How Donate Now Pay Later Is Changing Fundraising Forever

00:00:01 [Music] hello and welcome another episode of the non-profit show Julie and I are excited to have a super nerdy conversation with Neil Sinclair and Neil serves as the co-founder and coo at be generous so welcome to Neil and he's here to talk to us about attracting Millennials and Jen Z donors so excited to have that conversation Julia Patrick is here CEO of the American nonprofit Academy and I'm Jarrett Ransom your non-profit nerd CEO of the Raven group we are so very honored to have the continued

00:00:43 partnership and relationship with amazing presenting sponsors so a huge shout out goes to Bloomerang American nonprofit Academy also the fundraising Academy at National University be generous where Neil joins us from today your part-time controller non-profit nerd non-profit later as well as Staffing Boutique so please check these companies out they're here to elevate you your team your mission across your community so thank you to our sponsors they keep us growing uh thank you also for allowing us the opportunity to place

00:01:17 all 700 plus in fact I think it's like 725 episodes on Roku Youtube Amazon Fire TV as well as Vimeo and for those podcast listeners that are like me and listen to a lot of things via podcast go ahead and cue us up there too you can listen to the non-profit show wherever you stream your podcast so thank you to all of our presenting sponsors for that Neil welcome back we are so glad to have you here thank you I think it's been a month or two so it's been too long yeah you know we're excited to have you back

00:01:51 to talk with us um I thought that you had the most interest you you have a lot of content on your website you had a really interesting uh blog post about Millennials and gen Z donor reactions and profiles and strategies and so we're really excited to get you back in uh today to talk about that because I think that we're all we talked about it but we don't really engage with it and so I'm really excited to have you talk to us so first and foremost what is a millennial donor Behavior I mean aren't they all

00:02:26 the same yeah I think that's the big common misconception is there's two misconceptions and I think folks here might remember my back from the last one not only my co-founder and CEO be generous but I ran a non-profit for several years in the child sexual abuse prevention space that was focused on the so-called Millennial donors so Millennials I would typically Define them as kind of the your current 25 to 45 year old set there's some variations on that theme where you can kind of be a gen xer or leaning a little more gen Z

00:02:55 but typically Generations are defined anywhere between like 15 and 20 years that's sort of the standard metric that's used so Millennials are those folks that grew up in The Crucible of three major Financial crises the aftermath of 9 11 and the war on terrorism the 2008 financial crisis and now covid they have been trying to build wealth against those multiple headwinds not great I I think maybe the generation that was kind of born right before like World War one that's all won the Great Depression and World War II could lay

00:03:29 claim to similar World style events right so not only are they having difficulty Building Wealth but their behaviors because of that difficulty Building Wealth and because of the discrepancy between the wages that they thought they would be earning versus the prices of the world right just the Consumer Price Index and durable goods cost of Education cost of housing have really gone inverse right to the previous generation it's never been more expensive to be an American today um and so as a result of that the

00:04:00 ability to be philanthropic to give your wealth away is extremely curtailed if you don't have naturally into generational wealth and so I hear from a lot of folks that there is great difficulty and great trepidation within the nonprofit space of engaging with these Millennial and forget gen Zion for a second just Millennial and to an extent Gen X donors because what they're seeing is a lesser pattern of donation and the reality is these folks want to give you know a large portion of Millennials the vast majority consider

00:04:32 themselves by definition philanthropists right right yet less than two-thirds have actually ever given even a single dollar to a charitable or philanthropic organization and that's that great discrepancy to set aside the fact that there are some distrust of Institutions layered on top of all of that right and they're looking more for the charity Waters and the cool Innovative philanthropies of the world they don't want to give to Mom and Dad's Red Cross and International Rescue committee they want to do something a

00:04:59 little different right um they're very woke they're very aware of what's going on in the world they want to give of their time they do want to give of their treasure but they know the capabilities of generations past so you'll see I cite in the article that you've mentioned here that Millennials right which are now really coming of age where they should have some some wealth in some income that allows them to give away even a small amount are still lagging both Gen X and and certainly the baby boomer

00:05:26 generation by by Dublin in some cases triple digits for their average gift size and that's a result of all of these Confluence of events coming together to really act against them and then by the same token the Charities are not reacting and reaching out to them in the ways that are required because they're fearful and I get that to go and acquire a millennial donor is an expensive proposition without the ROI you know if you send a mailer to a man or a woman in their 60s or 70s there's a high Roi on

