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Hey, you, It's Rhea Wong. If you're listening to Nonprofit Load On, I'm pretty sure that you'd love my weekly newsletter. Every Tuesday morning, you get updates on the newest podcast episodes. And then interspersed, we have fun special invitations for newsletter subscribers only and fundraising inspo because I know what it feels like to be in the trenches alone. On top of that, you get cute dog photos. Best of all, it is free. So what are you waiting for? Head over to riawong.com now to sign up. Welcome to Nonprofit Lowdown. I'm your host, Rhea Wong. Hey, hey, what is up, Nonprofit Lowdown? Fam, it is Rhea Wong with you once again with Nonprofit Lowdown. Okay, today I need to talk about something that is a real bee in my bonnet. Look, it has been a rough couple of months out here in these charity streets, for sure. I've seen giving plummeting. I've seen anxiety connected to the world that we're living in. High gas prices, foreign wars, inflation, all of the things. But one thing that I am noticing very starkly is, y', all, I don't know what is happening out here, but development directors are leaving in droves. So just to give you an example, as you might imagine, I have a lot of folks that I communicate with throughout my week. A lot of EDs, CEOs, development directors and so forth. In the last week alone, folks that I was actively in conversation with, literally, I got the bounce back email that so and so has left their job. Now, it's not rare that development directors leave their job. What is rare is the volume of people who have left their jobs in the last month or so. So today I thought I'd do a podcast episode examining this problem and asking what is happening out in the world. And I think some of what we're seeing is solvable. So if you are an executive director or a board member listening to this, I need you to pay attention. Because what's happening in our sector right now is going to cost your organization a lot of money if you don't get ahead of this. So let's get into it. I want to walk you through what's actually happening, why you can't see it coming, and what to do about it before your next development director on your team walks out the door. So when I speak to executive directors about their development director leaving, and by the way, when development directors leave, it is terrible, you are left scrambling. You and I know, and having been an ed, I know you are laying in your bed at night worried about this inevitable happening. So from my perspective, there are two faces of the same problem. So the first I'll call the silent failure. This is when you as an ED has spent lots of time and energy recruiting, interviewing and finally hiring your development director, thinking that this is the light at the end of the tunnel. This person is going to help take a load off. This person is going to help bring revenue in. And for a little while, I call it the honeymoon period. Things look great. Your development director appears busy. Proposals are going out, events are happening. Maybe they're meeting with some of your donors, maybe they're spending your time cleaning up your list. But what's actually happening underneath is that your development director is doing things like writing grants instead of cultivating major donors, attending and planning events instead of having one on one conversations that advance a donor relationship. And so what you're seeing on the surface is a lot of motion without a lot of direction. And typically what happens is within 18 months, by the time you actually look up and notice, the relationship building that should have been happening over the last 18 months is not happening. It's what I call fluffing the pillows. A lot of activity, but not a lot of substance. And by the time 18 months rolls around, the damage is done. There are people who have not been followed up with. You haven't been stewarding your donors properly. Funders are wondering why you've ghosted them. I want to share a personal story here because I personally have hired and fired many development directors over the years. This is particularly painful because as we know, development directors tend to be the highest paid employees after the executive director and in some cases more than the executive director. That's another problem. We'll deal with that later. But, but I'm thinking about one case in particular. I hired this person. I was so excited. They came with really impressive background. They came with a background in tech and analytics and from a, from a university. So I thought that they'd bring some major gift experience. And frankly, I was young, I probably wasn't asking enough questions because A, what I was able to pay at the time was not terribly competitive with the environment and B, I wasn't sure what I was looking for and C, frankly, I just needed help and I wasn't going to look too hard at what I was getting. So I did not do as much due diligence as I should have and I see that now. But anyway, the point is I brought this person on. Things were going great for the first couple of months. I was just happy to have someone to take the load off of me. Then after a couple months, I was noticing that this person was not really coming to coming into the office, that I couldn't see a lot of visibility into what they were doing on a day to day basis. Thankfully, we were able to rectify this before 18 months. But by the time I kind of cottoned onto the fact that this person really wasn't filling the pipeline, not only was it painful to have to get rid of them, but also I had to backfill and go back to doing all of the things that this person should have been doing along the way. In terms of stewarding relationships, in terms of getting grants out the door, in terms of doing reports. And again, this is probably my failure of management, but I had mistaken the perception of being busy with being effective. I see that now. It was my mistake also because I did not have a clear system and pipeline wasn't able to