Are You Getting Your Money's Worth from Your Fundraising Staff?

By Mal Warwick

Admit it. You’ve been wondering, right? You want to know how your director of development or your fundraising consultant stacks up against the competition. That’s why you keep asking questions about “industry benchmarks,” isn’t it?

What you’re really wondering is whether the investment you’re making in your development program—a huge investment, really—is delivering the goods as well as it might. You know that the circumstances at your organization are unique. That no other organization is really comparable to yours. But you want some way to evaluate the effectiveness of the people who are raising money for you.

Well, if you’re looking for benchmarks, you won’t find them here. Benchmarking information is publicly available for certain fields in the nonprofit sector. CASE—the Council for Advancement and Support of Education—maintains performance data for fundraising programs at colleges and universities. And Target Analysis Research publishes nationwide benchmarking information online for the nonprofit sector as a whole—and privately, sub-sector by sub-sector, for nonprofits that are its clients. This is all solid information, and it’s useful up to a point.

But you know as well as anyone that fundraising isn’t just about money—so a meaningful evaluation of its value has to go far beyond the numbers. Getting a fix on the effectiveness of your development staff requires a lot more than statistics, which are only a part of the picture. In fact, when I’m asked to audit a fundraising program, I look at five dimensions of the staff’s performance:

 Personal fit
 The case for giving
 Strategic direction
 Program performance
 External factors

Once I feel confident I have an accurate reading in each of these five components, I combine them in an overall evaluation using a simple weighting formula. Here’s what that looks like:

Component	Weight
Personal fit	30%
Case for giving	10%
Strategic direction	20%
Program performance	20%
External factors	20%
Total	100%

Please join me now in an examination of each of these five components, one at a time.

Personal fit

How many times have you seen poor personality dynamics play themselves out in low staff morale, reduced productivity, and all-around poor behavior? If you’re as old as I am, you can’t begin to recall how many times. Suffice it to say that it would be a big number.

Here, then, are the key questions I ask when reviewing a fundraising executive in an effort to understand how suitable she is for her job:

 Is she a good listener? I’ve never met a fundraiser who was truly successful without being a dedicated and effective listener. In face-to-face solicitations, listening is essential to understand the way that a donor’s personal values and interests might be linked to a particular project. But listening is just as effective in direct mail, telefundraising, or other forms of direct response: how else could she really come to understand what a project or issue is about, or what motivates donors?

 Does your fundraising leader model ethical behavior? Ethics is vital in successful fundraising. When a fundraiser acts unethically, the organization’s credibility goes out the window. And, ultimately, a nonprofit organization’s most valuable asset is its integrity. The public trust requires it.

 Does her leadership bring out the best in others, or suppress it? The top-down model of leadership is passé. Nowadays, leaders are expected to counsel and support their subordinates, not to order them around. Young people entering the workforce these days wouldn’t have it any other way!

 Is she passionate about the cause? The most practiced and insightful fundraisers have been telling us for years that passion is among the most important prerequisites for success in fundraising. Donors may relate to people, as we’ve always been told (“people give to people”). But they relate to people who embody the cause. Passion communicates that link that is central to donors’ fondest expectation—that their gifts will truly make the world a better place.

 Does she inspire staff and donors? Passion alone isn’t enough to inspire others. A fundraising executive must be knowledgeable about the issues or projects the organization is engaged in. She must be ready and able to answer questions. And she must have the knack of relating those themes to a donor’s central concerns and a staff member’s day-to-day work.

 Does she under-promise and over-deliver? If you have to answer to your board for the budget you’re awarded or the income projections you’ve delivered, the last thing you’ll want is a fundraising manager who over-promises and under-delivers!

 Does she provide clear, regular reports to you and the board? The field of fundraising is awash in numbers. If you permit your IT staff or consultant to run rampant, you’ll be inundated with printouts half a foot thick. You’ll get numbers that will answer questions that neither you nor any other non-specialist would ever dream of asking. What you need instead, of course, is something brief, accessible, and regular—a report that brings you up to date on a limited set of key benchmarks. You don’t need to have the book thrown at you.

