’s when the four organizations I’m involved with now, he’s one of them are ones that I actually believe in the, in the mission in a deep internalized, you know, real kind of of way. And if I didn’t, I’d have, I’d have gotten involved in other things. Just mean, you can’t pick up new choices, a lot of ways that some of the smaller things I do, uh, they’re very interesting, uh, the kinds of ones that, uh, core values, but it’s, it’s an, it’s an opportunity, you know, to, to move the world forward. And that’s that’s that’s that, that that’s what why people give their time in the, in the treasure. [00:58:10.32] spk_1:
Thank you so much. Warren fre Mcfarland, he’s a Professor emeritus at Harvard Business School. The book is effective fundraising, the trustees role and beyond. Published by Wiley Warren, thank you very much for sharing. [00:58:22.23] spk_0:
It’s great with just terrific. Thank you so [00:58:42.82] spk_1:
much. My pleasure if you missed any part of this week’s show, I Beseech you find it at tony-martignetti dot com were sponsored by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot c o. Creative producer is [00:58:43.78] spk_2:
Clan Meyerhoff [00:58:44.70] spk_1:
shows. Social media is by Susan Chavez. Mark Silverman is our Web guy [00:58:52.92] spk_2:
and this music is by scott stein. Yeah, thank you for that information, scotty you with me next week for nonprofit radio Big non profit ideas for the other 95% [00:59:12.72] spk_1:
Go out and be great. Mhm. Mhm.
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Hello [00:00:09.59] spk_1:
and welcome to [00:00:10.46] spk_2:
tony-martignetti non profit [00:01:46.64] spk_1:
Radio big non profit ideas for the other 95%. I’m your aptly named host of your favorite abdominal podcast. Oh, I’m glad you’re with me. I’d be hit with like the Asus vulgaris if you drive me out with the idea that you missed this week’s show effective fundraising. That’s Warren Mcfarland’s new book. It’s written for potential board members, but it’s a valuable study for those on the ground doing the work. tony state too planned giving in the pandemic era were sponsored by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot C. O. It’s my pleasure to welcome Warren McFarlane to the show. F Warren Mcfarland is the Albert H. Gordon? Professor of Business Administration Emeritus at Harvard Business School. So F Warren McFarlane is the guy I’m talking to. Albert H. Gordon is the guy who endowed professorship He fr McFarland has spent the past 40 years serving on social enterprise boards, helping organizations find the right leaders advanced their missions and raise the necessary supporting funds. I don’t know anything more about Albert H. Gordon. F Warren Mcfarland is a retired esteemed professor. You don’t need a website. You don’t need twitter Warren, welcome to the occasionally crass [00:01:48.87] spk_0:
non profit radio it’s directly with you this morning. [00:01:54.74] spk_1:
What’s a pleasure? Thank you for joining us. Congratulations on the book. [00:01:56.44] spk_0:
Thank you very much it’s been uh [00:02:36.24] spk_1:
and you’ve written it for trustees are really potential trustees, but I think there are a lot of good lessons in here for for folks who are doing fundraising. So that’s why, you know, because our audience isn’t so much potential trustees, but it is fundraising on the ground in small and midsize nonprofits. So very apt subject. And I was glad to hear about your book. You Pretty much open with a chapter chapter #2 on governance governance. Why do you, why do you put governance ahead of getting into the fundraising topics in the [00:02:57.74] spk_0:
book? I think because governance sets the context for fundraising. The governor’s committee on the board, I think is probably the most important of the committees and they are the people responsible for identifying the people that will serve on the board. That will be able to help, uh, fundraising in one way or another, either personally or helping to make connections, general context and, and, and so forth. So that I really put it up because the three major roles of a nonprofit board, our number one approving the mission and the strategy of their uh, number two, hiring retaining and supporting the Ceo and certainly basically helping to secure the funds. And that’s a hard, difficult kind of things. My friends who head up nonprofits repeatedly say it’s 50% of their time that is spent on that. And it’s just hard, difficult kind of work. And that’s why I really, you wrote the book to help focus new board members attention on how vital their role was in helping to set the context for an organization to succeed. [00:04:00.94] spk_1:
Yeah, fundraising. So let’s give a shout out to your previous book, which dealt with those three topics, but this book fleshes out the fundraising that the third of Exactly yes. Your tell folks what your your first book was that had more focused on the first two of those [00:04:06.74] spk_0:
the [00:04:07.63] spk_1:
roles of the board. [00:04:26.44] spk_0:
The first, my first book was really aimed on governance of nonprofits, what a board member needs to know. And it really looked in a very broad kind of way. You’re focusing on mission structure, uh budgeting, planning and so forth. And that fundraising was one of the pieces in the book, but it was such an important piece. And I’ve been spending so much time working on it that I really felt there was need for another book to kind of taken and blow apart. Was one chapter in the other book into the, into this book. [00:04:50.04] spk_1:
Yeah, because we know fundraising is at least 50% of an effective ceos time spent. And you make that point in the book a couple of times, but give a shout out what’s the exact title of the previous book? [00:04:56.56] spk_0:
Uh Corporate Information Systems Management, I’m sorry? [00:05:00.07] spk_1:
No, no, that that can’t be a different book for a different, [00:05:11.64] spk_0:
I have to have to go back and think of something, but it was basically joining a nonprofit board. What you need to know. [00:05:26.84] spk_1:
Okay, so is that it joining? Okay, because we’re talking about effective fundraising, the trustees role and beyond. Uh, and, uh, okay. So the previous one. Okay, joining a nonprofit board. What you need to know? Exactly. Right. Well, I don’t know why I doubted the author of the book. Just you maybe a little nervous when you talk about corporate information systems. I don’t know. That’s a [00:05:35.79] spk_0:
different, wasn’t really part of my [00:05:52.64] spk_1:
life. It’s a different, it’s a different book. The man’s prolific. You know, he gets, he’s written so many books. He gets the book titles confused. That’s all right. All right. Um, I’m not sure that many of our listeners, again, small and mid sized shops have a governance committee specifically. What’s, what’s the role of that committee? They may be doing governance maybe in their executive committee. Perhaps it doesn’t get smaller, smaller and midsize or what’s the role of the governance [00:06:52.24] spk_0:
committee? It’s basically, it’s a nominating committee. Its role is to attract, uh, the right kinds of trustees to the organization to help talk them into doing it, to help get them, uh, slotted into the right kind of role. Worry about getting the right people and then helping them as when they finished their term to be involved in other ways because one of the critical things. And so I view that, uh, for for profit boys are very different. I’ve served in a number of them. They’re very exciting. And when you’re over the job is over. You’re gone for a nonprofit board. This is meant to be a lifelong relationship and one of the organization work. That’s right now why we’ve Now developed a committee of some, uh, 35 former board members. We have them sitting on various committees and so forth. And with that, they have stayed involved with the organization. And with it comes a philanthropy. They’re building willingness to keep people you involved. So is this an entirely different kind of concept? And it means that you have to that a nonprofit board is often less efficient because you have to deal with people’s idiosyncrasies in a way that you don’t in the for profit world because I’m not actually going to take a major donor who’s a little bit careless and sort of, you’ll cut them off too sharply. [00:07:39.64] spk_1:
Yeah. You make a good point about the trusteeship and the end of the trusteeship still being a, uh, warren, are you able to silence those? Um, that sounds like an email notification you’re getting. Are you able to, [00:07:51.97] spk_0:
I’m sorry. [00:08:25.04] spk_1:
Okay, no problem. Thank you. Um, the end of the trusteeship is just a continuation in the spectrum of the, the lifetime relationship with the nonprofit. I, I think a lot of non profit to make a mistake there and they figure, okay, the person served three years, six years, Hopefully not more than six. That’s another subject. But, you know, they’ve served their time. And, and now they just, you know, we hope they’ll continue to give. But that’s the end of sort of the, uh, it’s the end of the volunteer volunteering of the relationship. And I think that’s a mistake. Your, your former board members. You know, there may be an emeritus board or some kind of an advisory board or, you know, some other way to not lose that expertise that they gained while they were trustees. [00:09:18.14] spk_0:
Yeah, that’s, uh, that’s exactly the key point that I recall her often, a board of advisors or a corporation or two things that people, you know, calling for. And that was it. One of the jobs economic committee is to help figure out what the new, as somebody comes near the end of their term, how they will be able to be involved and get them involved in in the right kind of way now. And that basically tremendously increases your footprint. You must have term on that because you need to continually bring new people in while you’re bringing them and then in why taking care of the older people is, is, uh, can be, it’s, you’ve got a lot of value ideas and also philanthropy wise. [00:09:35.34] spk_1:
Yeah, yeah. Think through that, that post board member post trusteeship relationship, [00:09:57.74] spk_0:
I’m involved in four board, I’m involved in for nonprofit boys. Now, the links to them go back over almost 40 years and it’s evolved from one setting to another. And the power, you know, grows. And so that there was an annual giving then there was, uh, capital campaign giving. And at my stage in life now, why planned giving? It turns out to be a particularly important thing. [00:10:25.04] spk_1:
Sure. Yeah. You say the fundraiser is an educator of donors. That’s a, that’s a pretty, uh, basic lesson. But I want you to flush it out for folks because sometimes basic lessons are, you know, they’re foundational for a reason they’re worth revisiting and thinking about why, why do you say fundraisers are educators of donors? [00:11:50.34] spk_0:
It’s really helping somebody to understand how they can go about, um, contributing in ways they haven’t thought, I mean, they, that I’m working with somebody right now and they’re that some tragedy in their family. And we’ve been able to sort of help them think through how this new facility they’re building, is going to help the organization and help their grief and fill their needs. So that, uh, it’s, uh, it’s very important that when I go out and ask people from, uh, you know, for money, I’m not asking them for money. I’m asking for them to be able to contribute contribute to society in a way bigger than they can on their own. And it’s, it’s really opening up an opportunity for the person opportunity they often haven’t thought about in their, in their own ways. And that you’re one of the things that died. And I talked about this for trustees is that the first thing that I do is in fact, the trustee is you’ve got to believe in the cause and have made your own contribution because when it comes right down to crunch time and I’m looking somebody in the eye and they say warrant, what have you done first? You know, this is my number one or two financing and this is and here’s why I’ve done it. That there’s a credibility that that comes out of it. And the reality is that many donors, their lives are busy and they haven’t thought through the array of alternatives they can contribute to and how they can go about extending their leverage. [00:12:12.34] spk_1:
So the fundraisers job is to educate, educate them and educate about the work that’s being done also what those exactly those programs are doing. Um I I presume you’re a believer in 100% participation, fundraising participation on the board. [00:12:33.74] spk_0:
Absolutely. I mean on the one hand and say, and people give in relation of capacity, I was the chairman of the board of the hospital. I’m sorry. You [00:12:39.30] spk_1:
cut out a little bit there people [00:12:40.35] spk_0:
give chairman. I was a chairman of a border. [00:12:42.79] spk_1:
Wait 11 further step back. People giving what level, What did you say? [00:13:07.34] spk_0:
I say people, Uh, it’s not the level that you give your question. It was your your question was do I believe in 100%. I do, but I want to say at the hospital board share. I valued the $25 I got from the homeless mother in East Cambridge As much as I did. The 200,000 from the main present because she was the eyes and ears of the community. She gave enormous value and her commitment was to the institution. So that’s why I believe in the 100%. [00:13:30.14] spk_1:
Right? And, and of course for someone without a home, $25 as a stretch gift. So, yes. All right. And so you you would you go along the philosophy that there’s not a minimum giving level for for for every board member, every board member gives something that’s a stretch for their capacity, given their capacity. Is that is that how you would define it? [00:13:44.54] spk_0:
Or? The answer is yes. But uh, yes. Yes. But [00:13:50.98] spk_1:
that’s fair. Yes. [00:13:51.89] spk_0:
Yes. It is on the real high end gifts. I might be willing to be the number of four philanthropy. I have two or three situations I’ve been in where, you know, somebody has given me a sort of a go away uh, token gift to them which has actually helped the enterprise meets goals. They didn’t even know they could have. So, I mean, it’s one of the things that we find in uh, in 2021 is that the shape of the giving pyramid has really become much steeper and taller. And so therefore the people at the top of the uh, the Jeff Bezos, his wife Mackenzie and so forth. I mean they uh, a small gift for her is a transforming gift, you know, for the receiving your organization. So that’s, that’s kind of the exception that I was referring to. [00:15:04.24] spk_1:
And then after someone has given you, you talk about stewardship as you know, the engagement of past donors and trustees. And you say, stewardship is not an overhead item, but an offensive weapon. So let’s talk about stewardship. What, what, why? Why again, basic lessons. But, you know, I want people to get your perspective, ownership is a stewardship is so damn important, [00:16:29.24] spk_0:
um, that you give a gift, um, for, uh, let’s say for an endowed chair that you maybe do that if you’re in your fifties or sixties, that when they come back and tell you how that chair is performing, it’s an opportunity for them to engage your thinking on the next level and the next level that, uh, one of them is going through a very different situation hospital where they didn’t report how the gifts were doing. You know, for people they gave, and they were wondering why people were dropping off the whole notion of it’s a lifelong engagement. And when you come in to tell somebody how their, uh, previous investment organizations doing, there’s a lot of interest on that part of the person hearing, how did their money do, But you’re also there in the opportunity to talk about other kinds of things and opportunities and move the discussion forward. And it may have been that an annual fund gift around the class reunion that may in due course lead no to a capital campaign. You’ll give, you know, somewhat further on down the road and it may be a plan gift even, you know, you know further down the road. And of course the art of the question is when you’re managing these lifelong relationships, you have to be careful not to move too much clothes quickly because if you in fact uh, get the short term gift, you may also be turning off the long term relationship, which can be more important. That’s that’s why this is such an art to this, this fundraising. [00:17:19.84] spk_1:
Yeah. And and there’s a whole variety of stewardship methods, you’re focusing on reporting on the impact. But you know, if, if the first few gifts are, you know, in the 150 to $500 range, No, that’s, it’s hard to place impact, put impact upon that. But how, how would you steward those three and low four figure gifts? Uh [00:18:15.94] spk_0:
It’s actually your point is that one of the first things when somebody graduates from college is we have all kinds of incentives to just get in the habit of giving $50 for $100 you know, for each of the 1st 10 years and you have a 10 year giving club that has given 10 years in a row, all 10 years enrolled for a, somebody who’d gone for 22 to 32 doesn’t add up to a lot. But the habit of delivering the habit of giving the engagement and so forth. That’s what’s really laying the seeds for much deeper support of some of them. You’re further down the road. And [00:18:59.44] spk_1:
that makes me think of another stewardship method. You know, the recognition society, I think a lot of folks don’t think about having a recognition society based on longevity of giving. So you know, of course you’re using the, you know, 10 years, someone graduates from college if you can get them in a habit of giving for 10 years, there’s a very good chance unless you blow it That, you know, they’ll be giving for the next 40 and 50 years in increasing increments and in different ways and as as you’ve talked about. But that that method of recognizing giving for longevity, those folks who have been given to you for 25, 30 years and there’s longstanding organizations that have donors that do go back that far And maybe, you know, maybe maybe out of 30 years, the person missed two years as you give them a break or something, you know, but what you have, I mean, I longevity, not just the dollar amount each year [00:20:08.64] spk_0:
as you’re talking about a fearful reports from right to my mind where the little asterisks, beside the people who’ve given for each of the last 10 years and double asterisks for the last one and you actually look at it and that of course is, you know, one of the things that’s important is that development people want to a point that putting out development reports and give them reports and so Fort is very expensive and you really should do this on the web and on screen. The fact of the matter is when I’m at my most philosophic, I’m flipping through report and I’m saying what my classmates or associates did on, it’s an organization my Children involved, I may flick back down to another part of saying and it just turned out to be false economies and a lot of the people that have undone the paper stuff and brought online have had to back off the other way because discussions and ruminations which were important were taking place. [00:20:14.10] spk_1:
Yeah. You, you, you have some uh, anecdotes about that in, in the book which you know, we can, we can go, we can’t dive into all the stories. You just got to get the book. You just got to buy effective fundraising. So [00:20:50.94] spk_0:
just start, uh, it starts from the very beginning, I think for example, uh, as I entered Harvard College as a freshman And my second day there, I’m sitting with 1100 people in the room and somebody is talking right and left and those are the people that aren’t there because you’re there and you’re feeling pretty good. And the next comment he made blew my mind, he said, and every last one of you was on financial aid. Uh, my father did not communicate me, talked a lot about the expense and he said, you’re here because of the philanthropy and generosity of the generations that came before. But at your 25th reunion, you will have an opportunity, will pay that generosity and the numbers went something like that. That thing just slow across the room. And 1100 mines. A lot of it’s stuck there. And, and the 20th reunion, there was a $200,000 gift. And at the 25th, there was an 8.5 million and the 35th. It was a 25. And that the habit, you lay the idea down very early [00:22:40.24] spk_1:
On the very first day, they say 25th, he’s already got you giving to the 25th reunion. That’s right. Right. Right. All right now. seven. It doesn’t have to be a college. There’s there’s a very good lesson there. My synesthesia is kicking in. I’m getting goose bumps. Thank you. They listen talking about this. Uh, yeah, there’s a very good, you know, you get people in early and you and you and you cultivate those relationships. You cultivate that, that relationship long term from the, from the outset, You know, so, so for your organization’s, you know, take the lesson there. You may not, you may not be a school, you know, the first day of college, but you can be cultivating from the very early stages. Absolutely, a long term relationship. All right? Yeah, stewardship critical again, warren calls it an offensive weapon. Um, let’s talk about the head of the development Committee. This is something that I’m sure listeners do have. Even if, you know, even if it’s a small board, there’s at least a development committee of, you know, two, maybe three folks. But you spend time on the, on the, you know, in the, in the parties to the, to the board, talking about the head of the Development Committee and some skills that you like to see there. What what are you looking for in, in that position? [00:26:09.54] spk_0:
If somebody who’s got to be able to mobilize other trustees to come and join in the giving operation, the ability to reach out, uh, into the rest of the board, make them understand this is part of their job. They had somebody who, whatever their going out and talking about the organization. The organization is in their mind maybe to me don’t, but uh, Is a, it’s a job that’s 24 hours per day, seven days a week, and even more so for the development person. But uh, I just remember a situation that, uh, I was heading up the capital campaign for a religious organization, came out in the Boston Common in early january, you know, the temperature was about two degrees, the wind was blowing. It was miserable. I had 300 yards to go and I ran into one of my former students, uh going on, he stopped and said, what are you doing? I said, I’m going off, you know, to to join this. Uh this just felt me, this religious organization said, oh, you know, I’m a member of that religion, this is somebody who has, his wealth was considerable. And I just kind of stopped and said, well, you’ll tell me more. The temperature suddenly went up to about 60 degrees, the wind dropped down and I said, I was a senior warden of my church down in New Jersey. Yes, I said, but you’re not there anymore, So which church do you belong somewhere? I’m now up with the one in Wellesley. And I said, that’s terrific. And we disappeared out. I got to the office and sat down and he said, listen, this is what it is all about. And that my former student was in his office, you know, three weeks later for lunch and over lunch, you know why? That the head of the terrorist organization uh expressed an interest to actually see this person perform in the classroom. And so I never want to see me teach. But he went and watched this summer student of mine no teach. And that led to another nice consistent pro bono consulting assignment. And uh and Result of the whole thing was system is about $500,000 gifts that took place in such a tasteful way, you never even know what happened, but that’s something you just do recognize the opportunity and you have to stop, you know, put the thing together. You got to be creative and the head of the Development Committee, I want them there. They need to breathe and live the organization. You know, 100% of the time, it means they’ve got to have a close working relationship with the Chief development on Mr. They have to have a close relationship with the Ceo to make sure that they’re always always in [00:30:30.54] spk_1:
line. Great, great wisdom. Yeah. And uh, you say you want the person to be persistent and fearless and you know, that all that, that all is uh, epitomized by this story you just told that’s outstanding. Thank you. It’s time for a break. Turn to communications. They’ll help you find your voice and they’ll get that voice heard in the right outlets like The Wall Street Journal, the new york Times, the Chronicle of philanthropy, Fast Company Market watch many others where they have the relationships to get you heard. So what does this mean? Get your voice uh, find your voice and then get it out there. Well, defining the voice. They’ll help you craft your message. I mean, you’ve got your key points, but you want to make them cogently concise coherent. Look at that. Cogent, concise, coherent. Yeah, that’s what you want to do. So that when you’re talking to the journalists at these incredibly good outlets, You get quoted. That’s what you want. You want the quotes. I mean you know saying that you said something and then they paraphrase it. Yeah that’s pretty good to look. It’s your name, it’s your organization of course. But the quotes that’s the gold standard. Turn to will help you craft your message is you know what the message are. They’ll work with you to make it. What did I say? Cogent write, cogent, concise, coherent so that you get the quotes in these excellent outlets. So help you find your voice, they help you get that voice heard turn to communications. You know this your story is their mission turn hyphen two dot C. O. It’s time for Tony’s take two. I’ve got a free timely webinar coming up for you planned giving in the pandemic era. It’s graciously hosted by J. M. T. Consulting. I’m grateful for that. Their gracious. I’m grateful. We’re doing this on september 30th. From 2 to 3 Eastern time. I’m going to talk about what planned giving is who your best prospects are. Where to start your program and how planned giving fits in our pandemic era and of course you got