By Sarah B Lange under Uncategorized on May 28, 2024

Using Metrics To Measure Your Fundraising Success

Check out Ellen's Donor Fundraiser Journeys PPT HERE!

Hey everyone, I'm Sarah Lange and I'm here to spark the philanthropy revolution. The word philanthropy means love of mankind. My show is all about the ways we can revolutionize our fundraising so we can raise more money and do more good.

Sarah: Hey everybody, it's Sarah Lange here with another episode of the philanthropy revolution. And for those of you who don't know me, I am a professional fundraiser. I started my career in 1989 and I've raised over a hundred million dollars and worked with over 200 nonprofits. And I love what I do. I believe wholeheartedly in the value of the nonprofit sector. And Today, I am so excited to introduce my guest, Ellen Bristol of Bristol Strategies. Ellen is gonna talk to us about metrics, which is, in my opinion, a much needed discussion because more and more people want to know what is the actual investment that I'm making. So they're not necessarily looking at it as a typical investment, but they wanna look at the return on their impact and metrics will help us measure that. So, Welcome Ellen, I'm so excited you're here. Do you wanna tell people a little bit more about what you do and how you do it?

Ellen: Sure, sure. It's so cool to have this conference with you. I've been looking forward to it. I founded Bristol Strategy in, by the way, it's one strategy, not multiple strategies.

Sarah: Okay.

Ellen: I founded the company back in 1995. And I can hardly believe it's almost 30 years. But I did it after a 20-year career selling mainframe computers. And we won't spend a lot of time talking about the downside of corporate America. And there are many problems. But when I got fascinated. by the nonprofit sector, I realized I really knew how to sell. I knew what selling was about. And so I hear all this stuff about fundraising, and I see how many nonprofits are struggling to bring in $50,000 a year. And then I looked at the way they raised money. And it was such a Choose your metaphor here. A crap shoot, shooting in the dark, hoping God would provide. And very little about, something I did learn in corporate was how to manage the folks who do the work of acquiring the dollars or the shekels or whatever it is you're using as currency today to make a difference. And I thought, I know how to do that. This could be really cool. So after a while, I started to work with nonprofits. I'm in South Florida. There was a time we’re living in Miami, we no longer live in Miami, but It's all, you know, there's a big nonprofit community in any tourist environment in the U S anyway. And I pretty soon realized there were, how do I put this, strategic elements that simply didn't exist in a lot of nonprofits. They didn't know how to express their value proposition. They didn't have the marketing discipline to say people in institutions who fit our “funny shape door”, to use “wonderful” phrases I did not invent. Those are the ones who are gonna give to us. The people who give to the New York City Ballet might not be interested in our horse rescue in rural Wyoming. Okay, so that was part of it. And the other part of it was what we're gonna talk about today, which was metrics. So I was in the process of, you know, just sort of changing my religion from corporate sales to nonprofit fundraising. And it was then I had the breakthrough that the folks raising the money, be they fundraising professionals, development directors, which is a very poorly defined term, or volunteers, or members of the governing board really sort of didn't get it, you know. And I've had this conversation more times than I can tell you in the past three years, describe the fundraising process to me. And the answer is, well, you find a prospect and then you do a lot of stuff and then somebody makes a donation. I'm kind of a systems nut. I don't mean technology systems, although I'm a data geek and a technology fiend. I thought that seems kind of messy to me. Does it make sense, Sarah?

Sarah: Yeah, well, and also it, like goes back to what you're saying about, it's such a crapshoot at that point. If you don't have a process that you're taking people through and you're not taking your donors on a journey. then you might get that first donation, but if you're not, if there's not a system or a process or a journey in place, they're probably gonna walk away between gift one and gift two. Now, all the stuff that you just did to get their donation in the first place, now you gotta go out and find your next victim, right?

Ellen: And another victim, exactly, exactly. Especially since at the beginning. If you're in the private equity market and you're starting a business from scratch and you want to get venture capital, they call the first round of capital investment, the friends and family round. So that's what we do in the nonprofit sector. We start a nonprofit and we put the arm on our friends and families and in-laws and do us a favor or I'll come and break your knee.

Sarah: Right.

Ellen: So I thought, you know, there's gotta be a better way. There was another thing I discovered. I didn't discover this when I started building the methodologies and developing the metrics. I came to understand, I wanna talk about the leaky bucket assessment.

