Podcast | CEO Perspective: Industry Trends to Watch in 2022
In the influential book “Leaders Eat Last," author Simon Sinek opines, “We are not victims of our situation. We are the architects of it.”
Larger-than-life volatility has become a hallmark of our current “normal,” and it’s created challenges for leaders of business and nonprofits. As someone with a unique perspective into both realms, we knew we had to sit down with our CEO and president, Trent Ricker, to get his take on the challenges and opportunities facing our industry as we enter 2022. Ultimately, we have a say in what the future of fundraising looks like, no matter how uncertain the future may seem.
Listen to the episode:
Transcript:
Leah: As we look back at 2021 and some of the curveballs that have been thrown at us from a nonprofit perspective and as a business serving nonprofits, what are the current strengths, weaknesses, and opportunities that you see swirling in our rearview?
Trent: Tough questions. I love it. It's important that we all take the time to reflect on that. I think as leaders, particularly this time of year you are doing a lot of reflecting and business planning. There's a lot of nonprofits that have a fiscal year of June 30th, so they probably do that a little bit in the spring. But at the same time, anytime the calendar flips over it's always a time for reflection personally and professionally. I think that it's fair to say, and I've talked to a lot of leaders about this, the last almost two years have been the most challenging to lead through of my career. Almost everyone I've spoken to would agree. We learned a lot. I think that there's a lot of pride in the resiliency of humankind and particularly nonprofits. I'm extraordinarily proud of the nonprofit industry for unbelievable resiliency.
I recognize that there's still a lot of smaller nonprofits in particular that are hurting, but for the most part, people remained quite generous through the pandemic. And the thinking that nonprofits had to shift into was extraordinary. And so, I reflect back on 2021, both from Pursuant's perspective, our clients, and the market in general with a great amount of pride yet also fatigue. As I look ahead to 2022 I think a lot of us are tired. There are some people in their car right now that are saying, "Amen to that." And there's an incredible amount of uncertainty. We're recording this during a time by which the Omicron variant is getting some news attention in the last just handful of days. The Friday after Thanksgiving it cropped up and then some changes took place over the weekend.
The new variant has created uncertainty and disruption in the stock market as a result. Some anxiety I'm sure that people may feel around their travel plans for the Christmas holiday or post-Christmas. Will they be able to travel or how bad will this be? People are tired, but they also want to feel safe and they want to feel that they're being led well. But those of us that are leading in our jobs, we want to be able to lead well. So I think there's one word that would encapsulate my thinking and what keeps me up at night for 2022 is uncertainty. We've got a plethora of things to be concerned about that are already on our plate, inflation, supply-side issues, labor challenges, but there's also a lot of uncertainty.
You've got midterm elections. You've got still again, this pandemic. Will it turn back into a pandemic? You've got uncertainty related to health mandates, what that means for people as individuals, what it means might be for their job. So there's still some fear. And regardless of anyone's personal perspective of what's fueled by media fear or call it political perspective, it doesn't really matter, at the end of the day, we as individuals, as brothers, sisters, fathers, mothers, daughters, sons, friends, et cetera, coupled with being team members at the places that we work, I think we're tired. And I think with the uncertainty with 2022, I don't think anybody's thinking that 2022 is necessarily going to be smooth sailing.
I hate to be gloomy because I don't think it all has to be gloomy. And I'm sure that knowing you, Leah, and I love you for it, you're an eternal optimist and you'll always twist us and say, "Well, what can we leverage out of this, and what can we look forward to?" There is plenty to look forward to, but it's going to take us continuing to dig down deep. And we've been in a foxhole moment with our families and with our colleagues for almost two years that I don't see us getting out of that foxhole in 2022, so we're adapting. And I think that there's opportunity in the adaptation, but I think uncertainty is probably the word that I would continue to use.