00:05:56 that they're going to write that check out of their checkbook which they still balance by hand my parents do that right but the person that is doing their Banking online or you know using crypto or whatever that's a different nut to crack and so who's doing that right are some of those folks that have the ability to be experimental at the very top of the threshold so you'll see folks that you know the red crosses or the United ways that are accepting crypto and you know experimenting with Outreach

00:06:21 to that next generation or to the organizations that have nothing to lose that are already coming in and saying listen we have to go after the Millennials because we're not going to get the 75 year old little lady who's going to write us a check because she already has a long established relationship with Memorial Sloan or one of the other biggies out there so it's a difficult proposition but I will tell you as a final point on this particular topic it is not only worth it of course because money will make a large

00:06:46 percentage of population it is necessary for the sustainability and growth of your mission to figure out how to start getting Millennial wallet share and one of the biggest pieces of advice that I give to any non-profit large or small in business for a year or 100 years is and I really please do not take this analogy as truth but I hate to do it you have to start thinking like tobacco companies and the beer companies and you've got to start getting them when they're young right start cultivating those relationships in the

00:07:14 early days to make them the lifelong folks right why does McDonald's do happy meals for two or three dollars right they lose money on that generally speaking they do it because that builds that relationship so when you're an adult you're still going to come through to their drive through right and you have to start thinking of ways to get younger people involved whether it's creating a young professionals committee or just doing Outreach and speaking in their language and hiring staff that reflects that and if you don't do that

00:07:42 you might find yourself in crisis or in 20 years when all of those younger donors are now 50 60 years old and want nothing to do with your organization remember years ago when I started in my career and one of in my fundraising career and really the number one you know problem that my uh organization was facing was the growing age of the constituency base right and so we've kind of had this issue for the last couple of decades right saying hey our donors are aging our donors are dying our donors are no

00:08:19 longer our donors and so what I'm hearing you say you know in this Neil is really it's a long game and you know it is like selling a Happy Meal to you know a toddler now so that when they come to wealth and they see that brand awareness and connection and you know then they say hey I absolutely want to give to this organization because I was touched by them at some point so are you is it a long game and then what does that you know kind of look like so I used to work for an exceedingly wealthy family you know like 10 11

00:08:51 figures of wealth and they're the ones that taught me how to think in decades and generations and if you're thinking global politics you know who does that really well or the other Chinese right where we have a very short-term mentality in America the Chinese think in centuries and part of that their political structure and wealthy families have the ability to think long term but there's too much short-term thinking that goes on and the reality is if you're going to be a successful charity you have to have both mentalities you

00:09:17 have to think about how do I survive for the short term and how do I sustain for the long term and that's for your upstart nonprofits for your longer in the tooth non-profits you know your your red crosses your hospitals that have been around for 100 years these organizations whose names we know you have to have a similar mentality because there's a little bit at the upper end of the market a little bit of a I can't be touched I'm too big to fail kind of arrogance and the simple reality is ask a Sears executive back in 1952 if they

00:09:47 ever thought they'd be basically bankrupt today right and the simple reality is that that happened times change things change if you're setting up a non-profit you either have one of two one of two goals either you're you know gonna do sort of foundation style management and say listen we're running this to solve a 20-year problem and then we're out I get that that's great you can have a much different mentality if you're like my goal is to set up a sustainable organization that's going to change the

00:10:12 world for the next 100 years plus right to be the next Red Cross you have to have that long-term mentality and for those organizations that already have that long-term mentality you have to start thinking about how do I avoid being maybe the next Sears right or some of these other institutions that you know I mean there was a Woolworth on every corner where are they today right they don't exist anymore because they love that store they were great right I'd still like to go in and get a mall for 10 cents but you know it doesn't

00:10:39 exist anymore they lost touch and they lost reality with the changing times and I think some of the larger institutions have done a very good job of that and some have done a very poor job of that and they're going to be facing a Kick the Can down the road crisis we talked last time on this show about you know the death rate in this country which is you know two three percent very almost sort of logarithmically tracks the inversely the rate of individuals that are switching to online donations if you're not going

00:11:08 to meet your donors where they are even if it's a slow rotation two three four five percent a year Well ten years that's 50 of your donor base that is gone and 50 of a donor base that you have no contact with and I guarantee you just like in the land of for-profit startups somebody has come in and recognized that and said oh that organization's not being Innovative I'm gonna go and do that right and and eat their lunch and we've seen that I mean Amazon came in and eight Sears is lunch right because they weren't Dynamic and

00:11:40 you know the the CVS's in the Walgreens came in and did that to the Woolworth and so I think non-profits need to have that similar kind of of mentality if they want to survive for the long run absolutely you know in part and parcel to that in looking at this long road and understanding that we have generations and they have their own habits and they have their own experiences and they are influenced differently by things I mean you talked about 9 11 the the crisis of covid and then the the uh the major