Sarah: Okay.

Ellen: I came to understand that there was a vast disconnect between what the fundraising team was doing or thought they were doing and what the boards thought they were doing. So this sets up a very fertile field for toxic conflict between the board and the fundraising team, which probably includes some of the board. So eventually I actually created and trademarked a methodology. Little did I know what a methodology was, but a methodology, in case you're interested, folks, is a “system” of not necessarily in this order: Benchmarking criteria, key performance indicators, business rules, guidelines, data collection, and reporting methods. And I'm kind of a big picture kind of guy and I could see a lens like that would bring so much clarity, so I designed it. And then I realized nobody's coming to my website, so I have a cool idea. Let's put something interactive on the website. And after I came up with that idea, I'm a little bit of a slow learner, I came up with the notion that something we should put on the website should relate to these challenges and oftentimes the challenges were invisible to the users. They were not front and center. They were not thought about. They were not discussed. So with a great deal of help from a wonderful colleague of mine who is now retired, I designed the first version of the leaky bucket assessment of effective fundraising. This is something else I learned about formal methodologies. A methodology is great, but a methodology without data to support the need for that system is not so great. So I know you think the leaky bucket is pretty cool.

Sarah: Absolutely.

Ellen: What was it about the leaky bucket when you first got to look at it or at the benchmarking study?

Sarah: Because I'm like you, I want to know. First of all, I just want to know, right? So I don't want to guess, I don't want to hope, I want to know. Because nonprofits are already struggling to make ends meet. And so I would rather know that your strategy is working or that it's not working so we can start figuring out, OK, is this ball of yarn worth untangling, or do we need to just go back to the drawing board? So that to me is what's so exciting about measuring things because it gives you a roadmap to how to improve and then that leads to more money, right? So that to me is just, yay!

Ellen: That is so great. And I'm with you. I mean, one of the things that I also have discovered about the nonprofit sector, especially that we're limiting this conversation to small to midsize organizations.

Sarah: Right.

Ellen: Because the biggest and most well-known organizations like Harvard have by necessity learned how to manage all that stuff. I was friends with the managing director of the Mormon Church's philanthropy unit. And she said, we keep people for a long time, and there's 350 of them, so I have to be able to manage them. So back to the leaky bucket, this survey has nine statements in it. And they're all open-ended questions with “choose one answer” or “choose multiple answers”, just nine statements. And they ask things like, what are your organization's standard practices for qualifying a prospective donor, acquiring donors, retaining donors, upgrading donors, staffing your organization, what's in your fundraising toolkit and so on. My all-time favorite is the ninth statement which asks in a more diplomatic way, what do you do when your fundraising tanks? What do you do when fundraising is below the desired levels? You know, you don't want to insult people. And those answers are pretty amazing. One of the things that I think you'll find interesting, you Sarah and everybody who, or the one person who may be listening to this, is there's been so much attention paid to donor retention ever since the AFP's Fundraising Effectiveness Project came out in 2006. Well, guess what folks? The percentage of our 1,537 respondents, this thing came out in 2011, it's still viable. The percentage of those who have no, or like without any standard practices for retention or kind of encouraged to retain is about 76%. But the percentage of those who lack a documented ideal donor profile, including giving motivations, is around 84%. So the problem isn't retention. Or the problem might not just be retention. Why aren't we retaining donors in the first place is a question a geek like me would ask. What's the root cause of poor retention? And if you have more clarity about your value proposition and who is right for you, the likelihood is you're going to pursue donors who are more likely to get deeply engaged and give year after year, and maybe, oh, maybe leave you something in their will. So I know we're supposed to be talking about metrics, but I'm telling you, there's a lot of metrics that we could be looking at. And being able to kind of dig into why things are happening or aren't happening can only be done if there's data, you can't manage it if you can't measure it. And you have to measure the same things the same way every time to get anything analytical out of the data.

Sarah: I think you're bringing up such an important point, because so many people are struggling with so much role compression that they only have enough bandwidth to worry about where the next check is coming from. Like, I always start with what I call a donor data dump because I want to see who's in your database. And what I inevitably find is that there is a donor profile. You just don't know it.

Elle: They don’t know it. Right.