Leah: Another word that we've been using a lot is disruption. Which is such a funny word because it's been a positive buzzword for so long in the tech world. What are some positive outcomes from the present disruption? For example, looking at this list of challenges we identified with the labor market. There is a greater demand for talent because there's been a lot of turnover. There are people who are changing industries and I'm sure like many things, it's happening at an uneven pace depending on what industry that you are in.
There's also an acceleration in early retirements. There are a lot of positions opening up at the entry level because there's shifting up the ladder for everybody. As people decide, "It's time to cash in and enjoy whatever this new world is going to be. I don't want to be working in it, I want to my retirement." So that creates challenges as we have knowledge that might be retiring earlier than we thought it would be, that needs to be retrained and replaced. But then it also means that there's going to be new ideas and innovations to follow. Or there are new technologies that are coming on the scene and maybe devaluing some things but are increasing value in others. And so without getting into any one of those particular things, it's something that on the one hand is worrying but on the other is a revolution that's exciting to watch.
Trent: Yeah. I'll dive into one, and just because I have a philosophy on it that's fun to share. I'm not an economist, this is just an observation as a CEO and president of a business that's experiencing it. So let's take the labor market. This is an opportunity for nonprofits, so this is where I see a silver lining. The pandemic forced organizations to figure out how to work virtually and in so doing, the place that people worked from became less relevant. Pre pandemic, some leaders may have said, "For us to perform at our highest level, I need people to be physically in this office, in this city in order to do this job." And they may not have ever changed their perspective if not for the pandemic.
What they had to do is figure out that even though you might have still been in the same city, you were in your living rooms or your offices or wherever else it might have been where you're performing your work and at that point, it may not have even mattered whether you were halfway across the country or halfway across the globe. This new way of doing business suddenly changed the labor market. What changed, on the one hand, is, I look at it and say, "Wow." And we talked about this in our last conversation. I miss being in community. And I haven't yet decided at Pursuant. I'm right now and I've seen you in the office, Leah, you're in the Dallas area as am I. And so I would love to encourage people to come back to the office, but I want people to feel safe and comfortable. But it's also expanded my labor pool.
If I was trying to hire an account manager, I might have preferred that individual to live in one of the cities where we have physical offices, Dallas, Chicago, Boston area. Which, now, even on some of those we've changed our perspective. We had smaller offices in a couple of cities that don't make as much sense anymore. Let's just talk about Dallas for a minute. Before, I may have narrowed my focus on a geographical area, but now suddenly I have a labor pool that's nationwide. And on the flip side of that, the individual who wants to be an account manager who might have been looking geographically and competing with geographic candidates has the opportunity to work nationwide. "Wow. That disrupted the labor market, some for the good some for the bad. I'm finding it very difficult to find really strong talent." Why? Because they're in high demand. The strongest potential account manager, let's use that as an example, in Dallas now could potentially take a job in Chicago, New York, LA, DC, without moving.
That changes the landscape, doesn't it? That obviously then impacts our selection processes, our pay scales, when you're bringing in some new folks. I think that's part of the reason why this great resignation is taking place, is I think someone looked at it and said, "Hey, I can work from anywhere and that company..." some former colleagues of us at Pursuant, for instance, have moved on to Amazon Web Services, AWS. And we celebrate that. But pre-pandemic, those rules might have been, "You need to move to Seattle." And now it's, "You can work where you are." And so as people were able to extend those options and opportunities. If that shifts the perspective on the labor market, that's a challenge for nonprofit organizations, it's a challenge for Pursuant, it's a challenge for all organizations.
But it's also an opportunity because now I can look at it and say, "You know what? I'm not going to settle for only the best account manager pool in my geographical area. Although I would prefer that they be in community with us and be able to be in Dallas, I'm going to invest in a different way to bring us together virtually, and also physically periodically, so we can still have that sense of community, but I can also go hire the best account manager in Chicago or Los Angeles or Cleveland or Miami."
Is it going to drive inflation? I wonder if the driving of wages, obviously the ability for people to expand their demand for who they are as a team member and where they can work, driving up wages is also contributing to inflation.