00:12:12 global economic crisis of 2008-2009 where does Generation Z donors uh where do they fit in because I think this is another generation that they've been actively volunteering through their schools like the public school system so they get that piece of it what about the money piece no it's a great question so I'm going to show you this my my not even my gen Z but my gen Alpha piece of flair this is my my daughter's bracelet we have daddy daughter bracelets but she lost her so I'm I'm wearing hers right

00:12:47 now because I found it um so I have a little bit of personal Insight not only to gen Z but gen Alpha right which are the children of Millennials who are coming of age now and I'm going to lump them a little bit in together okay um because we don't quite know about Jennifer we're still learning a lot about gen Z gen Z and and for the audience that's unaware again there's lots of definitions out there but they're sort of the sub 25 year olds right uh they're they're coming into their age right now

00:13:14 a lot of them might still be in their teens some are kind of in their their 20s maybe later 20s again depending on who you ask they grew up in a mostly Post 9 11 World they grew up with an extreme distrust of institutions yeah I don't like the word because I think it's become pejorative but they've grown up with an extreme degree of wokeness that is you know your organization is not good enough right for them right they they are as very much a mentality of having a much deeper direct relationship with the

00:13:44 organization hence why you're mentioning that there is a lot of volunteerism right and so again it's all about the idea of meeting donors where they are and a big part of that is saying that these folks they don't just want to receive a mailer once a year and they'll send a check back they want to be involved and they don't really care about the annual report right to see your efficiency as an organization they care about the mission they care about the cause and the good work that you have done and that you lean into their

00:14:11 values this is a value-driven or you know level of individual and if you're not doing that they will find somebody else that will do that in the way that they think right this is it this is one of those Generations that I think is going to create a real sea change in the way that both Brands and nonprofits who are also a variation on brand need to engage or you will lose that consumer and somebody else will come in and figure out that way to speak to them very meaningfully and on the topic of meeting them where they are

00:14:42 let's be very clear they're not on Facebook right especially gen Alpha right my daughter has no idea what it is she's like that seems ridiculous that's like that's like Windows 95 to her right it just it just seems silly or incarnate it's like it's goofy stuff they're on Tick Tock they're on Snap by the way they're abandoning Instagram now as well they're in chat functions right they're on WhatsApp they're they want real dialogue and they want short pithy video content it's a whole different fundraising ball game for these folks

00:15:15 it's done through influencers as opposed to Brands and a lot of scenarios right it's a lot more again about sort of building personal relationships we don't know what they're going to look like from a wealth perspective yeah right Millennials got kind of the short shrift on this and we don't quite know exactly what the full gen Z size is going to be both in terms of wealth and as a segment of population probably someone similar to Millennials but as they mature into their wealth and into their careers I

00:15:46 would auger even more than Millennials if you have not established an early relationship by having them volunteer and be proactive and coming out and meeting them where they are on the social media channels where they are they are going to leave you behind and happily so and Jen Alpha from the little insight that I've seen with my two kids that that's they're doubling down on that gen Z mentality uh both of wokeness and of sort of new avant-garde ways to interact with with Brands there has to be an entire switching of mentality

00:16:21 Maybe not today probably about five to ten years to think about it right because they're not going to be making up the majority of your fundraising but you do have to start strategizing about that group because maybe they won't be on Tick Tock by the time they can become a meaningful donor but you do have to start thinking about how you can cultivate right and that's the biggest word I always give to folks you have to cultivate relationships early on or they will not respect you at the point in

00:16:48 which they can become a meaningful donor but they'll respect that small upstart organization that's been able to stick it out for these 10 years and that's where their check is going to go and you're going to see a lot of deficit of larger organizations and sea change of larger organizations that didn't do that prudent planning facing a reckoning within the next 20 to 30 years and and gen Z is going to be a real Catalyst to that you know one other thing I heard you say uh in particular for the Gen

00:17:14 zeers is you know they don't really care so much about the impact report the annual report you know so that leads me to think about trust philanthropy right trust based giving and so really moving in that space to say hey I've been watching you you are Innovative you have caught my attention and you've kept my attention here's my money or my time use it however you wish are you seeing that as a trend yeah it's a great question um I think it's a little bit of both right I don't think there's a pure

00:17:42 answer on this some of it is hey wherever it will help the most I tend to see that more when there's a one-to-one model and I would like to see more of that from more organizations where it's like if you give this fifty dollars this is specifically what will happen ninety percent of your donation will go to buying a goat for a person in a developing country and this is how they'll use it and these are the benefits of that right that one-to-one modeling that personalization is really important and that's where I think that

