Growth in Giving

As the end of the fiscal year approaches for most organizations, you might be feeling an intense focus on making your fundraising goals. As professional fundraisers, we live and die by achieving the dollar goals we committed to during budget planning. How many of us have felt an intense sense of relief once that number was achieved?

I have always believed it is important to think about both dollars and donors equally. Yes, achieving the cash goal that your organization expects is of paramount importance. However, increasing the number of donors is also important – you’re pouring water into the long-term pipeline.

A bigger question I challenge my clients to think about is if your organization is actually growing fundraising revenue?  It is admittedly a hard concept to consider when you’ve achieved your goal, allowed yourself five minutes to celebrate before already starting to panic about achieving next year’s goal. However, the Growth in Giving metric is a powerful metric that every organization should be using.

Simply stated, your organization’s growth in giving is the sum of gains from new donors, recaptured donors, and increases from existing donors versus the losses from downgraded donors and lost gifts from new or repeat donors.

Senior Leadership and Boards of Directors are infamous for subjectively setting goals. “Last year we raised $500,000, so… let’s shoot for $600,000.” Is it realistic for any organization to project a 20% increase in fundraising revenue ever, let alone in one year? Especially given the fact that the average growth in giving rate is 3%?

If your growth in giving rate is averaging 3.5% every year, you’re actually outpacing both inflation and average growth rate across all non-profits. If so, a more realistic goal in my example is $517,500. That doesn’t sound like a powerful number, but realistic goals that are surpassed are far better than ambitious goals that fall short.

I also cringe when leadership says, “Well, we have to raise that amount of money (in this case, the $600,000). We need it, and our donors will understand.”  Simply stated – donors do not care what your needs are. Donors care what needs you are meeting, how you’re fulfilling your mission and if you’re being a good steward of their support. And even if you’re able to create an incredibly persuasive case, is it fair to assume every donor will increase their gift an average of 20%?

Your growth-in-giving rate is a true indicator of the capacity of your program.

Establishing a Data Driven Culture in your Organization

Changing or establishing a culture at an organization can be a herculean task. More often than not, the culture of your organization was established well before you came on board. For many professional fundraisers, especially at smaller nonprofits, the idea of a shift in focus or priority can be daunting and the ability to make that change may be out of your control. So, when nonprofit leaders think about establishing a culture within your organization where data is respected, embraced and acted upon, it can seem like a daunting task.

Establishing Culture
The culture at your nonprofit includes:
– your mission and vision;
– how you value your team of people;
– your shared values.

Often times however, organizations confuse “mission” with “culture”. The mission is the work your organization does while culture is the way we behave within an organization and culture can be hard, if not impossible, to quantify. When professional fundraisers work to imbue a quantitative measure into a qualitative culture, a struggle may result.

Establishing or enhancing a data-driven culture must start with the philanthropy operation within your organization. This team must be the first to use data to make its own decisions and then seek buy in from other areas of the organization. According to a June 2017 article in the Harvard Business Review, “Culture change can’t be achieved through a top-down mandate. It lives in the collective hearts and habits of people and their shared perception of “how things are down around here.”  Someone with authority can demand compliance, but they can’t dictate opt.”

What does a Data Driven Culture look like?
A true data driven culture may be easy to describe but can be hard to recognize. Data driven cultures require:
–       Efficient gathering of accurate data;
–       Appropriate storage of data;
–       Ability to easily retrieve data;
–       Capacity to analyze data.

Most importantly, it requires that your organization use that data to make decisions that drive results forward. Results sometimes can be difficult to accept, but you must be willing to embrace them if you’re going to create change to increase impact at your organizations.

In early 2018 the Society for Human Resource Management released an article “Understanding and Developing Organizational Culture”. While the article speaks to an organizations’ overall culture, many of the advantages highlighted relate to the reasons to establish a data driven culture at your organization. “A strong culture can bring benefits such as enhanced trust and cooperation, fewer disagreements and more efficient decision-making.”

Data driven cultures do just that. When nonprofit leaders share factual information with other departments within your organization it builds trust between your department and others. Too often at nonprofit organizations, the rationale behind annual fundraising goals is simply the difference between program income and expenses. Data driven cultures allow professional fundraisers to honestly predict income and make positive strategic decisions.

Why are data driven cultures important?
Nonprofit leaders should work diligently to ascertain important data metrics and analyze the results. Two of the most powerful tools to utilize is the Fundraising Effectiveness Project or the Fundraising Report Card.  Both of these tools provide the user with both beginner and advanced metrics and allows for transparency and trust.