Obviously, the government injecting money into the economy is driving inflation as well, but they don't talk as much about the labor market expanding in this way. So it's a blessing and a curse for nonprofit organizations. I do think also we have to take into consideration inflation as it relates to the cost of us running our nonprofit organization or our business, because now it may cost us more for people.
The supply side issues are interesting. Because for those of us in the nonprofit space that do direct response, the cost of printing direct mail and the time that it takes, the disruption, the supplies, the paper issues, continue to make us think in possibility. And frankly, during the pandemic, when it didn't make sense to produce a piece of mail and get it out to your constituents because the information was changing all the time, we did what? We accelerated digital.
It was a digital disruption -- to use your word that you used earlier. How much of that then is in mainstay now because of some of these other challenges that are out there on the supply side issues, when we can say, "Okay, I don't like it, but I can't control it." This is how we're working with some of our clients right now.
Some of these things that we would otherwise want to supplement with a piece of mail and a digital communication piece might not be as possible because of the supply-side issues and the timing that's necessary to get out.
Guess what? Giving Tuesday happened on Giving Tuesday still because it was digital and December 31st will happen either way. But where we used to rely upon getting pieces of mail in people's mailbox and be able to depend upon it, on certain days leading up to 12/31 and then some digital communication leading up to 12/31, is being disrupted in 2021.
So look, we have to realize that inflation, labor markets, supply chain are practical realities. And we as leaders, whether you're leading a small business or whether you're leading a nonprofit organization, have to figure out ways to adapt in possibility with those things in 2022.
Leah:
Speaking to this idea of community and digital and the labor market is, with all of these forces that are happening another thing we've been seeing is the increased demand in the housing market.
Trent:
Yes.
Leah: People are moving and shifting around the country. And some are looking in places that previously were not in high demand. But we see a huge influx of people moving to states, for example, with no income tax. Because if I can keep my job in New York City that pays well, but I don't have to live in New York and pay high state taxes, but keep everything else in my life more or less the same. All of a sudden what I get to take home is bigger. This also means that despite inflation, there might be people who support nonprofits, who suddenly have increased their disposable income, and so what they could give to you has also increased.
Trent:
Yeah. Great observation. I don't know if I'm just not hearing about it in the media because there's so much other noise, but see, those are some common sense things that are happening. If people can work from anywhere, they may choose to lower their cost of living. They may also choose to buy a new home that's more comfortable and suits their needs now, why? Because they're home more, they don't commute as much. They want a comfortable home that accommodates their station in life with their family, their home office, et cetera. So some of these things are not terribly surprising, but regardless, there are people listening to these podcasts today who are fundraisers and you bring up a great point because the question is, how do we fundraise differently from those folks that are in a different life phase as the endemic and the uncertainty of 2022 moves along?
There are also people listening to this who are business leaders. I would imagine, they have to deal with an expense side of our ledger. So even if you're a fundraiser, you've got team members, major gift officers, agencies, communication leaders, and marketing leaders you're working with within your organization. So all these factors have to be taken into consideration. How are you working with your team members remotely? What is the appropriate role? What are the costs you're willing to pay? It's another important aspect for nonprofits. We have to be resourceful in nonprofit organizations. So just because there are certain jobs that are moving, I think too rapidly with their costs associated with them.
But, back to my earlier point, if that changes your geography with where you can look and now suddenly someone can take that job because they live in a state with a lower cost of living, whereas they couldn't have worked for that price if you require them to be in your downtown Manhattan, New York City office, you may be able to think differently in saying, "Wait a minute, that account manager, I can now hire in, let's say Nebraska, as opposed to somebody who's living in New York City." Rather than just getting stuck and saying, "I can't believe how expensive these roles are now and how demanding these people are." Let great talent demand their cost. And you make the decision as to whether they're worthy of keeping or hiring.