Sarah: They've already self-selected into your organization, which is why I want to do the donor data dump and the analysis because we're going to create the ideal donor profile of your existing donors and also I guarantee that there's a bunch of people who are giving to you who have been raising their hand for years saying, I love you, can we go steady? But you've never upgraded them, you've never had a conversation with them about…

Ellen: You've never had a conversation with them. That's one of the critical pieces. And something like, let's just, so we don't spend the whole 9,000 hours talking about somewhat trivial, well, not trivial, but other matters. Let's frame this conversation around the concept of the major donor, the donor who is or could be giving whatever your floor is. The AFP says it's a thousand dollars. A lot of our clients say it's higher than that. But anyway, whatever you guys consider to be major. And the reason I'm emphasizing that is you can't track the performance of an individual donor who gives you $25 on giving day, right?

Sarah: Right.

Ellen: You want that, you want to kiss their feet because it probably represents a significant investment on their part. But a lot of the specific metrics I want to talk about today are easier to see when we're talking about larger investments, right?

Sarah: Right.

Ellen: So we got to start with the fact that we have to know what kind does it do to an ideal donor. And in some organizations, there's more than one. And then we kind of have to figure out when you do the donor database, you want to figure out who's- Oh, hi, Elly. My dear friend, Elly, just going to…

Sarah: Oh, great. Hi Elly. Elly, she runs that Facebook group, right?

Ellen: No She’s…

Sarah: Oh, that’s a different Elly.

Ellen: Yes, she’s a different Elly. Anyway…

Sarah: Okay, sorry.

Ellen: Elly is a big shot in the community for blind and serving blind and visually impaired.

Sarah: Oh, awesome.

Ellen: So anyway, where was I? Yeah. The way we help the client develop an ideal donor profile includes many things, but one of the most important is, hey, come up with four or five open-ended questions. Make an appointment with 10 or as many as you can. Current donors who seem happy. You know, they've given more than once, maybe they volunteered, they showed up to your events, they read your newsletter, they post or comment on your post. You get the idea. And talk to them and say, pretend we're not already in a relationship. What is it that makes you interested in gearing to charity? Why a charity like ours? Why ours? What would you think if we were to be successful beyond your wildest dreams? why would that be important? And what would it look like? Why would it be important to you? What would it look like? And then flip the question, this is one of my favorites. Let's say we had to close our doors. What would that look like and why would that be important to you? And upon occasion, our clients have come back and said, we would be thrilled because it would mean we had solved the problem. And others have come back and said, oh, don't even dream of it. I'm going to cry myself to sleep. You know, one of the things we want to know is who are we talking to who wants to support our mission? Are they truly interested in our mission? Or are they part of that friends and family, your brother-in-law that, otherwise don't like much, but he wrote you a check to get you off.

Sarah: Right, but he's probably not gonna write you another one. Right?

Ellen: Exactly.

Sarah: Or maybe he'll write you the second one, but not the third, that's not how it works.

Ellen: Especially if your message is, Oh dear, we're broke, can you help us out? Not a good message. OK. We got what seems to point toward metrics, but isn't actually metrics. Although there is a set of metrics here. If you've got a donor base where you have to sort of segment, do they rank A, B, C, or D? Are they a close match to your ideal donor, in which case it pays for you to invest more of your personal time building that relationship, tightening that level of engagement. If there is C or D, either because of motivation or capacity, love them to death anyway, but don't put a lot of your personal time. So big chunk of my, the foundation for metrics here is understanding that you are human and have a limited number of hours to do this work in. And it doesn't do you any good to be up at three o'clock in the morning on Sunday writing a grant application when you should be sleeping or reading a book or taking it easy or something.

Sarah: Right.

Ellen: So far, we have a foundation. Right, Sarah?

Sarah: Absolutely.

Ellen: Know your target audience right?

Sarah: And also sometimes doing that analysis helps you see where the gap is. So I did this with an organization that serves women and children. And by looking at the data, what we realized is like the vast majority of their donors were 60 and above, women 60 and above, right? Okay, well, there's some implications in about, oh, I don't know, 20 years.

Ellen: And sometimes less.

Sarah: Right, we gotta develop some strategies for engagement and outreach to go where young women are and talk to them about what matters to them and then connect the dots. So that was like a whole different strategy that we developed because we realized,,,

Ellen: Well, it's not even a strategy, it's a different ideal donor.

