Transcript
WEBVTT
00:00:06.709 --> 00:00:09.153
your donors are your donors.
00:00:09.673 --> 00:00:11.355
They are unique to you.
00:00:11.355 --> 00:00:17.972
Nobody else in the universe, no other organization in the universe, has the same donor file as you.
00:00:17.972 --> 00:00:29.025
So if you hear an expert saying this is going to happen and it means this and blah, blah, blah, that doesn't mean that it's going to happen to you or your donors.
00:00:29.025 --> 00:00:33.674
Welcome to the Practice of Nonprofit Leadership.
00:00:33.674 --> 00:00:35.021
I'm Nathan Ruby.
00:00:35.021 --> 00:00:42.011
Well, big news happened a couple of days ago from when I'm recording this.
00:00:42.011 --> 00:00:55.110
On Wednesday, september 18th 2024, the Federal Reserve Chairman, jerome Powell, announced a 50 basis point cut in interest rates.
00:00:55.110 --> 00:01:00.003
Now you you will hear it on the radio or on whatever.
00:01:00.003 --> 00:01:05.171
Whatever news source you watch, you may hear it as a 50 point basis cut.
00:01:05.171 --> 00:01:08.582
You may also hear it referred to as 50 bips.
00:01:08.582 --> 00:01:17.024
For us, normal non-economist fundraisers, it basically means he lowered the rate by a half a point.
00:01:17.024 --> 00:01:22.825
That's what it actually means and I don't know if you listen to the financial media.
00:01:22.825 --> 00:01:23.990
I do.
00:01:23.990 --> 00:01:28.864
It's economics and monetary policy is kind of interesting to me.
00:01:28.864 --> 00:01:33.353
I know that's kind of weird and makes me a little bit of a.
00:01:33.353 --> 00:01:35.284
I don't know.
00:01:35.284 --> 00:01:38.015
I don't know what it makes me, but I just find it interesting.
00:01:38.015 --> 00:01:40.323
I think it's probably my history background.
00:01:40.323 --> 00:02:00.822
I love history that's what my degree is in and so I love the history of economics and how it all ties together, because monetary policy makes such an important impact in our lives in your life and mine and our families and also our donors and so it is worthwhile to at least have an idea of what's going on.
00:02:00.822 --> 00:02:06.388
But you have to be so careful because you could get totally overwhelmed with it really fast.
00:02:06.388 --> 00:02:16.002
And so on this 50 basis point, cut, the media, the financial media is all over the place on it.
00:02:16.002 --> 00:02:18.206
He did too much, he didn't do enough.
00:02:18.206 --> 00:02:20.292
This is terrible for the economy.
00:02:20.292 --> 00:02:21.881
This is great for the economy.
00:02:21.881 --> 00:02:28.626
Everyone out there has their own perspective and their own thesis on how this is going to play out.
00:02:28.626 --> 00:02:43.157
But here, at the practice of nonprofit leadership and for you and my donors, you know it's, and for us it's more of well, what do we do to prepare for what's going to happen from this basis point and cut?
00:02:43.157 --> 00:02:46.400
And so here here's a couple of things to remember.
00:02:46.400 --> 00:02:53.221
And then I've got, uh, I've got one thing for you to do that will help you kind of navigate your way through this.
00:02:53.221 --> 00:02:58.836
Uh, and first of all, just remember that your donors are your donors.
00:02:58.836 --> 00:03:00.640
It's your donor file.
00:03:00.640 --> 00:03:17.639
Nobody else in the world has the same donors that you do, and so if you hear anybody out there, any experts, saying, oh well, this is going to happen and this is going to be the impact, blah, blah, blah, blah, that doesn't mean that it's going to happen to you and your donors.
00:03:17.639 --> 00:03:20.804
Okay, you are unique and different than everybody else.
00:03:20.804 --> 00:03:29.895
Second, even though the 50 basis point drop is a big one and it is it's a whopper.
00:03:29.895 --> 00:03:33.728
It's not the biggest one ever, but it's a pretty good one for the first cut.
00:03:34.550 --> 00:03:40.530
When the Fed starts to cut rates, but it doesn't mean that rates are going to go into a free fall.
00:03:40.530 --> 00:03:46.338
Right now there are a lot of your credit card rates and your car loan rates.
00:03:46.338 --> 00:03:48.084
Those will probably react pretty quickly.
00:03:48.084 --> 00:04:05.335
But real estate rates and other borrowing rates that people borrow on, those are sometimes defined off of something else other than that interest rate from the Fed, or it could be a quarterly or semi-annual or annual.