But you also have the opportunity to say, "This is what it pays and this is the role." And those folks that may live in a lower cost of living area may say, "I can work for that." This leads me to a nice segue, which I think is part of the silver lining. If your workplace or your mission for your nonprofit is one by which people believe in, and it's who you work with and who you work for as much as the mission and the vision of your organization are real key factors as to why people come to work at the organization and stay there. So stay true to that. Stay true to your mission, make it a great place to work so that people feel valued, feel that they're well compensated and that they're well supported to do their job wherever they may be.
Leah: I would love to build on this idea. Let's look at, for example, one of the customer-based nonprofits. Let's say that they traditionally have only fundraised to people that live within a 50-mile radius of their museum. Well, does this mean that there may be a greater pool of donors available to them in places they may not have previously looked?
Trent:
Yeah, I think it's possible because I think a lot of those organizations needed to expand some of their constituency from the physical presence to the immersive presence, the online presence. And now it's harder for a museum. Off the top of my head, there are certain things that are just downright regional. But to that point, if there are metropolitan areas that are getting an influx of new residents as a result of not just the great resignation... I must have heard this somewhere because I'm sure I didn't make this up, but there is this notion of a great migration.
There are people that are moving for instance, from New York to Florida, to your point. Lower cost of living, no state income tax, fewer regulations, et cetera. Keeping politics out of it, there are various reasons as to why people might do that. If you're a museum, if you are an animal shelter, if you are a local health and human services organization, you have a tremendous new influx of people who were supporting local organizations in New York that are looking to support local organizations in Florida. And you have to have some awareness of that.
At Pursuant are very keen on data and analytics and we use data partners that can help tell where people are giving and where they've previously supported. Boy, is there a strategy to look at incoming residents in your metropolitan area that have previously supported animal shelters and have an acquisition campaign around those? Of course, there is. That's a common-sense type of approach to adapt, I think as we head into 2022 and endemic and all of the chaos that otherwise might take place. How do we adapt? And I think that's the big question people need to be contemplating as they get through the holidays and flip the calendar to the new year. "How are we going to adapt to these things?" Because we can't control them.
I can't control personally, inflation or the great migration or the great resignation or supply-side issues, but I have a business to run and I serve my clients that have organizations to run and serve their mission that still needs to be funded. And so luckily people have been generous. How do we continue to tap into that generosity, and to your point, if there's an increasing capacity? And if I may just to shift topics just for a moment, if we think about baby boomers, who are, I believe it's fair to somebody listening could maybe call my bluff on this, because it's just my instinct, but I believe baby boomers are still the most generous as it relates to giving dollars. But we also know that millennials are an extraordinarily generous generation that is looking to give in different ways and mostly through their time and the impact that they can make. But guess what, the millennials are starting to come into capacity.
How are we shifting our thinking around tapping into the next generation of wealth, and not just the wealth transfer that may take place as baby boomers pass their wealth along, but also just continuing to engage in the various generations as we evolve in these new communication channels and post-pandemic in the endemic world?
Leah: I think a great place to land as we wrap up this portion of the conversation is to touch on the transfer of wealth that is going to be on the horizon, as well as this incredible growth in digital fundraising. I've got a stat sitting in front of me that showed that online revenue grew 32% in 2020, which was three times the typical rate of growth in that channel. So we see the growth in digital fundraising happening alongside this upcoming transfer of wealth, which is also interesting. Something like 72% of the wealth that is going to be transferred over the next 20 years is actually going to go to women.
So we see women, we see this growth in digital fundraising and we see the shift in the generations happening and what their values are, and how they expect to interact with nonprofits. And so nonprofits are very traditionally risk-averse compared to for-profit businesses. What is a piece of advice you could give a nonprofit as they're staring down these upcoming opportunities and challenges? And how would you advise them to respond and prepare and the infrastructure that they need to have in place in order to meet these opportunities as they arise?