Sarah: Right, exactly.

Ellen: I'm pretty interested in teenagers because the current crop are more activist and they've grown up in an uncertain world with climate change and warfare of all sorts of things. And don't get me started on politics and the economy.

Sarah: That's another show.

Ellen: That’s another show. But kids these days might or might not have money, but there are prime targets for other forms of philanthropy being involved, becoming volunteers and so on. And it doesn't hurt them…

Sarah: Advocacy, outreach. Right.

Ellen: So we got that. First of all, let me talk about three global metrics that I think should be tracked. And when we say “track” and we're talking about key performance indicators, I just want everybody to understand that a key performance indicator has three components; what you measure, how you measure it, and what your success target would be for that measurement. Other people seem to refer to success targets as benchmarks. I don't think that's really the definition of a benchmark, and you start with mission impact metrics. So there's a lot of stuff we do in nonprofits that doesn't seem measurable. So we have to find ways that are measurable. So an example I often use is, in the next 12 months, every child in our neck of the woods will obtain at least one book from our nonprofit. OK, so we're pretending we're a literacy project here, right? And then we might say we want to achieve 500 families where parents are reading to their children every night for at least 15 minutes. So we can track those things. And the reason you wanna track those is that's the data analytics of your impact. And if all you can start with is the number of people who came to the class or who ate the food or whatever. It's not rocket science to count up things like that. So now we've got to look at metrics, the global metrics for fundraising. You talk for a minute, because I have to take a sip of water.

Sarah: Sure. Yeah, I think one of the things that you're saying that is so important is, it's not just about measuring our impact, but also it has to come from the other direction. So for example, if one of our measurements is that we want to measure how many parents are reading 20 minutes a day to their child. Okay, well, where did those numbers come from? Well, it comes from the research that shows that when you read to your child, at least 20 minutes a day, their literacy, do you know what I mean? Like, so we can't just throw spaghetti at the wall and pick a random number. We have to look at the literature that's out there to say, what impact is this activity going to have? We know that…

Ellen: And how do we measure it?

Sarah: Yeah. So I feel like it kind of has to come from both ways. What do we want to achieve through our mission but also what does the literature tell us about our industry and what success means, right? So we all know nobody's…

Ellen: Precisely.

Sarah: Yeah, so go ahead.

Ellen: Anyway, there is a challenge in creating metrics for fundraising because fundraising means money and money means numbers. So the challenge there is it's easy to measure a whole lot of the wrong things. I have no problem measuring your total income or your total income by segment or your total income by segment and by month. That's great, but it's a trailing indicator. And if you don't know what happened upstream, you're gonna get in trouble downstream. So the big three global measurements are not numbers of dollars, those come later. Number of donors, you remember we're just going to frame this in terms of major gifts, the number of donors we acquired in the current 12 month period, you reset it and you can reset your targets at any point based on reality, right? You know, you might have, you might say this year we want to acquire 50,000 new donors above thousand dollars, wouldn't that be lovely?

Sarah: That would, but it's also…

Ellen: We’re not really a one person shop, right?

Sarah: Those are the metrics your board writes after they've all had a bottle of wine, right?

Ellen: Exactly. That you paid for. So number of donors you've acquired, number of donors you've retained, and number of donors you've upgraded. So those retains should be, some years it'll be a smaller number. I mean, if you're just starting out, your need to acquire donors, probably a little greater than your need to retain donors and your ability to upgrade those donors. If you've only been in business two or three years, I'm sorry, it's not realistic, but it's a great idea to say this is our, you know, if we could raise gifts of a thousand dollars and we could raise 12 of them that would be $12,000 one donor a month, right? Yeah, great, so we've got a great metric there. Acquire 12 donors at $1,000 or more in the course of a year and break it down to one a month. So, now, why do I say break it down to one a month? Because donors acquired is a trailing indicator, just like money in hand is a trailing indicator. So you kind of fake out the measurements by saying, if we were tracking this once a month and we didn't land a donor, then next month we need to acquire two donors and we, blah, blah. So we have a way to correct the course early in the game if we have those leading indicators, which I will discuss in a moment. So a little digress… Yeah, go ahead.