00:18:15 trust philanthropy comes in hey use it as you wish but I want to understand that if I give 50 bucks what is that sort of philanthropic Roi that I'm getting but I trust that you as boots on the ground will understand that but by the same tokens some people say I don't trust I want to actually see and hear I want you to do storytelling and or I want to be involved right if I if I can meaningfully be involved in some way and come out and actually help out and then say oh I see where my treasure would

00:18:46 meaningfully go to this organization because I've actually seen the results and impact on that right remember Millennials kind of started this gen Z's really taking up the mail this is the show me generation they want to be out there and get the selfie wow they're doing good and show that to their friends that's social proof is so massively important and just saying hey I struck a check doesn't do it anymore right you'll actually get harangued by your friends for doing that hey great that you're you know you've got that

00:19:15 money right put it on yet why aren't you out there doing some some good in the world right what have you done today right if you ever get a chance to read the philosopher Peter Singer he's an Australian philosopher wrote a lot specifically about animal rights animal welfare and he has this sort of amazing philosophical concept out there where he says if you're walking down the street and you see a man or a woman with a broken leg in the middle of that street about to get run over by a car wouldn't

00:19:43 you go and help yes of course I would I'm a moral person I dragged him out of the way get the medical attention he says well there's another person a thousand miles away with the same broken leg and same Peril how is your moral obligation to that person changed just because of distance right and when you start to think of it it's like it really hasn't right it hasn't because then you can just substitute that person in a sense of urgency with someone in an impoverished situation someone dealing with an emergency that just because

00:20:12 there's an arm's length distance between you and them has not actually diminished your moral obligation to them and I I think that gen Z and certainly gen Alpha as well have that kind of moral framework and that kind of global I must help mentality and I must show up mentality um and so even more so than hey you're a great non-profit go out and do your good where yes some of that will play in it's gonna be a lot of I've got to show up and actually do something more they kind of mock the Millennials right and me

00:20:45 being one of them when we like host about like hey I put a frame on my Facebook book so like I'm like against anti-semitism great what did you do right what else did you do yeah what did you do this the black screen Instagram no it's like great you posted a black frame you know now what what are you gonna do about that you know this is so interesting uh Neil and I think our children are probably similar ages uh there is not a single scent that comes home for my son for anything because he's donated it to

00:21:18 some you know box that's in front of the cash register or given it to someone who needed something more so you know I'm seeing that age and he's 12. very giving he is very giving um and maybe some of that's because of you know I've I've modeled this through my work career and he's seen that certainly as have your children um and he's a very you know very astute to technology which brings me to you know the the buy now pay later mentality and that impact of you know consumer behaviors how have you seen this for the

00:21:54 be generous platform you know change philanthropy today yeah I know it's a great question so the simple reality as I mentioned earlier is there's a huge disconnect between the economic reality of Millennials gen Z's probably gen Alphas um and their their ability to earn income and wealth right sustainable wealth and their ability to then give that away against the headwinds that they've faced and just the fact the world is so much more expensive that's why we've seen a lot of an uptick towards those High net worth individuals

00:22:27 towards those major gift owners making up more and more of the share of overall giving well corporations have remained steady at six percent different discussion for a different day buy now I'll pay later what we call donate now pay later is a necessity within the philanthropic space there's a reason that buy now pay later right in the the consumer space what some people call reverse layaway has done so well a the millennial and Below Generations do not trust credit cards or Banks right the financial crisis of 2008 shied us all

00:22:57 away from that they don't like institutions so there are some recent reports that said a 2 thirds of all Millennials and even more of gen Z don't actually own or utilize a credit card on a regular basis that is a major seed change they're using Alternative forms of payment they're trying to live a little bit more within their means because they have to and on top of that credit isn't being extended to them in the same way so buy now pay later if you want to buy a dress or a TV or whatever it is that's outside of your means is

00:23:25 becoming more and more popular but out of necessity not necessarily out of avarice and desire to to be acquisitive right it's just I have to have that in order to get the things that I need because I'm paying six thousand dollars a month for a one bedroom 300 square foot apartment in New York right some of the realities of the world so that model need to be cross-applied to these Millennial and certainly gen Z donors as well because they don't have the financial capability to pop down a credit card and spend a thousand dollars