In my experience, I have found organizations that are driven, although not constrained, by data are the most creative and high functioning nonprofits. Having information at your disposal that can accurately tell you about your organization’s performance is empowering. These organizations are able to use their time more effectively – not worrying about “where they are” or “how they’re doing”. They know – because they’ve used the data at their disposal to find out. Certainly, a data-driven culture has an effect on the fundraising side of the nonprofit.

But if used correctly, it can also have a positive effect on Marketing, Communications, Finance and even Operations but above all else allows leadership to make smart, informed decisions at our organizations. In my experience, after the development office, the Finance Office benefits the most from a culture when data is respected and embraced.

For example, organizations that know their donor retention rate (the percentage of donors who gave in 2017 and 2018), know their average gift (total dollars raised divided by the number of gifts) and their growth in giving rate within that population can predict revenue. (Check out our free online calculator to determine your donor retention rate!) It’s certainly not an exact science, but your Finance team will appreciate some background for the budget numbers you’re providing. Conversely, you as a professional fundraiser can approach next year’s budget with an accurate prediction of revenue from fundraising.

Having the data is nowhere near enough – you have to create an action plan to drive towards increased efficiency and effectiveness. Understanding your data and having a plan to make positive change is one of the first steps to creating a culture that embraces data.

In a 2012 study in the Harvard Business “The Evolution of Decision Making: How Leading Organizations Are Adopting a Data-Driven Culture”, more than half the respondents said agreed or were indifferent about the statement “My manager relies more on judgement\gut feel than data to make decisions”. For how many of us is this statement true at our organizations?  While I would never advise to fully discount members of our organizations who are well aware of organizational history, in order for your organization to thrive, you must make decisions based on the information you have and that you know to be true – data.

In that same report, more than three-quarters of respondents said using analytics:
–       increased productivity;
–       reduced costs;
–       allowed faster decision making.

Seventy-percent of respondents said the outcome was “Improved financial performance”. Why as nonprofit organizations are we not embracing the data that we have to make decisions that will lead to positive outcomes?   Data driven nonprofits allow our organizations to focus as many resources as possible to our missions.

Getting Started
Establishing a data driven culture should start slowly.  Nonprofit leaders should embrace three to five simple metrics and imbue them into your work.  I recommend nonprofits should begin by looking at:

–       Overall average gift;
–       Donor retention;
–       Donor conversion rates for appeals.

Those three simple Key Performance Indicators (KPIs) are strong examples of basic metrics to establish goals around.  Make decisions using those first metrics and increase your efforts and you begin to see results and have “buy-in” from staff.  Keep adding additional KPIs as your program and your culture matures

Finally, I encourage you to personally strive towards being an “Analytical Leader” within your organization’s Data Driven Culture. As noted in the 2012 Harvard Business Review report, Analytical Leaders have “refined their decision-making processes as part of a data-driven culture and achieved superior financial results.” With a great deal of competition for donor dollars every day, establishing or growing a culture where data is captured, stored, analyzed and utilized will pay dividends.

What’s old is new again, or is it?

I recently had a meeting with a client and they shared with me how excited they were about a new fundraising tool they learned about. The conversation quickly lead to a question that I love to be asked, “What’s the next, best, really cool trend that’s coming in fundraising?”.  My response, “Nothing is as cool as sitting down with a donor and asking them for money”.  Of course, this quickly took the wind out of their sails, which was not my intention, but I wanted to make a point.

There is plenty of products in the marketplace that will help you raise money, some are better than others.  But the most effective and efficient way to raise support for your organization is to directly ask people to support your work.  Since before there was ever a profession known as fundraising, people were meeting with each other and asking for things.  I know it sounds much simpler than it is, but I encourage you to always be focused on directly asking people for money.

Major donor fundraising is one of the cheapest ways to raise dollars.  According to a 2005 Ketchum Canada study, average costs were $0.12 per dollar raised to a high of $1.50 per dollar raised. Major gifts, partnerships, capital campaigns, planned giving and sponsorships were in the lower cost range, while acquisition mailings, special events, and telemarketing were in the higher cost range, with direct mail to existing donors and earned revenue in the medium cost range (Spears and Morrison, Philanthropic Trends, 2005)

Stick to what our profession has always done – meet with people, get to know their passions and ask them to support a great cause!

An important message from a noted philanthropist!

In early April a well known and well-respected philanthropist in my community (Albany, NY) sent the following letter to the editor of The Daily Gazette newspaper: 

This is an important message to charitable organizations holding fund-raising events and galas. The formal part of most programs, including speakers and honorees, is getting too long. There’s too much talk. Audiences giving up their free personal time are getting turned off with long, drawn-out events.