Sarah: Well, this is why the process is so important, because if you don't understand the pipeline of how the donor learned about you, fell in love with you, decided to invest in you, then you have no idea how to get, okay, maybe you've got one donor. Now you got 11 more, you got a T up. And if you don't understand the process, I always kind of think of like a major league baseball team. They have AAA, they have their farm teams, there are certain things they do at that level.

Ellen: They have different performances in baseball at college, at high school, and in middle school, right?

Sarah: Exactly.

Ellen: Yeah, that's a really good analogy. Now, one of the things that I discovered to my regret. I hope it's improved by now. But for many years I would talk about the pipeline when I was, you know, back in the good old days when we actually appeared someplace to give a speech. And I’ll never do that even if it's possible because I'm too old to get on an airplane. So I once asked, I started to ask the audience, do you know what a pipeline is? 50% would raise their hands, the other 50% had no clue. So I always had to define the pipeline as a simple checklist of all the opportunities for a donation that are open, that have been where the process has started, but it hasn't ended and the mantra if you're gonna lose them anyway lose them early in the process.

Sarah: Exactly. So it's like you know going on a date realizing it's, you know, done. Yeah good, great I'm only wasting one.

Ellen: We’d say, I'll have to check, see you later.

Sarah: Right exactly.

Ellen: So I started to think about this pipeline thing way back in the Pleistocene era when I was still selling mainframe  computers. I didn't get it. Maybe it's just my brain is shaped kind of funny, but the pipeline was presented to me as I was growing in my business career is: Did you do this? Did you do that? Did you stand on your head? Did you sing the university fight song? Did you take them to a topless bar? Did you…

Sarah: Yeah.

Ellen: it's almost like, and I kept saying, but what should I do first and how do I do that? You know, I got a whole lot of, these were all tactical activity driven measurements and not strategic measurements. And I thought about it, I thought about it and  couldn't figure it out. And then I had a eureka moment. And I said, we, those generating income, could do 50 million different things. But the question was, did those things we were doing result in the donor moving closer to us? So I said, Eureka. Let's change the pipeline from a list of activities, which is how conventional moves management is presented. Why don't we track the donor's journey? Can I show you, can I share with everybody what the donor's journey is like?

Sarah: Yes, please.

Ellen: Let me make sure I got the right thing. Okay. So why is it doing that? Oh, I just turned myself off. I'll turn myself back on in a moment.

Sarah: That would be great.

Ellen: Okay, can you all see this?

Sarah: Yes.

Ellen: So. these moves here. say that our answers to the following question, did we persuade the donor to tell us what motivates their giving behavior? And move 2 says, did the donor ask us stuff to indicate that they would be, you know, that we're a good match? So in more blunt terms, move 1 tells us we like them and move 2 tells us they like us. And then we get to move 3. This is not the proverbial ask. Move 3 is, did we find out if they were willing to consider investing in our nonprofit? If so, move them to move 4 where we present a suggestion, a proposal, a recommendation, and get them to review what we're offering and negotiate the terms and scope. Usually, if you've selected the right person, you want to lose them here at move 2 and just stop calling them again. But if they've said, this sounds really good if we could start in X date or can we pay it by the month or something like that. The likelihood of getting to move 5 from move 4 if they say yes is very high. And then later on, we go back and ask them, how are we doing? And then we get them to give again, and then blah, blah. So these are all these three, 6, 7, and 8 are stewardship moves. So we have to track here is moves 1 through 5. Make sense so far?

Sarah: Yeah, totally. I love this. Well, I just think it’s, it’s so at the stewardship piece is so important. Because, you know, we have to stop treating donations like transactions because people care about the mission. This is a gift of their heart, again, philanthropy, love of mankind. And they're trying to solve a problem. And we're in the business of trying to solve that problem. hunger, homelessness, domestic violence, whatever it is.

Ellen: Whatever it is.

Sarah: Right, and so they can't solve that problem. So they're saying, can you please take this gift from my heart, my hard-earned money to help alleviate this problem, right? So the stewardship piece is, if you ever wanna get another donation, you have to engage in stewardship. And again, this goes back to, like the role compression and small-shelf fundraising where they're trying to do grants and social media and individual donors, like people…

Ellen: Yeah, exactly. And if you want to engage volunteers in your fundraising, engage them in stewardship.

Sarah: Yeah, exactly.

