FULL TRANSCRIPT OF THE PODCAST

Bob Swaney: I'm talking with RSC Associates CEO Catherine Heitz New, and we're discussing a few of the challenges and opportunities we see emerging in the field of arts fundraising. Let's spend a minute or two on just how you coach clients on their approach to building and maintaining quality relationships.

Catherine Heitz New: Yeah. So I think this is a moment where some practical examples are really helpful. And we certainly have many of those, but I'll share a recent one. So we were working with a client. We conducted a feasibility study for them to explore the possibility of an endowment campaign. And we interviewed during that process what I'll call the community's big philanthropic fish.

And every single person who engaged with us through the study process knew that he had the capacity. But when we interviewed him, though he loved the organization and was very endeared to it, he communicated that he felt he'd really already done his part. He said he was likely not the major or lead donor to this effort that many thought he would be.

And through a process of about a year of coaching them in asking engaging questions, really listening to his responses, and responding thoughtfully, he was sold. He made a $5 million gift to the campaign, and he challenged the community to match him in his support. This goes back to that simple process of asking, listening, and responding. That is cultivation. That is stewardship, and we do it very naturally in our day to day lives. We do it naturally in our conversations. Think about how you start up a conversation with any friend or family member. It's asking, listening, and responding. And so do that authentically with your donors. Do it consistently with your donors and you are going to see results.

Bob Swaney: The beautiful thing about arts and cultural organizations is there are very few things that Development has to create out of whole cloth. There's so much preexisting. Performances, exhibits, open rehearsals. There's so much to piggyback on that other nonprofit verticals don’t have. And so my advice would be take advantage of what already exists.

We talked earlier about doing three or four things, doing them exceptionally well, and doing them over and over again, getting better and better at them. The last thing I'll say on this is. Have fun.

And I know that sounds like such a demand, but have fun. You have donors and prospects who love you, who love your organization, and maybe they range from being curious to being passionate about your organization. Having fun is something that arts and cultural organizations can do uniquely and without a lot of effort, especially in a way that other nonprofits can't always do.

Catherine Heitz New: It's so true. Authenticity matters in relationship building. Most of us in this field came to it because of a deep passion for the arts. Think about your own story, your own passions, and let that drive your relationship building. Share your story, ask them about theirs. Really get to know your people through this process. And won’t just help you be successful, but it's really fulfilling.

Bob Swaney: We're very fortunate to work in creative environments. We get to see artists at work. We get to see the products and byproducts of their work. We get to work with management staff. We get to work with board members who are attracted to the organization. So don't forget that ingredient in fundraising. It's often forgotten or pushed way back because of the daily demands. Do not forget about the joy that your organization brings to people and what it means to their life. The arts are irreplaceable. They're special in an unreplicable way.

But the other part is we can't close our ears and our eyes to the need for innovation and adaptability. The fundraising landscape has changed dramatically, and we've seen a shift in the last 10 years. Earned revenue and all forms of contributed revenue used to each account for 50% of organizational budgets, but that has shifted to now more like 70% / 30% in favor of fundraising.

The demand for contributed revenue has grown exponentially and continues to grow on a percentage basis incrementally, at least post-COVID. And so just thinking about how rapidly things have changed. How would you recommend that arts organizations start to be nimble in an environment like this without giving up on fundamentals?

Catherine Heitz New: That's such a great question. And I'm glad you used the word nimble because as you were asking it, I was thinking about the fact that adaptability isn't just about being nimble.

You can change tactics frequently and if you do so thoughtlessly, you'll see terrible returns. I will never forget the moment where I was having a conversation with a marketing director and I asked him about why they're not doing paid advertising at all anymore and what drove that decision. He simply said “for one concert, we forgot to place all the ads. We just simply forgot. But it didn't seem to really change how many people came to the concert, so we decided we wouldn't do that anymore.” They didn't have data but had one anecdote. One moment in time.

Brief experiences drove decision-making, and you wouldn't be surprised to know that several years after they had stopped doing that paid advertising they were struggling with audience retention and audience growth.

I bring that example up to say adaptability is important, but you have to take in all the information, right? Look at the data, look at the results, look at the environmental factors. Analyze those and then adapt to take action. You have to give the fundamentals and an approach the time to work, and you have to be intentional about taking the step back and analyzing the results.

Bob Swaney: You and I are going to have another one of these podcast episodes one day about all the things like that. At least a few of the things that drive us crazy are either exceptions or rules, and some of the things that we hear are mind blowing in terms of decision making and process.

In the meantime, you mentioned data. How do you coach clients to use data and analytics to inform their fundraising decisions and strategies? Even though you can collect as much data as you can imagine, what are two or three things you really need, and how do you apply them?

Catherine Heitz New: First and foremost we have to face that we live in a data-driven world, so you have to prioritize data. And the first thing to do is to ensure that you have good data hygiene practices.