Trent:
Wow. There's a lot in there. I would encourage nonprofit leaders to reflect back on their foxhole moments in 2020 and 2021 and where they were forced to be innovative by the environment. So when you talk about in 2020, the kind of digital acceleration, [inaudible 00:22:15] digital transformation, et cetera, there was an acceleration in my mind and primarily it was driven by the fact that people needed to communicate more quickly, more rapidly in ways that digital allow for. And if they were in times of great uncertainty, if you take the first several months of the pandemic, most of our clients, for instance, we changed calendars or stopped physical mail for a period of time because the information may be dated by the time that campaign, or it might be insensitive or whatever else it might be.
You needed to talk about the needs of the day, which then meant you need to get that out digitally. That also conditioned the constituent, the donor to engage as such because they also were becoming, in their personal and their professional lives much more digitally savvy. So this digital acceleration took place. And I think it created a higher floor now. This was a quantum leap if you will. I think that's going to continue. Back to the advice to give the nonprofit leaders though is, even in the face of perhaps some level of stability... So we've talked about great instability and uncertainty, let's say in the spring of 2020, we aren't at that level right now. And hopefully, we never get there again, but we have talked about a level of uncertainty. How do you tap into that innovation when the sense of urgency around instability doesn't exist? But can you create an environment to say, "Given the environment that we're in, can I create an environment within my leadership to think innovatively driven by good creative thinking, what if scenarios?"
If we decide to go back to business as usual as it was in 2019 and early 2020, I think we'd be doing ourselves a great disservice. And I don't see a lot of nonprofits doing it. In fact, it's really cool I think to see nonprofits that were very risk-averse having to take risks out of survival and now be able to say, "You know what, that's a new muscle I've never used before. And some of that stuff was really cool and it worked. So long as we stay vulnerable and we stay authentic to our constituents and we stay humble and authentic internally and we're willing to fail forward and fail fast, but to continue to be the best organizations that we can be, let's continue that spirit." And that would be my advice, obviously to the nonprofit leaders, because I think there's a tremendous opportunity still out there to advance in that. You threw in there a little bit of piece about infrastructure for that.
I do think it takes some level of investment, everything to be on the front-end analytics and insights, to know who you're speaking to, to be very resourceful, I think that's still critical. And then having the appropriate technology platforms, like marketing automation, so that we can be timely and relevant and personal and have our constituents feel that they're in the community by doing as such. And there's great technology out there now to help you to do that. So I think that good nonprofit organizations need to evaluate analytics to figure out who we're talking to and then the appropriate infrastructure and technology tools and marketing automation and CRM in order to make sure that that, going back to what we talked about before with community is intact leveraging technology.
Leah: To point, which we surprisingly haven't touched on as much, personalization is going to be increasingly crucial. It's funny because like most Millennials if I get a mailer from a nonprofit I wouldn't normally give to, it might go right in the trash. But I've actually been opening them lately because I've been just curious. "This person, this organization just cold-mailed me, and they don't know who I am. How personal is this message actually going to be?" And I've been opening them. And the amount of just completely tone-deaf letters I've gotten asking for contributions has been astounding.
Our experiences with for-profit brands like Amazon and Spotify tell me every year exactly what my listening preferences were, I expect a message you send me to have my name in it and maybe know a little bit about me. But when I get something that's addressed to a generic person, such as, "Dear American Patriot," I'm going to tune out.
Trent:
Yeah. I think there's a lot to be desired, I think in evolving acquisition of new donors and I hope to see some advancement there. So to your point digitally, back in the day and they still do it, I loved it, Amazon was a pioneer in this. You might like these books because you bought that book. So you had an understanding of why they were recommending a product to you. Based upon a book that you read, you might like these other books. And now, because they have all these products and services, it's a little harder for them to do that but when we used to be very book-oriented, it was pretty easy and straight to it. When you get that mailing from a veteran services organization, let's say, and it says, "Dear American Patriot," there was a reason that you're on that list.