Ellen: Have a board member calling somebody who makes a $100 a month gift just to say, I'm Trixie Baphysdix, calling from the board of the Institute of the Bewildered, and I wanted to thank you and see you, and whatever. So I also wanted to show this, which is what we do. We fundraisers. We follow up on the lead. We ask probing questions. We decide if they're a good fit. We establish rapport. We provide a proposal. We review the proposal with the prospect. We thank and we follow up and we go over and over and over again. But this is where we can establish key performance indicators. How many times in a month do we need to get people to move one? By the way, if it's a second or third or a continuing gift, you just start them and move three because we already know why they give and that they love us.

Sarah: Right.

Ellen: Alrighty. Now I have to go back.

Sarah: And we just see your lovely face. Oh, and there you are. Now you're sideways. Thank you for sharing those diagrams, they're so helpful.

Ellen: They're really cool. And what I discovered is in all my years of selling for corporate, I worked in cube farms, okay?

Sarah: Great, yep.

Ellen: The most common conversation was always, Okay, I got them to this point, what do I do next? And I know that happens in development shops too. Do I take Prospect Z to lunch again? What do I do? Is it time to sing the University Fight song? I don't know. In this model, It's always, oh, move them to the next stage by whatever means is legal, moral, ethical, and closure. You know? And don't let them get away with nonsense either. which you do by establishing rapport in the first place. So with each of those moves, we can establish some other metrics. Now, one of the things that's a standard in corporate sales organizations is what's in your pipeline. Now, fundraising professionals have some kind of expectation. What's your goal for the year? How much money are you supposed to raise? I don't know how clear those goals are. You spent time in the field, so maybe you can tell me, are the goals clear? Are they well-reasoned? Are they, you know, how thoughtful are they?

Sarah: Well, what I find is that the budgeting process very frequently does not include the fundraising team, that the budget is developed in isolation that people just add numbers. So I was just talking to somebody in Boston and they have done very well. There's some new leadership and so there's some momentum that's been built. And so they were able to significantly uptick their fundraising last year and they are assuming that will remain to be the case next year. So they have increased their budget by over $100,000 and I see things like that and I want to cringe and scream because that is not a real, you need to look at over time, yes, last year was great. I'm so proud of them for significantly upticking their revenue. Go team, right? That's not sustainable, right?

Ellen: Well, yeah. Exactly.

Sarah: Or is it sustainable? They don't know if it's sustainable. They just throw $100,000 at the budget.

Ellen: It took me years to truly understand what people talked about when they were talking about capacity. And you know, if your capacity to raise money includes your ability to attract qualified or pre-qualified donors, your ability to retain donors, your ability to keep those donors engaged your ability to upgrade certain donors there's all kinds of things we have to do right so if you're a startup and you have a donor base of your mother your two girl cousins and your husband's aunt there's not a lot you can do, you don't have the capacity yet. Your only capacity is to improve your digital PR. If you have a donor base of 25,000 names, there's probably a lot of money on the table that you haven't accessed because you haven't upgraded, you haven't retained, you haven't engaged. You don't know them. Nobody in the organization really knows those people. The number of times, you know, when I was describing how to define the ideal donor profile and talked about going out and interviewing current engaged donors, whether their gifts were large or small. How big is that base of donors in the first place?

Sarah: Right.

Ellen: So then we can say one of three things. We need to acquire more new donors than we need to retain donors. We've retained the same donors for years and now we're in a position like you mentioned to me before, I think before the show of an organization for women where almost all of the donors are over 60. So they need to acquire new donors who are probably from a younger demographic. So capacity, it's something that shifts, kind of like the weather. And you have to constantly be going back and looking at what is our capacity? Are we attracting the right people to our website? This is all your digital PR. Does your website truly represent your mission and its impact? Has it been upgraded since the year 2, right? and so on and so forth. I don't wanna get too distracted by that. But one place I like to talk about here is, okay. However we settle on what our target is for generating income this year, we need to set, so now we have a target, okay? Our target is half a million dollars, whatever. We need to have a pipeline target, nobody does this, okay. I recommend it? Hardly. You've got to raise half a million bucks, guess what you need to have in your pipeline. You want to guess?

Sarah: I would say about two million dollars worth of donors.