00:04:05.335 --> 00:04:11.009
So not everything is going to just drop like a rock just because he dropped that rate.
00:04:11.009 --> 00:04:16.791
So there are some things that will take a while to happen, so you're not going to see everything at once.
00:04:17.261 --> 00:04:28.636
The other thing is, the market does not like volatility and volatility impacts people differently.
00:04:28.636 --> 00:04:34.791
So the 50 basis points it's a symptom, it's not the root cause.
00:04:34.791 --> 00:04:40.283
So the drop in the interest rate is going to add to the volatility.
00:04:40.283 --> 00:04:54.014
But part of the reason that there is a drop in the rate is because of the way the economy is and what's happening, and so the volatility does not impact all of your donors the same.
00:04:54.014 --> 00:05:12.009
So you could have, let's say, one of your top five most affluent donors and so that donor they could have their investments positioned for long-term growth and income.
00:05:12.009 --> 00:05:21.819
So individual volatility in the market, now increased by this interest rate drop, it's not really going to affect them that much.
00:05:21.819 --> 00:05:25.204
Or they have.
00:05:25.204 --> 00:05:30.853
All of their assets are wrapped up in their business and their business is okay.
00:05:30.853 --> 00:05:37.995
Their business is resistant to some of the ups and downs in the market, so it's not going to be a big deal for them.
00:05:38.978 --> 00:05:48.504
Other, maybe some of your middle donors, a lot of your middle donors are still giving out of income and for them it may be a little different.
00:05:48.504 --> 00:06:09.644
They may have if I'm giving $500 a year to your organization and it's coming out of my income, but now because the economy is shaky and there's layoffs going on and all of these things, that maybe I'm a little concerned and I'm pulling back and so I'm going to drop.
00:06:09.644 --> 00:06:21.185
You know, if I give to five organizations, maybe in 2025, I'm only going to give to two, or maybe I only give to one, and so there's that that impacts them differently.
00:06:21.185 --> 00:06:35.764
And then you know, you could get into some of your smaller donors that are maybe are on fixed incomes or, you know, retirement incomes and for them, people that where, where income is a, is more of an issue.
00:06:35.764 --> 00:06:40.559
You know it's 18 bucks, 15 bucks to go eat at McDonald's.
00:06:40.559 --> 00:06:51.829
So you know, there, there's folks there that may, just they just can't do it anymore, and so the market and volatility and the economy hits people differently.
00:06:51.829 --> 00:06:57.326
And so my point here is don't make an assumption that this is going to.
00:06:57.326 --> 00:07:00.278
You know your donors are going to all do this.
00:07:01.379 --> 00:07:32.596
Now, I also think that there's another aspect to this, and that is the mindset of, I think, our population in general, because right now they're just being and you probably are too, if you listen to the radio at all or TV you're just getting bombarded with how bad things are and how the economy is bad, and you know, of course, we're going into a very contentious election, and so you've got both sides that are just chirping constantly, and so you've got both sides that are just chirping constantly, and so there's a talking about volatility.
00:07:32.596 --> 00:07:39.062
Volatility is a lot of volatility in your emotions and inside of you, and also inside of your donors, so I think that's playing a role as well.
00:07:39.062 --> 00:07:41.261
So, ok, so what are we?
00:07:41.261 --> 00:07:41.923
What are we going to do?
00:07:41.923 --> 00:07:48.545
So here's what I'm recommending you do, and I am actually looking at myself as I record this.
00:07:48.545 --> 00:07:50.053
So I'm literally looking at myself in the mirror, but here's what I'm going to do, and I am actually looking at myself as I record this.
00:07:50.053 --> 00:07:53.019
So I'm literally looking at myself in the mirror, but here's what I'm going to do.
00:07:53.540 --> 00:07:59.141
I'm going to go out and I'm going to see my donors, and this is what I'm going to say to them.
00:07:59.141 --> 00:08:07.125
Well, I'm going to go see them, I'll see them face to face, and if I can't see them face to face, I'll do it on Zoom, so at least I can see them that way.
00:08:07.125 --> 00:08:08.908
And I'm going to do four things.
00:08:08.908 --> 00:08:15.338
First thing I'm going to do is I'm going to thank them for their giving.
00:08:15.338 --> 00:08:19.307
That is the single best thing you could do to a current donor is just remind them how thankful you are for their gifts.
00:08:19.307 --> 00:08:20.336
So that's number one.
00:08:20.336 --> 00:08:21.778
Let's thank them for their giving.
00:08:21.778 --> 00:08:26.755
Number two give them your vision for the future.
00:08:26.755 --> 00:08:27.678
This is what we're doing now.