 Does she understand enough about fundraising to help others do their jobs better? If she’s the director or vice-president of development or has some similar title and responsibilities, then—theoretically—she understands at least the basics about each of the various fundraising programs and techniques in use at your organization. If not, then how could she supervise the specialists who run them? And how could you trust her to make sound decisions about those programs?

 Is she broadly knowledgeable in the field, or a narrow specialist? If her experience is limited to one sub-specialty—say, direct mail, special events, or major gifts—then she’s clearly not in a position to play an effective leadership role with her colleagues who run programs in other areas. Equally important, she may view their work through the lens of her own limited experience. For instance, a major gifts officer bumped upstairs to the VP slot may disdain telefundraising because she doesn’t like to receive unsolicited calls at home in the evening and is convinced none of her donors do, either. Yet the telephone may play an essential strategic role in your organization’s overall development program.

 Does she read, seek learning opportunities, and grow in her job? Research into employee attitudes consistently reveals that those workers who feel they’re expanding their horizons through their jobs are the healthiest and the most productive. They also manage to garner the greatest respect from peers and coworkers alike. Like any field nowadays, fundraising is changing at a rapid rate. Your fundraising leader must stay on top of new developments.

If you use these questions, you’ll be able to get a fix on the personality and behavior of the central person in your fundraising operation. You’ll gain insight into whether she’s a good fit with your organization and in her job. In my estimation, that’s the biggest single challenge in evaluating fundraising staff. But it’s hardly enough to gain a balanced picture. To carry your evaluation further, you need to examine some key aspects of the work she’s done for you.

The case for giving

Fundraising communications is a hit-or-miss business at many nonprofit organizations. Some stumble from one appeal to the next, opportunistically latching onto any popular issue that comes along that is remotely connected to its mission (or sometimes when it isn’t!). As you might suspect, this is a formula for failure over the long-term.

If you, your fundraising staff, your board, and your donors aren’t clear about the themes and values that define your need for funds, then you’re in trouble.

The remedy is a clear and compelling case for giving. Normally, the case for giving is thought of in connection with major gift or capital campaigns. It’s part of the infrastructure that any competent fundraising professional puts in place before launching a campaign for big contributions. However, a case for giving is equally important in raising small gifts through direct mail or other means. The case isn’t necessarily set down in writing (though it’s preferable that it is). But your fundraising manager or consultant had better be able to rattle off its essence when you ask.

A strong case for giving contains, at a minimum, the following elements:

 Organizational positioning. “Positioning” is jargon drawn from the world of commercial advertising. But in recent years marketing and fundraising professionals in the nonprofit sector have come to understand that positioning is just as important for a nonprofit venture as it is in the world of business—and maybe even more so. Successful fundraising depends on clear and credible positioning. Why should any donor contribute to your organization rather than to one of millions of other causes, charities, and institutions? A positioning statement spells out in a few hard-hitting words how your organization stacks up against all the others. How you’re unique, and why a donor should support you rather than some other group.

 Vision and mission. Time and again, survey research and day-to-day fundraising experience have underlined the importance of organizational vision and mission in motivating donors. If your case for giving doesn’t spotlight the vision and mission that infuse your organization with meaning, it will be difficult for many donors to relate their own values and concerns to your work. Few donors care even remotely as much as you do about the details of the issues or projects that fill your day. They care about the underlying realities that cause you to do the work you do. Does the case for giving describe how your vision will be advanced, and how your mission will be fulfilled, by the work for which you seek support?

 Current campaign, program, or project and its fit with vision and mission. Successful fundraising requires that any specific campaign, program, or project must be clearly and understandably linked to the organization’s vision and mission. If your fundraising manager or consultant can’t spell out this linkage, she may be failing to communicate the case clearly to your donors.

 Overview of the goal and funding needs. Clearly, there must be a close match between the funding needs for a campaign and the revenue goal that’s been set. If there’s a strong mismatch, you’ll either fall on your face in trying to reach an impossible goal, and thus look foolish to your donors—or you’ll so far exceed the goal that donors will question why you asked for so much money . . . and you’ll look foolish, anyway.

 Ask specific to this prospect. In major donor fundraising, it’s common practice to set a target amount for the gift from each prospect. Why? Because it almost always works better that way. But the value of setting an Ask amount specific to each donor is no less great in direct response. If your organization isn’t using computer “personalization” to tailor an Ask for each donor you’re approaching in a direct mail, telefundraising, or online campaign, you’ll be leaving a lot of money on the table.