Ellen: No, you're overestimating it. It's usually a three to one ratio. So if you say to your team, I wanna see a million and a half potential dollars in our pipeline, we're working on a three to one ratio. One out of three of those donors is kind of close. going to make a gift. 2 million is a lot of money. One and a half is a little less money. So it's not devastating. But that's where progress tracking makes all the difference in the world. It's not only, how much did you close? how much, you know, I hope everybody in the nonprofit sector understands the term ‘to close a deal’, right? It's how many opportunities you have in the pipeline that are qualified. Some years, you are not going to raise more money. And that is okay if you spent the year at the same level, but you built stronger internal systems and you were able to capture the data and you improved your methods for retaining staff and you improved your methods for serving clients, that's fine. Some years you really have to raise more money. Now, Bridget says, normally our goal is based on the budget deficit. It's like, that doesn't seem very sophisticated to me. What's your comment?

Sarah: Well, I mean, first of all, I always make my clients budget for a surplus because if you don't budget for a surplus, you're never going to have one. And as we all know, prices are not going down. They're just going up and up and up. And also I often find that a lot of budgets are constructed with made up numbers.

Ellen: 100%!

Sarah: They're not based on real actual costs and projected increases. So for example, we all know health insurance ain't cheap and it's not getting cheaper. Right. So let's make sure we book an increase so that we don't suddenly say, oh, now we're going to cover less of our employees' insurance. Well, that's going to lead to staff turnover. Right. Which is a very high cost for every position you lose, you're looking at least twice their salary in replacement costs. And that's…

Ellen: Twice their salary and their payroll taxes and whatever benefits you gave them.

Sarah: Right. You're talking about…

Ellen: The cost of loss of opportunity, the whole thing.

Sarah: Yeah, and all the intellectual capital they're taking out the door. I mean, it's all interconnected. And so you can't just take your budget and say, Low…

Ellen: Or you just have them say their cost of living.

Sarah: Right, that's fine, but then you better have some strategies to raise that money that are based on actual real data. I remember when I came back from maternity leave, I was still in the full-time workforce at this point, I came back from maternity leave to find that they had added $125,000 to the budget. And I went to the next board meeting and I held up the budget and I said, so you're going to raise this money? Because I'm tapped out. I had approached every single funder that is a decent match, we are at this point, you know, growing our individual revenue pie, but that's a slow uphill, you know, hike. So where do you think this $125,000, and plus by the way…

Ellen: And magically appear.

Sarah: Right, I'm already working at least 40 hours a week on the activities that you've already assigned to me. So, unless you're gonna, like give somebody else the newsletter or have somebody else manage the, you know, the other pieces of the work that I'm doing, I'm already tapped out. And now I have an infant at home. So I'm gonna be even more tapped out because no one's sleeping. And what, and they were shocked. Like, what do you mean you can't? I was like, fundraising isn't magic. It's not magic. There's no fundraising fairy, you know?

Ellen: If there's no secret place, a door behind which fundraising consultants keep all of the donors.

Sarah: Right, exactly.

Ellen: So if we have the numbers, there's one other thing. Let's go back to the concept of methodology. We kind of covered the idea of the key performance indicator, right? So we set up an annual target for numbers of donors and numbers of an amount of income generated. And then we say, again, if we're in the major donor space just by way of illustration, we need to raise $12 million from our major donors this year, and each major, or $1.2 million, and each of the major donors is gonna donate $100,000. Well, that's doable if you have a deep enough donor base with deep enough pockets to make 12 such investments. On the other hand, and by the way, that means you need to cultivate about 43 new donors at that level every month. So. We're out of capacity to start with. And if, on the other hand, you say we want to raise $150,000 in $1,000 increments? Give me a break. So that's where we talk about capacity. Do we have enough man hours? God forbid I shouldn't say man hours, labor hours available to us. Do we have enough staff skills and talent? Do we have a deep enough database to produce repeat gifts or larger gifts? So all of these are things about capacity. Is there a way for us to serve more people at lower costs? Are we paying a lot of money for a program that isn't very popular and isn't very impactful? Maybe we should quietly sunset that program and put our efforts into what really makes a difference on the ground. So we like to take this concept of the pipeline target as well as the income target and keep track of both. We're almost at the end of our time so I don't want to digress and show you another illustration that when we, this is one thing that's really important for me to say. Folks in the corporate world are less likely to be driven by their emotions. Certainly corporate leaders, you know, they've done and a lot of, a lot of non-profit people sneer at that philosophy. That's a losing battle, folks. But in the process of sneering, they're also throwing out the baby with the bathwater. One of the reasons well-run corporate organizations can make so much money is because they support their fundraising team. They give them mental health days. They have more or less realistic expectations about what they can do. They send them off for training frequently during the course of the year. And more and more, we should be doing the same things. We shouldn't expect miracles from a one person development shop. And we should, I think of KPIs and metrics as guidelines and guardrails. I loved your response in my illustration of the pipeline as a circle. One of the reasons I came up with it was I was suffering from PTSD or being flogged without because I didn't have a good pipeline system at the time. And so you know what to do next. It's clear that you're moving forward. If we discover that you can actually achieve those key performance indicators with less work, hurrah! Let's figure out what you were doing so that the next person can replicate it and we can make enough money. This is a big, you know, drum roll please. Make enough money to pay our people an appropriate wage. Recently saw a job description for a database coordinator or some ridiculously, you know, what is this? And there were 18 elements in the job description from handling all the social media marketing to event planning and running major gifts.