to have the all important Q. And A. That’s where the focus goes on what you’re thinking what what is on your mind. I can only channel so much of you. I need you to fill in the rest. So that’s the all important Q. And A of course plenty of time for that also. So you have to make a reservation, it’s free. But you got to reserve, you go to J. M. T like Juliet mike tango from the old Air force days. Military folks will appreciate that. Also private pilots, JMT consulting dot com then events and then expert speaker series. That’s the only category they have. I would have put me under something like middling speaker series or lackluster speaker series. But alas, they don’t have those categories there. Of course. The problem is not going to create a category just for me as well. Just stick with their default category of expert speaker series and squeeze me in there. So that’s um, that’s where, that’s where you go. JMT consulting dot com events, expert speaker series. It’s all on september 30th two to three Eastern. I hope you’ll be with me for planned giving in the pandemic era. That is Tony’s take two we’ve got boo koo but loads more time for effective fundraising with Professor Warren Macfarlane. Another another part of the part of the board is the board chair. The chair and the Ceo the chair Ceo relationship that that’s critical. I’ve I’ve seen very dysfunctional relationships where there was micromanagement and you know, too much in the details. But I’ve also seen very healthy relationships where it’s it’s it’s supportive and collegial between the board chair and the ceo talk about that relationship please. [00:33:47.34] spk_0:
It’s the most sensitive one. You know, in the, in the organization that the ceo is that it’s first of all, it’s peculiar to nonprofits. This is not known in the for profit world. And for that, the notion of an unpaid non executive chair of the board uh working with a paid seal. Uh the first problem is people have, coming from the private sector, have trouble understanding how that system works, that it means that the two have to be in public very much. It’s a Pataca. I can remember that, you know, one board that I chair, that the uh CEO and I would fight furiously but always 10 miles or more away from corporate headquarters. But when you’re there with the board and with the stamp, the hands around each other’s shoulders of the, like the jokes were going back and forth and you made sure you couldn’t put a slim nail you in between the two of us. I mean, that relationship is just an absolutely critical kind of one. Now, what’s also interesting courses, in some cases, why the chair maybe a very much of a development uh project, that there was a wonderful book that was just written by one of my former students said, hey Jim, who is a uh investment maker in in new york, he is chairman of the University of Russia’s Sir board of trustees. And his book describes, you know, how when he was asked to do that job, he said, I just can’t do it because I’m amazing. I need Rochester’s short of money. We need somebody to really raise the money and the president just kept working on. And finally my friends, these types of books, just what is the largest gift that’s ever been given To Roger? So it was back in 1926. George Eastman gave $26 million dollars and uh, he spent some more time and money and his family said Rochester did so much for me. We’re going to do a little bit more than that. Now that’s the chairman who, I mean, he gives with his treasure, he gives his time and his block and he’s a, he’s a remarkable person. He was an orphan basically from orphanages from the time he was age seven to age 16, and one in ROTC scholarship out of the orphanage, you know, into uh, into Rochester. But the whole notion behind that in terms of how our chairman can support is really, it’s, the chairman must be philanthropically oriented, must understand the development mission, must be able to uh, work around the strengths and weaknesses, you know, of the Ceo [00:33:55.34] spk_1:
uh, fill me in a little inside baseball on corporate boards. What what’s the role, what is the role of a board chair on a corporate board. [00:34:22.84] spk_0:
Um, the, in the, in the ideal world, the board share is a sports chair and Ceo and you have a president and chief operating officer boy. So the board share it, Uh, it’s basically, it’s, it’s the Ceo job. Now from time to time with emergence, You may have somebody left over from emergency you need to send with, so you may make them sort of a non executive chair of the board and give them a nice office about 10 miles away from corporate headquarters and the three years work while you work your way through your retirement, earn out and so forth. [00:35:16.74] spk_1:
Okay. So it often is the, it’s the chairman, Ceo chair chair and Ceo. Okay. All right. So going back to nonprofits, what’s your advice warrant on fixing the relationship? I mean, if I think CEOs would know if they have a dysfunctional relationship, whether it’s micromanagement or maybe the board chair is too hands off. Maybe he or she is not a strong leader of the board, not a consensus. What, what advice do you have for the C. E. O. S. Two improve the relationship with the [00:36:15.53] spk_0:
board chair? Well, there, there’s several things, you know, the first one is that The length of tenure of the board share, uh, is often just 2-3 years And if you want people to rotate through that. But the critical person, this is again, is the head of the governance committee that the head of the government’s committee is one of your wisest, most senior atrocities and their job is to make sure that that relationship is working. And if it’s not working to find a way to sort of you move the thing along, it’s a it’s just it’s a terribly difficult and awkward thing and of course it’s complicated because you know, people have tremendous egos, it’s alm except that uh the people amass the well father to do these jobs, they don’t suffer from an underdeveloped of self concept. And so how you deal with their he goes uh is very tricky, [00:36:29.43] spk_1:
right? But so what, you know, what what specifically I mean, do we have a heart to heart conversation with them and say look, you know, I think, you know, and I know, you know, this relationship is not ideal. Can we can we talk about it or you know, or is it just, I mean, I hate to leave folks just wait until the board chair’s term has ended and then, you know, we hope to do better in with their successor, [00:38:16.52] spk_0:
their to their to their their two or three different ways. The first one is uh the question is whether it’s the board chair problem or the C. E. O. I mean, this is of course, you know, one of the problems because in fact the paid Ceo does report, you know, to the board and to the board chair. So the the power actually lies on the on the other uh side that the question there that they’re all they’re all kinds of consultants who can come and help, you know mediate these things. But when you get to that level, it’s already broken in a distaste away and the hardest problem is to try and avoided getting in it at the beginning and that has to do with how you pick the people, you know, in in, in the roles and that uh, sometimes we was in a very difficult situation from your skull were uh, the new board share uh, just almost immediately immediately started pushing things in that as he learned about the organization, uh, he came up with a strategy just wasn’t going to work for them and we had to reach in and in the most tender way, get him out. But then this is because uh, to get him out knowing he could also be a supporter of the organization. And so it was just about as complicated as you can say to get the dirty deed done, but we love you, we need to and can help you and the boys a lot of scrambling and a lot of stomach just turned around and came to a happy ending on on that part of it. But if the strategy that was would not have worked and would have actually driven the organization the bankruptcy, [00:39:08.72] spk_1:
you have to be very, very careful about circumspect about who you put in the board leadership, you know, if even even vice chair because the presumption is that the vice chair is gonna become the chair, assuming he or she is, you know, competent. So you have to be careful there and and other board leadership positions to its it’s very important and you you you’re right, I mean you can end up with uh it’s something that really is is detrimental to the organization and you’re stuck, you know, for two or three years. [00:39:30.42] spk_0:
Well. And you know, this is of course why it goes back to your very first question when you asked me, you know, why did I pick the governance committee to start? It’s because that’s the place where these issues get sorted out and need to be sought on the strategic way. Mhm. [00:39:31.32] spk_1:
Yeah. Put put time into thinking about these things and planning, planning, succession planning, I presume you have a succession plan for for the ceo you know, there should be succession planning on the board as well. You know, we talked about as people leave the board, but succession, [00:40:09.31] spk_0:
oh we know the slots that you’re needing to recruit for. I always need to have a couple of uh potential board chairs ahead of the Finance committee, one or two heads of the development committee and the job, it’s a delicate because when you who clued somebody onto the board, you often have a view as to what role they’re going to be best set. They may not, however, understand that and they may be so excited to be on the board that they want to sort of dive into some area or they have neither skill nor So it requires some discussion to sort of make it that make that work out. [00:40:58.01] spk_1:
Yeah, I was invited to be a board member once and I I turned it down because I didn’t think the organization had really thought through what benefit I could bring to the border. You know, why I’d be a good board member. Um, it was a smaller organization and I was supporting the work. But I I didn’t I just didn’t feel that they had done their due diligence around me and you know, why they wanted me. It was just, well, you’re a supporter, you know, you’re you’re in the area. So, you know, would you like to be a board member? And [00:41:00.97] spk_0:
I mean, [00:41:02.86] spk_1:
time, time constraints went into it also, but I didn’t, I didn’t feel and I continued supporting the organization, but I didn’t feel they had they were really taking board membership as seriously as they should, even as a small organization. [00:41:18.91] spk_0:
Yeah. You never know until it does man, you got mixed into all these things and it can turn so bad, so you’re just much better to not get started and getting into one that doesn’t fit [00:41:47.81] spk_1:
right. And then, you know, the embarrassment of you have made me having to leave before your term is over and then there’s bad feelings there, and I just Yeah, so think through, you know, be careful about, be thoughtful, be circumspect about who you invite on your board, [00:41:49.02] spk_0:
That’s [00:41:49.65] spk_1:
two or three years can be a long time with the difficult board member or a couple of board members. Two or three years can be a long time. [00:41:58.11] spk_0:
Yeah. And a lot of them maybe, uh, sits here so [00:42:09.60] spk_1:
well. Yeah, that’s a, that’s a long, that’s an awful long term. Six years. I mean I’m all for, you know, maybe extending for a second term, two or three years and then, and then the second term. But [00:43:13.60] spk_0:
I remember this battle that I lost some years ago when on sports share and that uh, this person had endowed a new athletic field for one of the universities in the area. And we needed a new athletic feeling a little bit around the edges. Often I said, uh, I need him on the board. The head of the company said one, this isn’t going to just fit this question, but I’ll make sure he sits beside me every meeting, I’ll keep him under control. Said one even got two more years left, he’ll be here afterwards and we didn’t do it. Somebody else got the gift. But I’m pretty sure it was the right one because that they, there is a culture that you have to deal with. And that’s that if you have overtly disrupted people that can, in fact, that’s just supposed to people who have good clear ideas, well reasoned that are different than yours. That’s a whole different topic. But uh, loosely cannons learning around can can cause all kinds of difficulty. [00:43:41.60] spk_1:
I think it sounds like you were wise to uh, to take the advice of the person and not bring that member honest, but that’s a very good point. You know, warren, you’re only gonna be here for two more years, they’ve got years after that and you know, and really, how well are you going to be able to constrain them? You know, if, if these, if the person becomes obstreperous in, in a, in a board meeting, are you gonna be willing to, you know, put them back in their place publicly in front of the rest of the board and maybe there’s staff in the room at the same time and that could have been ugly. So you were wise, I [00:43:52.60] spk_0:
didn’t feel wise this time, but the way you describe it, you’re absolutely correct. [00:44:20.59] spk_1:
Yeah, okay, we’ve said enough about how bad it can be. Um, so hopefully you have a good board chair ceo relationship, it’s, it’s supportive, its collegial like you said, you know, you, you couldn’t drive a thin nail between the two of you in public but you have, you have things out in private and, and, and there should be a lot of communication and I think a board chair and see, you know, they should be in touch. I don’t know what’s a week or so. [00:44:22.25] spk_0:
It takes a month, right? It takes a lot of time. Uh, the ones that I was working on recently, it just turned out that uh I was taking 40, 30 to 40 hours a week of the chair. And that means you got to make sure you have the time uh to put into that [00:45:14.59] spk_1:
too. Yeah, and the person that you’re asking has the time. Yes. All right, so I’ve been I’ve been looking forward to talking to you about planned giving. Yeah, because you have a chapter on plant giving and foundations, and I’ve been making a living a plan giving for A good number of years, 2400 years. Uh and your plan giving donor, it sounds like uh so and you’re you’re playing giving chapter, you spend most of your time, and it’s just, you know, it’s one chapter and you make the point that playing giving could be a series of books. And indeed, I have [00:45:21.00] spk_0:
a I [00:46:13.88] spk_1:
Have a 400 page treatise on planned giving, you know, on my shelf that I hardly ever have to refer to, but when I do it’s comforting to know it’s there. Um so, you know, your your chapter is an overview of you talk about iras and trust, different types of trusts and uh charitable gift annuities. Um um My focusing planned giving is now, so I I I I am a startup plan giving consultant. I I initiate the kickoff launched programs. Um So my focus is mainly on Will’s because I think that’s the place to start a plan giving program. Um but again you’re doing an overview, You’re not talking about starting a plan giving program. Your your chapter gives an overview of playing giving, but I’ve still been anxious to talk to you about it, especially, you know, because you’re playing giving donor to what what do you what do you see as the role of planned giving, how critical to you is [00:49:23.97] spk_0:
This to me? It’s uh that it’s as you pass by a certain point in your life and I don’t know whether it’s 60 or 65 uh that the actuarial tables begin to sort of uh well differently. And that uh somebody uh is looking at once to make a meaningful gift and they may be worried about, you know, the cash flow and something like a channel remainder trust or channel annuity is that the donor life, the fact they’re able to give a big number And they in fact, no, they’re going to live for another 40 years. And so it’s a big deal that you and the other side, you know, the end is much closer than the dome. So it’s a very happy kind of situation. Uh And what it really does is that people who are going to worry about end of life expenses are able to use this set vehicles and there are all kinds of tax incentives. I mean the one I personally caught my attention was the I. R. A. I’ve spent 30 years of my life you know building that up at every step along the way for retirement income. And that somebody had developed wants to sit down and said that you do understand you know what the tax implication is when you die of the I. R. A. And by the time you look at he said this is actually free money because you’re not taking very much away from your kids and you’re giving a lot more you know to the charity. And so those discussions can be just enormously beneficial and it’s uh but you bring it up with sort of the right point in a person’s Your life at Harvard. We never heard about a charitable annuity at a reunion before the 45th reunion. And by the time becoming the 60th that’s all you’re hearing about these vehicles. So that that that that there’s a time and a place for it. And it also of course comes back to our earlier discussion of the of the uh the annual fund giver. The trustee who becomes a trustee emeritus contributes to a capital campaign. And then plan giving comes right on. And as you get into the habit of giving through the other things you become more receptive, You know, nor philanthropic about these later on in your life kinds of up to us. And that what you need there is you need people who are really specialists like yourself because there are 1000 ways you can put the thing together. And I picked just about six or seven or what are the most common ones to, to make them the point. But those are the ones which, uh, your hospitals and museums and college so forth. You tend, you tend to use. [00:50:28.46] spk_1:
Yeah. And I see it as essential to the stewardship of donors. You know, you want that lifetime relationship. It’s, it’s stewardship over a long period. But in the, in that period there are, there’s cultivation and solicitation, you know, for the next gift. So as your stewarding over a lifetime, you’re cultivating and soliciting for different, different phases, you know, the annual, the, the major, the capital, the, and, and, uh, ultimately the planned gift. Um, so it’s, uh, so I’m interested in, you know, you as a, as, because I worked with a lot of plans giving donors. Um, I’ve worked with thousands through the years. Uh, but you know, I don’t get to have the conversation with them that I’m, you know, on the same level having with use. I mean, so I, I have to sort of suss things out a little bit. Uh, it sounds like for you, the tax advantages of, of the Ira, we’re appealing [00:50:29.99] spk_0:
Well, but [00:50:31.61] spk_1:
that tax advantage was moving for [00:50:33.94] spk_0:
you when I looked at, I said, this is, this is a very inefficient way to distribute the IRA and my kids, I can, [00:50:42.21] spk_1:
they’ll be taxed on. [00:51:25.56] spk_0:
Exactly. And so therefore this is money that I can get much more leverage. And by giving out to the outside so that I’ve been really hammering at people that for the last uh, five or six years. Then you come back to the notions of, uh, where you want to make a really significant, you know, impact. And this is where charitable remainder trust uh, can be really helpful so that you want to sort of make a half million dollars million dollar gift. But you have to worry about keeping the food on the table through your declining years. And there, Oh, that uh, that you put the money inside for that trust. And it takes care of the income to your life or your life and your spouse’s life. But there’s a big number that goes to the, uh, the museum of the university of what? Not at the end. And then of course it becomes particularly interesting is still Harvard uh, does it very nicely, is that you can designate up to 49% of it to some other organization. And [00:51:57.59] spk_1:
right, well, Harvard, Harvard is an outlier there because they have the Harvard Management [00:52:00.88] spk_0:
corporation. But what that does [00:52:11.85] spk_1:
just, that was just for your trust, most, most nonprofits can’t do that. And, you know, the trusteeship ends up being with the, with a Fidelity or Schwab or, you know, some, some financial institution. [00:52:16.41] spk_0:
But what it does is it, uh, in that case it allows organizations that don’t have very sophisticated plan dealing. And you really worry about the investment advisors, they’re using uh you can sort of put that underneath the same, I’m broad and the fidelity to do the same thing. [00:53:01.85] spk_1:
Your larger point that one remainder trust can help multiple charities. And yeah, I know you make the point in the book that Harvard Management Corporation allows that. So as long as I guess, I guess as long as 51% goes to Harvard 9% can go to other charities. Uh, But if it’s an outside manager and some some financial institution manager acting as trustee, then uh oh there is unlimited ways you can divide the, but then the lots and lots of charities from one single trust [00:53:25.85] spk_0:
as somebody who makes a living designing these things. Of course, your greatest single friend of this is the U. S. Congress because the laws change. And just as soon as you have finally tuned strategy in one place, you’ll go off change and then you have to come back and you re think about it. So it’s it’s a it’s a it’s a continual ideally, once you getting along you can’t just do it right. And it’s done. [00:53:54.05] spk_1:
Yeah. But this the significant tax code changes only come like every 15, 20 years or so. Yeah. So you’re you’ll go through a couple in a career. Uh, But again and again, you know, my work is mostly at the at the formation of planned giving level. I mean I’ve I’ve done $25 million dollar lead trusts and I’ve done multiple remainder trusts and hundreds of gift annuities, maybe thousands. I don’t know hundreds at least. Um, but my work is mostly at the formation stage, getting folks getting nonprofits set up with [00:54:10.24] spk_0:
just how to do [00:54:35.44] spk_1:
it. Let’s start asking with because let’s start asking for bequests simple gifts by will. Let’s start there. That’s the foundation. Uh, I believe of of any planned giving program is, is just a simple gifts by will. Um, and then in years later, you know, you may graduate to the more sophisticated gifts depending on the size of your organization. You might not, you might just, you might just be content with doing requests indefinitely and you’ll capture most of the plane gifts anyway because that they’re always the [00:55:03.44] spk_0:
the most common comment is powerful. The will is, is the first place. And then of course, uh, way way back when that I can that I remember somebody, uh, one of, one of my ancestors uh, basically uh, was going to give a gift of, Of a, of a certain percentage of first stage and the other as you know, I don’t want to do it that way. You want to make sure that uh actually gets a specific money. And so instead of the percentage putting what you thought was a huge number, which was actually 1/10 of what we had it gone the other way. So you have to have all sorts of funny kind of twisted thinking that you have to sort of unravel that process. [00:55:59.74] spk_1:
You, you flush that story out in the book. You tell that one in a little more detail in the book. So folks got to get the book. Um, warren, let’s, let’s leave folks with just, You know, you’ve got these 40 years of experience, multiple, multiple board memberships, board chairmanships. You’re a donor in your own right through times, decades and decades. Leave folks with some, some fundraising wisdom, please. [00:58:02.02] spk_0:
I think that uh, philanthropy is fundamentally a very satisfying activity that basically you’re helping to move social causes along along that I next, of course, is the whole power of the nonprofit sector is that I have there there’s almost a spiritual aspect uh, built to it. I, I enjoyed my corporate boards. We make changes things that nature new parts or what, but there’s something different. There’s something different in the nonprofit and when you’re trying to sort of move society along in some ways that you think are, are important and uh, that what you have to learn is that all you have to educate people on the opportunities. Uh, that the book was originally with basically the nutritious e right after a lot of them are asked to be trying to be, the first thing they say is do you have to ask people for money because I’m not good at it. And the answer is yes. You are going to have to ask for it and we can train you how to ask for it. And it starts by, you’re basically making a major commitment because that gives you the passion and so forth to move the cause forward. But it’s uh, it’s when the four organizations I’m involved with now, he’s one of them are ones that I actually believe in the, in the mission in a deep internalized, you know, real kind of of way. And if I didn’t, I’d have, I’d have gotten involved in other things. Just mean, you can’t pick up new choices, a lot of ways that some of the smaller things I do, uh, they’re very interesting, uh, the kinds of ones that, uh, core values, but it’s, it’s an, it’s an opportunity, you know, to, to move the world forward. And that’s that’s that’s that, that that’s what why people give their time in the, in the treasure. [00:58:10.32] spk_1:
Thank you so much. Warren fre Mcfarland, he’s a Professor emeritus at Harvard Business School. The book is effective fundraising, the trustees role and beyond. Published by Wiley Warren, thank you very much for sharing. [00:58:22.23] spk_0:
It’s great with just terrific. Thank you so [00:58:42.82] spk_1:
much. My pleasure if you missed any part of this week’s show, I Beseech you find it at tony-martignetti dot com were sponsored by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot c o. Creative producer is [00:58:43.78] spk_2:
Clan Meyerhoff [00:58:44.70] spk_1:
shows. Social media is by Susan Chavez. Mark Silverman is our Web guy [00:58:52.92] spk_2:
and this music is by scott stein. Yeah, thank you for that information, scotty you with me next week for nonprofit radio Big non profit ideas for the other 95% [00:59:12.72] spk_1:
Go out and be great. Mhm. Mhm.
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