If the data is not there, you simply can't analyze it. So your first step is to review how you input and update data, along with reviewing your processes.

Bob Swaney: I'll share a quick story. We're working with somebody now who has over 20 years of data.

But it's only at the very surface level. Just two chin hairs away from being the phone book kind of stuff. Transactionally there's nothing there to look at. There's nothing to compare. And so our starting work with them has got to be asking what do we have to work with? And that's when best practices come into place. What we're saying is, listen, “let's start where you are. Let's build a data structure. And in five years, you won't be saying what you're saying to us now.”

Let's deal with that because there's certain essential pieces of data to capture so that you can make good decisions moving forward.

Catherine Heitz New: That's right. When we talk about data hygiene, I find that there's often an inclination that we need to go back and fix past data. And there may be key metrics that you do need to address, but by and large, what it means is that you need to put good practices into place now so that five years from now, we have the robust data we need to make informed decisions, to work faster, to work more efficiently, and to make less mistakes.

Bob Swaney: I want to talk just a second about community engagement and this idea that arts and cultural organizations rely on community support.

And so the thinner we go on the donor pool, the harder it is to raise that support. Now, I'm not suggesting by any means that you have to get 30% of your community to give you money each year because as an arts organization, that's not realistic. But let's say it's 2% or 3%, which on a good day is pretty good for most organizations. Those people have to be attracted in the first place, they have to be cultivated, and then asked. Given how much cultural organizations have to rely on this community support, what are some of the most successful ways that you've seen an organization engage its local community in its fundraising efforts?

Catherine Heitz New: I'll give you a few thoughts in theory, and then I'll give you a practical example. In theory, I'll go back to one of our main mantras, which is authenticity matters.

Community work, community engagement, and then broadening your base of community support, you have to think about that work, not just in terms of for the community, but really by and with the community.

What do we mean by that? From a practical standpoint, ask yourself questions, like what uniquely defines our community? What is our community's set of challenges and sets of priorities?

Community work shouldn't just be viewed as access. It should be viewed as a tool and a way to use art to uplift and advance. And from a fundraising perspective, what's the result of that?

Simply put, I've never seen a client lose donors by meeting a community where it is.

Now I'll give a practical example of this. We had a client whose organization was historically very exclusive. We liked to describe it as one that had a very country club feel.

As with all organizations, they were seeing natural attrition – people move, people pass, people change their priorities and their focus areas. And so what they started to do to really break through that was to simply start by talking to people.

They asked those same questions that I just did. And identified venues and programming that uniquely spoke to their community. This wasn't a wholesale shift in their programming. This was experimenting with one, two, or three different types of formats, different types of venues, and different types of programming within a year to see what resonated. And what was fascinating about this is that there were donors who had been sitting on the sidelines that took notice, before this even really reached a critical mass of affecting their base of patrons. They saw a greater level of authenticity. A greater level of service to the community.

Within the first year of acting on that feedback from the community, that executive director had cultivated more new major donors than the organization had ever seen in its history.

There can be a real immediate impact from a value standpoint of doing community work authentically.

Bob Swaney: Yes, adding value, doing work that matters, and being highly visible is key to reaching deep into your community.

I think about one organization we worked with, which was almost extinct. In their turnaround, one of the things that they did was put their art literally out on the streets.

Literally put performers on the streets, got news cameras there, got iPhone cameras there, and just doing things that, they started to do work that really mattered. It was viewed as valuable, and they pumped that out as frequently and as loudly as they could to start to get the community to turn their heads towards this organization.

It worked. It worked beautifully.

Catherine Heitz New: A little goes a long way here as long as you're doing it genuinely.

Bob Swaney: As we start to look at wrapping up here, let me move us into measuring success when we go into help an organization.

Many have a one-dimensional way of looking at results. By one dimensional, I mean they look at only the dollar figure. Did we hit gold? And it's all they look at all year. They don't look at other ways of measuring success or stress or potential weakness. Give us a snapshot of the KPIs that we normally recommend.

Catherine Heitz New: If your only metric is whether you hit goal at the end of the year, then begin by building a focus on pacing. And there's two simple ways to extract and track that pacing data.

The first is simply where are we by division compared to this time last year? We recognize it's really hard to make up for lost momentum, so in your annual fund, look at each of your divisions, whether that's board giving, major individual, broad base, or institutional giving. Is it on track with, ahead of, or behind where you were this time last year? Depending on that, you can adjust your tactics.

The second pacing benchmark you should be looking at is front loading. Not every month in the fiscal year is created equal. And what we mean by that is that the first half of your fiscal year is going to dictate your success. The major metric we share with all of our clients is that we must hit at least 65% of our total goal by the halfway mark in the fiscal year if we're going to be successful overall.