hold this person to clear benchmarks. Typically the benchmark I had was, okay, you either raised the money or you didn't raise the money. What I didn't have were interim KPIs in between the benchmark goals. And so the money raised was a lagging indicator of all of the work that this person hadn't done in the meantime. And that was my mistake. But unfortunately I see that all across the sector. But that is one flavor of the problem. You don't realize it's a problem until it's too late. Here's the other problem, and I also see this, what we call the visible crisis. You bring someone on, she's crushing it, right? She's doing the do, doing the events, getting the grants out the door, doing all the things. And so because this person is crushing it, you keep asking for more. More events, more proposals, more board engagement, more outreach. And because we're all good little soldiers, we say yes. But the problem is when we keep asking more, without an actual infrastructure and without a real sense of what people's capacity actually is, we are basically guaranteeing burnout. And the breaking point comes when this person finally says, I can't anymore. Here's the thing. Both of these scenarios end with the same outcome. You lose your development director. And what happens when you lose your development director is you lose 18 months of donor relationships, you lose momentum, you lose pipeline, and you're sitting there wondering what just happened. The irony here is that even though both reasons look different on the surface, one is burnout, the other is underperformance, underneath it's the exact same problem. Because the truth of the matter is, without a system to track performance along the way. You literally cannot measure whether your development director is doing their jobs. So what you do is you see activity, you can see them busy, maybe you even see the revenue coming in, but you're not asking the right questions. Are they building major gift relationships? Are they moving donors through a predictable pipeline? Are they cultivating the right people at the right time? Are they positioned to put a proposal in front of someone when they are ready that is calibrated to their capacity, their interests and their timing? Frankly, most of us have no idea. So what I've learned through the trials and tribulations here is that if it's not on the scorecard, it didn't happen. Now the problem is a lot of us don't have a reliable scorecard that we are tracking. And so what this means that a lot of us are out here flying blind. If you're a board member, if you're an executive director, you kind of don't know what's really happening in a day to day way other than seems like they're doing stuff. Seems like we are putting a lot of proposals and meetings out. Look, we may even have something that helps us to assess how many asks we have out tied to a probability, which makes us feel like there's some predictability, but without some real indicators underneath that, we have no idea. I could put out proposals for a hundred million dollars, but without any indicators of what actually is beneath that. Have I actually advanced a relationship? It's immaterial. So what flying blind feels like is trying to fly a plane from San Francisco to New York without instruments. For the executive director, that means you have no visibility, you have no early warning system, and you have blind trust in your development director until it breaks. And for the development director, this isn't good either because they are scrambling around. They have no idea that what they're doing is right. They're operating on instinct instead of strategy, or they're being asked to implement the system themselves. And that is a recipe for burnout. That is the exact setup for them to leave. Okay, so if you're hearing this and you're feeling like somewhat called out here, let's talk about what this is actually costing you. Because if you think that this is just a hiring inconvenience, you're not really seeing the full picture here. So let's talk about the full cost of losing a development director. You are looking at 18 months of institutional knowledge about your donors that it's gone. You are talking about sacrificing donor relationships because Whether you like it or not, this is a relationship business. And I know that we have this idea, this fantasy that, well, it shouldn't matter if someone is calling from this organization or if it's another person calling from this organization, they should have loyalty to the organization. Wrong. Think about for yourself. How many times have you developed a relationship with someone only to have them leave? Let me give you an example. I donate, as I'm sure you do, to quite a few places. One place in particular I give quite generously to because I developed a really nice relationship with their development director. When this person left, I did not have the same kind of relationship with their replacement, even though they tried. And so as a result, I don't really give at the same levels because the truth is people matter. Relationships matter. Here's what else. Here's what else happens when a develop a development director leaves your pipeline, momentum stalls. So people that were in process, people that were in conversation go cold. Because frankly, the minute I get that email like by the way, I'm moving on in my mind, I've closed that relationship. It's like, okay, well we're not moving forward there then let's talk about the other thing. It is so hard to find a good development director out here in these charity streets. So I think conservatively people are looking at a three to six month hiring gap while you recruit and onboard a new person. Let's just say for a $3 million organization, your development director might be responsible for anywhere from 500k to a million dollar in annual revenue. If you lose them, that revenue takes a hit. Not to mention all of the cost of the salary that you paid as well as all of the time and energy and money that you're going to spend recruiting a new