00:08:27.678 --> 00:08:28.341
That's okay, you could.
00:08:28.341 --> 00:08:29.384
This is, this, is this.
00:08:29.384 --> 00:08:30.668
This is what we're doing now.
00:08:30.668 --> 00:08:36.337
That's okay, you go, you could reference that, but this is where we're going and this is what we're trying to achieve.
00:08:36.337 --> 00:08:37.841
This is our vision, this is our mission.
00:08:37.841 --> 00:08:42.922
Here's a story about how we're achieving that and this is where we want to go in the future.
00:08:42.922 --> 00:08:44.405
Um, so that's.
00:08:44.405 --> 00:08:47.022
Two is is vision for the for the future.
00:08:47.725 --> 00:08:52.183
Reinforce how important their giving is to finish this year strong.
00:08:52.183 --> 00:08:54.340
Uh, you know we're in September.
00:08:54.340 --> 00:08:57.047
Uh, we're coming up to year end giving season.
00:08:57.047 --> 00:08:58.378
Uh, this is.
00:08:58.378 --> 00:09:01.506
You know, we're going to be elections in November.
00:09:01.506 --> 00:09:09.649
Um, you know, just remind them of how important it is for them to finish, for you to finish strong this year.
00:09:10.731 --> 00:09:19.460
Um, and then, lastly, and this is the most important one, is, ask them if they see any major changes coming in their giving for next year.
00:09:19.460 --> 00:09:27.741
Um, and it's really, it's really not that hard If you have any relationship with your donor at all.
00:09:27.741 --> 00:09:35.523
Um, it is okay, it might be a little awkward, um, but it doesn't have to be a whole lot awkward.
00:09:35.523 --> 00:09:40.121
And you just say something like hey, we're starting to work on next year's budget.
00:09:40.121 --> 00:09:44.490
Here at my organization, we're already in planning next year's budget.
00:09:45.874 --> 00:10:20.142
So for me, that is actually what we're doing and, as I see, in the next year's budget, we're going to have an increase as we work harder than ever to hit that vision and mission and you know, referencing back the vision that you talked about earlier in the conversation and for us to reach those things, we know that we are going to have to probably raise more money than we did last year, and so I'm just you know, I'm visiting with donors and asking do you see anything in the next 12 to 18 months that would significantly impact your giving?
00:10:20.142 --> 00:10:22.696
That's how I'm going to ask it.
00:10:22.696 --> 00:10:24.236
And then I'm just going to let it sit there.
00:10:24.236 --> 00:10:26.360
And you know, cause they may have.
00:10:26.360 --> 00:10:29.371
Well, yeah, I'm planning on selling my business, so I'm going to double my giving.
00:10:29.371 --> 00:10:36.004
Or, um, well, you know, uh, business is down right now, and you now, and fourth quarter doesn't look good either.
00:10:36.004 --> 00:10:39.500
So, yeah, it's a possibility that I may see a decrease next year.
00:10:40.150 --> 00:10:41.417
So just have that conversation.
00:10:41.417 --> 00:10:48.389
Don't feel like you're prying or you're being rude or overstepping.
00:10:48.389 --> 00:11:02.677
That is a very benign question and it is a real question and your donors will appreciate it hearing from you and being asked that because they're your donors.
00:11:02.677 --> 00:11:21.200
Prudence for you to be looking at expenses and revenue over the next year and where are you going to be so you can use those resources to their most effectiveness.
00:11:21.200 --> 00:11:24.153
So don't worry about asking the question.
00:11:24.576 --> 00:11:33.879
So I'm going to do that with some of my top donors and then some of my middle donors and then some of my lower donors, and get a sense of what's happening.
00:11:33.879 --> 00:11:37.164
And then you know we can, we can plan accordingly.
00:11:37.164 --> 00:11:44.336
So that's what I'm going to do and you know, like I said a little bit a bit ago, it's really not about the rate cuts.
00:11:44.336 --> 00:11:45.538
I think the rate cuts were.
00:11:45.538 --> 00:11:53.720
Just when I saw that happen, I wanted to get out and do this, do this session real quick for you.
00:11:53.720 --> 00:11:56.504
It's not the rates, it's the overall economy.
00:11:56.504 --> 00:12:11.336
And just remember that not everyone is going to have the same experience, not everyone's going to have the same point of view and for sure not everybody is going to have the same consequences of what's going on in the markets.
00:12:11.336 --> 00:12:24.902
Right now, the best thing you could do is to go talk to your donors and just ask them what they see coming up in the future for them, so that you could be prepared for whatever is coming next.