Bob Swaney: Sometimes that's a shock. We've seen organizations that do 50% of their annual fund in the final quarter of their fiscal year, which is a very dangerous place to be.

Sometimes when you look at trends and the dollar figure, it's a nice stair step year over year. And then you look at the number of donors and gift average year over year. It can be really telling, and will usually reveal something like an extraordinary gift that was shoved into the annual fund one year to make it look good. Number of gifts and gift average start to reveal things like that.

And for annual funds, particularly, we want nice year over year consistent growth in those three areas – dollars, number of donors, gift average. When we go in and begin a relationship with an organization, looking at their volatility year over year gives us some clues, and it also helps us strip away some of the things that are not helpful and then setup a clean way to gauge numbers year over year.

Catherine Heitz New: It's so true. As you speak about that, I'm just wanting to share an example of truly the results that can come from a simple shift in timing of tactics and moving to this front-loading approach. I think of a client, they had a very passive, I'll call it a pick it up and put it down when we have time for fundraising program.

We worked with them to engage and ask their best donors early in the fiscal year, really just a simple switch to helping their donors understand the timing impact of their giving on the organization, as opposed to giving whenever they get around to it or their own individual timeline. It did several things that are really impactful.

Certainly, it brings in crucial revenue early in the fiscal year, and I've never seen any organization that didn't like that, but what it also does is leave more time at the end to steward donors. And it also leaves time to focus on cultivating new donors.

For this organization, just the simple shift in timing of tactics to early in the fiscal year resulted in doubling their base and increasing their annual fund by 40%. It's incredible.

Bob Swaney: What I've noticed coming out of COVID is that when the audiences and attendance didn't come back as fast as everyone hoped for, the reliance on fundraising rapidly increased. By front loading, we get that 65% - 70% secured that gives fundraising time to be responsive if earned revenue is not responding the way the organization needs.

Now I'm not saying, great, let's just give every development director a stretch goal. But there were times, particularly in 2021 and 2022 when that was absolutely necessary. And fundraisers needed that time. They couldn't do it in the last 60 days of their fiscal year. They needed a longer runway. Front loading provides that.

So let me go into our last segment here just to talk about collaboration and teamwork. We said it earlier, the development director, the CEO, the staff -  they're not an island for fundraising. This is a relationship game, right? And that relationship needs lots of touch points and needs lots of leverage.

With this idea of collaborating with various teams, both internally and externally, how should fundraisers approach building relationships and collaborations internally and externally?

Catherine Heitz New: Let's first recognize that this can be hard, and we find this with a whole host of organizations, regardless of budget size, regardless of staff size, and, I think it's because we're mission based creatures in this field.

We come to work every day, rightly believing that we're doing important work. So it makes sense that people look at their own goals and their own metrics as the vital, or maybe even the most important, piece of what the organization does. It’s important to provide some recognition and appreciation of that as you go about trying to advance collaboration in your organization.

And a couple of things that I'll mention from a practical standpoint. If you're struggling to collaborate more across teams or across departments within your organization, start by looking for where you can provide value to the areas that overlap. Don't think of this just as, maybe development dictating to marketing or to the education team that they adopt a practice that helps fundraising, but really help provide those people in other departments the tools as well as the demonstration of why these tools and this approach benefits all.

The last psychological piece of the approach is that we have to address that this is about building trust. And the best way to build trust with people is consistency and follow through. If you want people to collaborate with you, you have to demonstrate that you're trustworthy. Be consistent with them, follow through on what you say or what they need of you. And all of these aspects of collaboration, which are 100% vital to the organization advancing as a whole, will become more easy.

Bob Swaney: Yeah, I agree and would add the idea of over communicating with both, not just with patrons.

Particularly internally and with any external partners that you have, like partner organizations who help with education, that over communication is essential. When you feel like you're doing it too much, that's probably the right amount. I've got a very good friend who says quite often that, the death of communication is the birth of suspicion.

And I think about that between earned revenue and contributed revenue. That lack of communication creates unhealthy competitiveness within an organization, where sides say “these are my patrons and those are your patrons. This is my schedule. This is your schedule.”

The best way to tear that down is by communicating, and not just one way, but both ways. So talking and listening, it's absolutely necessary to do that.

We covered a lot today and Kat, I'll give you the mic here for just a minute. Any last thoughts that you'd like to add before we wrap things up?

Catherine Heitz New: I just want to show some appreciation to the people that are listening. We know that you've devoted your life to the arts, and we thank you for doing that. You're why we do this work and you make our work more fulfilling.

So I simply want to say to the listeners, thank you.

Bob Swaney: And thank you, Cat, for your thoughts and your insights on this. And of course, for accepting the new leadership role at RSC.

And of course, thank you for everyone who plugged in and we look forward to more on Fundraising Growth Now in 2024.