person. And by the way, typically I see organizations hiring headhunting firms to find development talent because it is such a competitive market out there. So specifically, how much this is going to cost you conservatively is anywhere from 500k to a million in revenue, 18 months of donor relationships, a three to six month hiring gap. And so if we add it all up, the total opportunity cost is probably about a million dollars. And here's the invisible cost. That's just the explicit cost. The invisible cost is that are the major gifts that didn't happen because there was no system to make them happen. If your org should be bringing in 1.2 million in major gifts, but you're only at 600k, that gap isn't because your development director is lazy. It's because there's no system that makes major gifts happen consistently. Now, let's get clear on the two ways that development directors actually leave, because the response is different for each one. So type one is the involuntary exit. This is the silent failure. This is when you as an executive director have to fire your development director for underperformance. What happens in the involuntary exit is that they weren't doing the work. But honestly, more of the problem is that they didn't know how because there was no system, there was no roadmap, there was no process. And you, as the leader, did not make clear what the priorities were. So what typically happens is after a year or two of floundering, you finally see that the pipeline is empty. You wonder what the heck they've been doing the last 18 months, and you have to let them go. And then you have to explain to the board why you didn't catch it sooner. Frankly, and I have been there, there's some real shame that happens in the conversation. And the real talk here is that it wasn't actually a hiring mistake as much as it was an infrastructure problem. And believe me, I know there are definitely hiring mistakes. But I would argue that in the absence of a system and infrastructure, you were not setting up that person for success. And you, as the leader, did not have a clear idea of what key performance indicators you were tracking and therefore could not be clear with your hire about how they would be held accountable. Let's talk about type 2, the voluntary exit, which means the. The burnout. So this is a case in which the development director was trying. They were showing up, they were working hard, but the asks kept coming with no support. They were just asked for more. More events, more donors, more proposals. There was no staff support. There was no database that they could depend on. There was no cultivation plan. They were just asked for more. And the truth is, they burn out. They leave. Often they go to another nonprofit where they hope it'll be better. And here's a spoiler alert, it usually isn't. The point is that both of these cases, the involuntary and the voluntary exit, are both preventable. That's the part that should make you mad and make you motivated. None of this had to happen. So what does it mean when you build a system? When you build a system, you're clear about the strategies and your development director is clear about it. Everyone is on the same page about what needs to happen. When you have a clear framework and system, you know which donors are in which stage of the relationship, what is the next step for each major Gift prospect. How many people should be in cultivation? How many are ready to ask, how many are in cert, how many are in stewardship? And what you will know, what you will have is real visibility into whether your development director is actually moving people through the pipeline. So if you have a scorecard, if you have a framework that is clear and structured and everybody knows it, if something is broken, you see it in weeks, not 18 months. Why the system also prevents burnout is your development director isn't doing everything anymore. They're not writing grants and cultivating and running events and doing stewardship because they have clarity about the future. Few things that really move the needle. They will have a clear role. They have support, they have a process. And they know exactly what they need to do each week to move donors forward. So that's the difference between a development director who burns out and one who thrives. What a real system. And I keep saying the word system because I really believe that this is the first step to building sustainability in an organization. What I see over and over again is when development directors walk out the door, whether it's voluntary or involuntary, there's a real loss at the nonprofit, not only in terms of actual dollars, but also from a sense of morale, frankly. The work that you do is too important to have setbacks. So when you have a real system, you map every donor to an actual stage. You define the clear next steps. There's no guessing. I think sometimes we think of major gift fundraising as an art versus a science versus. But because we think of it as an art, we let people come in with some vague ideas or some personal idea of how to set up a system which may or may not map to real data. And we sit back and we just don't ask too many questions about how the sausage is made, as opposed to realizing that we can put some real systems and structure and data behind major gifts. When you have a system too, you create accountability. So everyone knows what their role is. The development director, the board, the staff, the ed. And you can track progress over time. So you see problems early, not 18 months later. And the fact is, it's not complicated to build a system, but it does require intentionality and effort. So it requires you to commit to building it and using it. Most Eds I talk to know that they need a system. They just keep putting it off because they're busy putting out fires, but frankly, fires that wouldn't exist if they had a system. So it's a little bit of a chicken and egg problem. You have to Break the cycle somewhere. Now, I'm going to share questions that you can ask to see