Hello friends! You can help me get selected for the big NTEN conference. Please vote for my workshop. When you go to this link, you will see a list of five options. Vote for Toward a Predictive Model for Fundraising. Thanks for helping!
UPDATE: We were selected! Very excited to be chosen from lots of good proposals.
This is the second half of a two-part blog on reducing overhead. As I mentioned in the first part, these suggestions are not meant to "starve" your organization or keep you from making necessary investments. But they are intended to encourage sound financial management and to suggest an effort to shift resources into program activities for carrying out your mission. We started with the three suggestions. Here are four more.
4. Eliminate inefficient fundraising practices.
That’s you, direct mail acquisition. If the American Cancer Society can do it, so can everyone else. What about special events? Is that gala or golf tourney really raising money -- even when you factor in staff time? If it costs more than it raises, then you’ve got it upside down. (Related to this, make sure you are calculating your own ROI. It’s amazing what other people can do with statistics.)
5. Don’t hire outside help for advice you can get for free.
Fundraising is 95 percent implementation. It’s not complicated. You sit down with a donor and ask for a gift. You send out letters and emails. If you need help developing a fundraising plan or convincing your board to help, take advantage of the free resources on the Foundation Center website. Or these other sites which have good advice.
6. Consider bringing some services in-house.
It’s easy to get in the mode of thinking that others can do it better. It’s also expensive. Don’t be afraid to stuff a few envelopes now and then. It can be surprisingly therapeutic.
7. Just say no most of the time.
You can probably justify spending money on lots of important stuff: a new database, a wealth overlay, maybe even a glossy case statement. But as development staff, our job is to get people to give us money, not the other way around. Keep the money flowing in the right direction.
As a follow up to last week's charity watchdog webinar, I've compiled some ideas for reducing overhead. I'm not suggesting we "starve" our organizations, just that we be savvy managers and good stewards of our donors' dollars.
The less we spend on administration and fundraising, the more we have to put toward program work. So here are some ideas for getting rid of unproductive activities or unused resources -- not because of the watchdogs, but because it’s the right thing to do.
I've split these recommendations into two posts. Here are the first three:
1. Conduct a top-to-bottom review of all contracts.
Do this for every vendor, every consultant, every lease. Explain that your audit committee has requested the review, so no one feels singled out. Examine all regular payments. If you’re not the one signing checks or approving every invoice, sit down with the people who are. Ask questions. Are these services still necessary? Can we renegotiate a better rate?
2. Look for pro bono support from professionals and help from volunteers.
Check with professional associations like the local bar association for pro bono help. Post volunteer jobs with VolunteerHub or VolunteerMatch to find long-term volunteers who can help with office tasks. I once found a correspondence secretary through VolunteerMatch who generated our major donor thank you's. Every week. For three years. She was like an angel from heaven.
3. Only hire fundraising staff when you absolutely have to.
Remember, a fundraiser needs to raise enough money to pay for his salary and benefits, to cover the cost of equipment and supplies, and to fund any special budget needs that come with activities he manages before he produces any net benefit to your organization. The average salary for manager-level development staff in metropolitan areas is around $80,000, so there are only two conditions under which I'd recommend hiring a fundraiser:
- You need someone to manage existing fundraising activities. In this instance, you are either replacing outgoing staff or you need to free up the executive director or program staff from heavy fundraising responsibilities.
- You are positive -- I mean, absolutely certain beyond the shadow of a doubt -- that there is potential for significant revenue growth. You can quantify it. You have prospects. You have names and dollar figures. You just need someone to help you take the next step.
More tips for reducing overhead to come . . .
Do you wish you had a predictive model that would help you answer questions, such as:
- Which new fundraising activity is most likely to yield the best returns?
- How much does consumer confidence impact my bottom line?
- What level of experience should I look for in my next development hire?
At a training I gave last month on strategies for upgrading donors, a major gifts person wanted to know which of the five strategies -- conditional ask strings, sustaining programs, recognition lists, matching campaigns, or second-gift asks -- would produce the best results. Unfortunately, I couldn't point to an analysis of industry-wide data that would help us chart a path to success. But then I thought, why not? Why can't we have statistical models for the development office?
For new development staff, I advise going big. That is, starting out with an organization large enough to support your growth and development as a fundraising professional. At the early stages of your career, it’s wise to work in a place where you have access to training and other educational opportunities to round out your technical knowledge -- such as, applying statistical analysis to your donor file --as well as to acquire some level of expertise in areas like nonprofit accounting and regulations governing charitable solicitation. Like any field, fundraising has its own specialized areas; planned giving and grant-seeking are just two. Gaining knowledge in these and other areas will make you an essential player in any development office.
But you will need to commit time to expanding your knowledge base, and it will be much easier if your organization supports your efforts -- and not just in theory. A large organization ($10 million plus), in most cases, is in a better position to underwrite the training you need and to give you work time to complete it.
As someone who benefited early on from week-long courses in planned giving, marketing, and major gift development, I can attest to the benefits of early-career training. It helped me immensely as I moved among different organizations and moved up the ladder.
Of course, if you opt for small organization, you can still access lots of free and low-cost training (check out the Foundation Center), but you will still need time off to do the training. The reality is that in small shops, the profit margin is slim, the staff is stretched, and time off for career development may be difficult to manage. In a bigger organization, you may feel lost in the bureaucracy and you may sacrifice some autonomy, but the payoff in learning will be worth it. And you will be a lot more valuable to the next place you work.
It’s important for all frontline fundraisers--board and staff-- to understand ‘the law of the vital few.’ More commonly called the 80-20 rule, it means that 80 percent of your funding comes from 20 percent of your donors. To demonstrate this point, I run a complete list of all gifts for the year. Every single one. The report contains thousands of gifts and is usually two inches thick. Then, in a meeting with everyone present, I remove the top page, hold it up, and say “The donors on this page make up 50 percent of your revenue.” It’s definitely an attention-getter and helps drive home the point for paying special attention to the vital few.
I have been immersed in statistics this week, so I've been thinking a lot about how best to apply the science of data to help us predict the results of our fundraising efforts and steer us toward the best chance of success.
When it comes to grantseeking, particularly from new foundations, we sometimes lose sight of how improbable it is to get that first-time grant. We may be overly optimistic. But by analyzing a couple of key variables as part of our research, we can dramatically improve our predictive abilities. At some point early in the process, try to ascertain the following:
How many grants did the foundation award last year?
What was the ratio of renewals to new grants?
How many new applications were considered?
Of course, there are a lot of factors in grant decisions, but foundations do tend to be creatures of habit. It’s safe to say that the best predictor of whether you will receive a grant is whether you have gotten one before. But where does that leave those who are going for a first-time grant?
Here’s an example of how to use the data you have collected to estimate your odds.
The XYZ Foundation receives 100 applications and awards 50 grants. So, if we submitted our grant on time, we should have a 50-50 chance, right? But what if the foundation awards 47 renewals and only three new grants. And suppose the number of new grant applications was 50. Our odds change dramatically. When it’s three out of 50, we now have only a 6 percent chance of receiving the grant.
The statistics may seem daunting, but don’t let them deter you. Use this knowledge to plan more effectively. First, expand your initial prospect list. If you started with ten, expand it to 25. Second, balance out your list with near- and long-term prospects. In some cases, the whole process may take 18 to 24 months, so plan accordingly. Third, if you are not successful on the first try, go back the following year. Persistence usually pays off.
As a development director, you no doubt will be called on to predict the likelihood of receiving a grant. By using the right statistics, let’s hope your crystal ball will be just a little bit clearer.