Sarah: What?

Ellen: And the offering salary was $30,000 a year.

Sarah: That's like five jobs in one.

Ellen: Five jobs in one. And you can't live alone. You have to either live with mom and dad, or have a partner who is earning at least as much, if not more than you are, or something. So it's all in the data. Sector-wide, we do a lousy job of understanding that these things are measured. Figuring out ways to standardize what we're measuring, capture data and compare it to our plans and improve continuously, constantly be looking for ways to automate or outsource or delegate to a lower cost channel of some kind, like a volunteer. And the final thing, which I keep meaning to mention and keep forgetting to, is the reporting. The board and senior management are often very far removed from the daily life of fundraising. And so they come up with out of alignment suggestions, right? Why aren't we doing more? We didn't. That's for golf tournaments, right? Bingo night. Let's make sure that when it's time to report to the board, the board sees that there is an ideal donor profile, that there is a pipeline. The board sees a forecast. The board doesn't just see the backwards look of the financial statement on a quarterly basis.

Sarah: Right. And I think this goes back to what you were saying, you know earlier, is that you have to understand what's happening upstream. You can't just look at the results in isolation. You have to understand how did this money get here, you know? And so, because only that way can you replicate your success. Because otherwise you're just going to spend all your time throwing spaghetti against the wall, which is not effective.

Ellen: Or hoping, and on your knees, and under the circumstances you describe, it's when things are suddenly tanking that everybody gets a wild hair and starts jumping around like a lunatic, pounding on you on the 17th day of the 12th month of your fiscal year, saying, hey, you have to raise as much money in the next two weeks as you did all year. And if you don't, we're firing you.

Sarah: Yeah. That's often the time at which I will get phone calls from people.

Ellen: Same here, and what we always want to say, and saying it diplomatically isn't easy. you're in a crisis, you could have avoided it if you'd started working on this a year ago.

Sarah: Yep, 100%. Well, Ellen, I just wanna say thank you so much for joining us today. I feel like we could talk for another two hours, but I'm sure…

Ellen: We could have talked forever.

Sarah: I know. This has been so helpful and such good information for people about thinking, you know, how do you start building a pipeline? You know, what do they need to be measuring? How do they need to be measuring it? Looking at the lead indicators and then the trailing indicators, you know, and understanding how to kind of set some metrics and KPIs that make sense and aren't just the whole spaghetti against the wall methodology.

Ellen: Yeah, hope is not a strategy. And, you know, if you start habits like these when your nonprofit is young and small, you're gonna get to mission impact faster and not enough organizations pay attention to these foundational strategic elements.

Sarah: Yeah, so well said. Well, thanks for joining us everybody. And I'll see you in a couple more weeks. And meanwhile, thanks again, Ellen. I Appreciate you.

Ellen: My pleasure.

Sarah: Bye everybody.

Ellen: Bye.

Thanks for Tuning in, I'll be back in two weeks with another episode. Got topics you want me to cover? Organizations you want me to showcase? Let me know. Also, I'm here to help you revolutionize philanthropy at your nonprofit. If you wanna talk about what that looks like, drop me an email.



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