00:23:57 on an auction item and then materially meaningfully pay that off because their income is great the constrained and they're paying back student loans in a way that our parents and grandparents generation didn't have to and I appreciate you know twenty thousand dollars of student loan help that might be coming if it gets out of the Court scenario but if you've gone to law school right you're making a good living as a lawyer right if you've gone to a top sort of you know 20 30 40 50 law school it's got 200 000 in loans just

00:24:23 for that right unless you have that intergenerational wealth do you know how much on even on a 25 or 30 year payback basis servicing 200 000 of loans even with a de minimis interest rate is you're talking two thousand dollars a month sometimes right to service that loan and you're maybe making a starting lawyer salary between 100 and 150 000 take taxes out of that you're working in a major city because that's what the major law firms are that ten thousand dollars a month of take-home is already

00:24:52 one quarter gone now you layer in your basic living expenses and you've got almost nothing left right bonuses don't exist in the way that they were less Millennials and gen Z are able to engage in sort of other wealth building activities like buying homes or getting involved in the stock market a lot of things that are coming against you so donate out pay later you know in our scenario interest in fee free spread out those payments over time three six and nine months it's it's a it's a wonderful

00:25:19 thing we would be doing this even if this wasn't a financial reality because it is always helpful to be able to pay over time but we are also a necessity in order to engage those younger generations and so what we encourage a lot of our clients to do is not only Market donate now pay later to your current audience but if you're a little fearful of going after those Millennial donors right now offer them donate now pay later show them that you're not saying I need a thousand dollars in my pocket today to go out and do good in

00:25:46 the world be like I'm still going to get the thousand dollars from be generous amazing they pay me up front but I want to make sure that I'm being respectful of your wallet right and the other difficulties that you're facing I feel like a lot of non-profits you know I'm Jewish so I can say this they go the Jewish mother around right and they guilt you a little bit oh come on you can't give a thousand dollars today there's almost dogs there's veterans without meals what are you doing and you do it and it's it's painful to do that

00:26:12 and the reality is that non-profits have to be a little more respectful of the fact that as much as we want to help as Millennials and gen zeers sometimes we just can't we can give up our time we can't give of our treasure so that's why donate now pay later really fundamentally has to exist now interestingly I will tell you our our typical donor is much younger than the average donor which you know the average donor depending on your organization be 60 to 65 years old our average donor is actually around 48 49ers years old so

00:26:40 much younger but it's not still necessarily that a 25 year old right and that not yet but that is because a lot of non-profits are fearful of marketing to the Young Generation because they don't think the ROI will be higher and I have to encourage you you're missing out an opportunity for like 20 to 25 of the population by going directly to them to have this dialogue in conversation with them very little to lose a lot to gain they're already sort of behaviorally institutionalized to this type of you

00:27:11 know sort of buy now pay later you know sort of mentality and behaviorism donate out pay later makes sense to them and so I would encourage all folks whether you're just offering a sustaining giving program um or you're offering you know sort of you know donate now pay later as we do to really lean into that for the acquisition the donor acquisition equation for the sub sort of 40 year old donor I think you'll get some really material Roi you know this is so amazing I you know as soon as I heard from Dom

00:27:40 your uh co-founder in be generous I was I was on board like I love what you're offering through be generous the Donate now pay later talk about Innovation um so this is just fantastic I hope that all of our viewers and listeners will certainly check out the website it's beginnerist.com and uh co-founder and CEO you heard from him directly today Neil St Claire Julia mentioned the uh blog that's on their website so definitely check that out it has just a wealth of information and uh Dives Dives deeper on this conversation so Neil

00:28:14 thank you it's always a fantastic conversation and I cannot wait to see where this platform goes thanks so much really appreciate you having me on it's been a lot of fun hey everybody again I'm Julia Patrick CEO of the American nonprofit Academy been joined today by the non-profit nerd herself um these are the the things that we live for we love these conversations and we are so fortunate uh to have a sponsorship of boomerang American non-profit Academy your part-time controller be generous who we had Neil

00:28:44 today um on fundraising Academy at National University Staffing Boutique nonprofit thought leader and non-profit nerd you know this uh is the type of discussion that we have a lot on the nonprofit show not just talking about those things today but really expanding you know the Horizon and looking that we do have a trajectory to follow if we want to be sustainable and so Neil thank you so much for giving us a new insight onto that my pleasure thank you again yeah thank you hey Jared since I flubbed

00:29:17 up so much on our exit last week I'm gonna let you take us out well we have a lot going on this week it was a wonderful opportunity to kick off with Neil today with be generous we invite you to join us each and every day this week for another Hot Topics that uh we have on the lineup so until then we ask you encourage you remind you to please stay well so you can do well thanks everyone and we'll see you here tomorrow foreign [Music] [Music]