Two recent examples: One had two speakers and lasted over two hours. The second had 15 honorees and lasted one-and-a-half hours. While organizations are doing their best to raise money, there’s a growing insensitivity to audience attention span. “The mind can absorb only what the seat can endure.”

The message to meeting planners is tighten up your formal programs to 45 minutes or less. Recognize a few key people — maximum of three. Don’t overkill a good thing. Please find a way to better facilitate a larger group of people.

We’re happy to support you, but please have pity on the time we are lending you. Run a tight program. Start on time, have an end time and end on time, particularly the cocktail hour. Silent auctions are OK as they are. Live auctions must be limited to seven items or less.

Neil Golub

It is impossible for me to agree with Mr. Golub more than I already do!  For those of you outside of the area, Neil and his wife Jane attend countless fundraising events in their community.  Frankly put, they are at everything and not only attend but, in my experience, also support financially.  I know many clients struggle with wanting to tell everyone about everything during their Gala.  “But they’re a captive audience, we have to tell them while they’re there!”.  Is that the best strategy?

I’ve always advised clients that they should raise more money the weeks AFTER their gala than they do during their gala.  Yes, tell your donors about what you do – but leave them wanting to learn more.  Follow up with prospects after the event, asking if they have any questions or would like to hear more.  

Don’t hold audiences captive!!!  Use your gala to start or build upon your relationship with prospects! 

I went to a gala!

This past weekend my wife and I had the opportunity to attend a fundraising gala for an organization I support.  It is important to point out right away that this is an organization that is close to my heart – not my wife’s!  So while I was up at the auction table bidding on countless things we don’t need or will never do, my wife was sitting at the table probably counting down the minutes until we could leave!  It should go without saying that at the center of every good relationship that involves someone in the fundraising profession is the partner who just wants to go home!

When I returned to the table to proudly announce that I had “won” a book we didn’t need, my wife was chomping at the bit to tell me how excited she was about a conversation she had just had.  It turns out that the head of the organization took a moment to sit down at our table and introduce himself to my wife.  On the outside, it may have appeared that he just wanted to sit down for a second.  But the reality is that he took a moment to cultivate my wife.  He knows that this cause is more “my thing” than hers.  So he took the time to sit down, thank her for our support, ask if she had any questions about the organization and then shared the great things the organization is doing.  As soon as I got back to the table, my wife quickly ran off a list of five programs that the organization was doing and told me how excited she was about one of them.  “Do we give to that program?”, she asked.

Special event fundraising is not a passion of mine.  It is one of the least effective ways to raise money when you look at “cost per dollar raised”.  But it is an incredible opportunity to cultivate your donors for larger gifts.  You should be raising more money the day AFTER your special event then you do the day of.  Strike while the iron is hot and get to know your donors (and their spouses\partners).

This is also a good lesson in not assuming your donors are serving as your best ambassadors to their spouses, business associates or circle of friends.  Needless to say, this organization that was always close to my heart is now, apparently, close to ours!


Where are you going?

One of my favorite Dave Matthews Band songs is “Where Are You Going?”.  Dave Matthews wrote it as more of a love ballad, but I like to think of this song as the Strategic Planning anthem.  Okay, maybe that sounds a little too “nerdy” – but, the title asks an important question that every good professional should be able to answer.

Does your organization have a strategic plan?  Do you have an idea of where you want your organization to go in the next three to five years?  This is imperative to ensure success – you can’t guess where you’re going, you have to plan to get there.

A robust strategic planning process should include all the stakeholders; the board, the executive director, and senior leadership of the organization.  This process is meant to be a “meeting of the minds”.  It is an opportunity for board members who inspire to work with staff that manage programs and operations.  Strategic Planning is an important process that should not be taken lightly.

We encourage non-profit leaders to be able to answer, “So, where is your organization going?”  Do you know?  Would you and your board chair answer in the same way?

Strategic planning is a process – embrace it!

Spring Cleaning

Until recently, the northeast has been spared from major snow this winter.  We were even more fortunate to have a few days of 60 and 70-degree weather.  I took this opportunity to go through my closet and donate a few items to a local charity.  As I told my wife, it was an “early spring cleaning”.

It also got me thinking about the importance of “spring cleaning” your data.  I know for many organizations the end of the year was very busy.  Many donors were making gifts early to maximize their tax benefits.

So in this “lull” before “gala season”, now is a good time to look at your data and clean it up!  Run a duplicate record search, run your data through the NCOA (National Change of Address) database, perform an e-mail append, etc.  Now’s the time.  You’ll be thankful this fall that you took the time to complete this important task.