They know what the reason is, they rented a list. And to your point, Leah, I think we can do a better job of trying to connect the dots. To your point, for some strange reason, the reason why I bring that one up is, I've been bombarded, I've somehow personally gotten on a list of veterans organizations. Although I've periodically supported military causes, I don't have a family that comes from the military. I love the cause for sure. There are very few causes that I don't love. But I don't know how I got on a list where here, particularly as we're heading into year-end, I'm getting bombarded with a variety of organizations, Tunnels to Towers, Wound Warriors, et cetera, et cetera, and for the life of me, I'm trying to figure out what did I do or who did I give to, or what in my behavior put me on a list?
And to your point, I don't know how easy this is to do by the way and I'm sure I've got some great team members and leaders in my company that probably could figure this out. But if I understood the relevance, I may give you the time of day to listen to your pitch a little bit more. "Because you did X, we thought you might be interested in Wounded Warriors," just for instance. Without that connection, sometimes I just look at it and I might look at it as junk mail. I got one and I can't remember from... and even if I could remember who it was from, I wouldn't say it on the podcast, because it was a very expensive mailing. It wouldn't even fit in my mailbox, so it was leaning against my door. And I looked at it and I thought, this was an acquisition package that must have cost a fortune, so they've obviously profiled me in some way as having interest, capacity, desire. And that they're converging at a time, well, right now it was worth that investment to me. But I couldn't connect it.
So to your point, back to personalization, very critical, even if it's making sure to start your letter with "Dear Leah." Here's another example: I love golf. There are charities I like such as First Tee. I received something from that organization that said, "Dear Trent, as an avid golfer, I'm sure you can understand the importance of fill in the blank, fill in the blank, fill in the blank. Here at First Tee we do, fill in the blank, fill in the blank. Would you consider supporting us by doing fill in the blank?" That's much more personalized and relevant because you're connecting my passion for the game of golf with who I am and then what your cause is and how I can help. "Who are you? How can I help?"
So I do believe that acquisition is going to get more and more difficult as... Boy, we could do a whole nother episode on that. But particularly as privacy issues and other things evolve, it's just getting more and more difficult. And we need to be resourceful in those areas as nonprofit leaders.
Leah: So Trent, as we are considering this environment of uncertainty that we're sitting in from a multitude of facets, what is a thought you would love to leave with nonprofit leaders as they are making their final plans for 2022?
Trent:
I think we need to be optimists. I think we in the nonprofit space have an opportunity to be unifiers as opposed to in this polarizing environment that we're in. We've learned that through this uncertainty that we've been in, in the last nearly two years, that people are generous. And I think to tie into even our last conversation around building stronger communities, that we have an opportunity as nonprofit leaders to bring people together. And a big question is can charity be a uniter? And what's your role in that in 2022? Let's face it, I think with the uncertainty that we do have, inflation, supply side, great resignation, great migration, midterm elections, it's likely to continue to be... and for that matter, diversity, equity, and inclusion, we didn't even touch on that. These things are going to continue to create uncertainty and divisiveness in a lot of areas.
What role can we play as nonprofit leaders in the missions of our organization to speak to our own tribes and to build community in a way that unites rather than divides? How can we be bold in our vision? And so something that you said earlier around being a little riskier, taking some risks, being authentic, being vulnerable, but bringing our tribe together, rather than potentially going back to what was a way of being passive, risk-averse, timid. So I challenge our industry, we can be leaders or we can be followers in 2022. I think we need to be leaders. I think we can be uniters. I think we can keep the generosity tap flowing strongly, but we're going to have to continue to think differently and anticipate, keep up that spirit of nimbleness. And by all means those of you out there who did a wonderful job of being transparent and vulnerable in your appeals were rewarded richly because people give from their heart primarily.
And then major gifts obviously head into more of a, "Show me that you can be good stewards of a larger gift than the things that I care most about." You're able to have conversations at different levels with folks, you're able now to have those sorts of conversations via Zoom rather than face-to-face meetings, and people can take the time and we'll take the time to connect with you in different ways. So let's leverage the things we've learned and let's be uniters rather than dividers in a year that's going to be uncertain, likely. One thing is certain for 2022, it's going to be divisive, it's going to be polarizing, it's going to be difficult. And we have a role that we can play in bringing people together.