if you are possibly in red flag territory with your current development team. If your development folks cannot answer these questions about your organization right now, your system is broken or you don't have a system. Question 1. How many major gift prospects do we have? And by the way, prospects are not simply names with a wealth screen attached. Prospects should be backed up with engagement data. Do we actually have any way to reach them? Have they demonstrated interest? Are they on our email list? Do they open our emails? Have they been to any of our events? Do we have proof of life other than a name and a wall screen? So that is how I'd be thinking about prospects. Then what stage are all of these prospects that we have in? You can think about it in the typical traditional way that we think about stages. We have identified them, we've qualified them, we're cultivating them. They're in solicitation phase or their stewardship phase. I have a more nuanced process, but basically you want to get a general idea of what stage these folks are in. You also want to know when is the next touch point with each of these prospects? Who is responsible for each relationship, and how many asks are scheduled for the next quarter? If you can't answer any of these questions right now, your system is broken or you don't have one. If your development director is showing these signs, they're either struggling or they're about to struggle. One, doing the same activities week after week with no progression. Two, juggling too many priorities at once. Okay, so I want to say something about the word priorities. The word priorities did not exist before the 1900s. Why? Because the word priority comes from the Latin, first in rank. And so from 1400 to 1900, it was only the word priority. Because there's only one thing that can be first at any one time. It was the Industrial Revolution that introduced the word priorities as a plural. Now, the problem here is that as an executive director, you have to set the stage for what is actually the priority. Because if 10 things are the priority, then nothing is. Okay. Here's another thing. If your development director is spending more time on grant writing than donor cultivation, you got a problem. If this person is working nights and weekends consistently, you're going to have a problem. If they're saying things like, I don't know what I should be focusing on, you're about to have a problem. Finally, if your board is doing any of these things, the problem is bigger than you think. Asking where are the major gifts? Without understanding the cultivation timelines or asking questions about like, why can't we just ask Mackenzie Scott for money? That is a clear indicator that they have no idea what the structure is. They're confused about their roles. They either micromanage or they completely ghost. And they're not engaged in any way in major gift strategy. So I'm going to leave you with this. If you're an ed, you need to stop asking, is my development director doing their job? Instead, start asking, do I have a system that makes their job possible? Because here's what I've learned the hard way, and I see this unfortunately, everywhere. A great person in a broken system will eventually fail. Let me say that again for those in the back. A great person in a broken system will eventually fail, and a person of average ability in a great system can thrive. You need both the right person and the right infrastructure. So in closing, if you're listening to this, I want to flag for you that you should get ahead of this problem before it is on fire. The great development director exodus is happening now, and great development directors are leaving organizations that do not have systems. Because frankly, if you are a good development director or even a great development director, you want to be in a system where you can succeed. Frankly, the market is so competitive right now that even if you're not a great development director, you can probably find a job pretty quickly. Now, if you're listening to this and you want to keep your development if you're listening to this and you want to keep your development director, the good one or the one that you're about to hire, you need to build a system now. Not next year, not after you find the right person. It is unrealistic to expect that your next hire will build the system for you. You need to build it now because the next development director will burn out or underperform without a system. And the one after that, and the one after that. So hear this. The problem isn't your development director. The problem is the infrastructure. Or rather the lack of one. Right? So that was a little ranty. But if you want to find out how to build a system that survives staff departures and actually generates the major gift revenue your org should be bringing in, book a call with my team. I will put the information in the show notes. We want to talk to you because as someone who has been in the nonprofit sector my entire career, I see this happen over and over and over again and it hurts my heart because I know as an executive director how painful it is when you have to start from square one every single time someone walks out the door. So if this hits home, send it to another ed who needs to hear it? DM me on LinkedIn. I want to hear where are you with your development directors right now? Is it a story A or story B? All right folks, I will see you next week and until then, take care and let's try to get ahead of the problem. We want to talk to you to help. Have a good week. Hey fundraisers. Looking to nail those big fundraising asks? Check out my Big Ask gift program@riawong.com Bag say goodbye to uncertainty and hello to confidence with my program. Get expert strategies and personalized support to secure those game changing donations. Don't let fear hold you back. Join me and take your fundraising to new heights. We're enrolling now@riawong.com bag. That's riawong.com bag. So if you like big asks and you cannot lie, I'll see you in the program.