 Donor benefits. In any capital campaign—or, for that matter, in any membership program—it’s widely understood that donor benefits need to be spelled out in advance and highlighted in solicitations. It’s less widely understood, but equally important, in other forms of fundraising, including direct response, that aren’t linked to a structured membership program or campaign. Tangible benefits, such as naming opportunities or free tote-bags, may be few or nonexistent. But intangible benefits must be spelled out clearly, no matter what the circumstances. A fundraising executive must have a handle on those intangible benefits. They’re essential to the case for giving.

So much for the case for giving. Even more important, and weighted twice as heavily in my approach to staff evaluation, is the strategic direction that the fundraising manager has elected to pursue.

Strategic direction

If there’s no discernible strategy for fundraising, chances are strong that the development program is off-track and under-performing. As anyone in business will tell you, the executive’s first responsibility is to deploy the organization’s available resources, including staff as well as capital, in the most productive manner possible—and that requires focus.

To get to the bottom of this matter, I ask the following questions when reviewing the performance of a fundraising manager:

 Is there a strategic plan for fundraising? Has the fundraising manager clearly spelled out—in writing, if possible—the overarching goals of the development program? Is it really clear to you how the organization’s fundraising activities contribute in substantive ways to the achievement of its mission rather than just secure the funds it needs?

 Are strategic priorities clear? Obviously, from your perspective as CEO, there are many priorities to consider. But have you made clear to your fundraising director which of those priorities is paramount—and has she deployed the resources available to her in the development program in a way that clearly matches those priorities?

 Are goals and objectives clearly differentiated? Any thoughtful fundraiser can construct a long, long list of desirable outcomes from a fundraising program. But has your development director distinguished between those that have longer-term significance and take precedence (goals), and those that are of shorter-term importance and are clearly subordinate to them (objectives)? No executive who fails to draw a clear line between goals and objectives is truly doing a good job.

 Are tactics subordinated to strategy? In any well-developed fundraising program, it’s likely that a number of different methods or techniques will be in place. (For example, not just major gifts and foundation grants, but also small gifts secured through telefundraising and special events.) Is your development direct able to relate how each of those techniques is helping to attain the overall goals of your organization at this stage of its development?

To give you a clearer idea of what I mean by these questions, I’ll begin by explaining what I mean when I use the word “strategy.” First of all, strategy is not just a way for you to meet your funding target. It’s not “a way to do things” or to “get from point A to point B.” Strategy doesn’t mean using particular techniques such as advertising, direct mail, or special events. Those techniques are tactics, not strategy.

By contrast, then, here’s what I mean by strategy.

In the purest sense, strategy is a word that comes from military usage. Strategy is distinguished from tactics. A strategy is a way to “win the war.” Tactics are the means to “win battles.” Without strategy, the military—or any organization—is left in a muddle.

Strategy is the concern of the commander-in-chief. It’s about marshaling the resources of a society to wage and win a war. It requires an assessment of the natural resources available to sustain the war effort (food, fuel, and minerals), of the morale of the population, of the number of fighting-age people available for the armed forces. Strategy is about the Big Picture, not the small stuff.

Tactics, on the other hand, are the concern of colonels, majors, captains, and lieutenants—even of low-ranking generals. In a war, tactics are used to move a company across a river, or up a hill, or to put a bridge in place. And those tactics, no matter how cleverly conceived or beautifully executed, must serve the country’s strategy—not the other way around.

So it is, too, with any nonprofit organization or institution.

There are numerous methods you (or your fundraising director) can use to determine the fundraising strategy that’s ideal for your organization. My favorite—because I designed it myself—is an approach I call the GIVES model. “GIVES” because the initial letters of the five alternative strategies I perceive spell out that word when they’re arranged in the proper order, as follows:

 Growth. By Growth, I mean simply a growth in the number of donors who actively support your organization. Growth in revenue may follow—in fact, it almost always does—but it’s growth in the donor base that I believe is central to this strategy.

 Involvement. Experienced fundraisers know that involved donors are more generous. There are many ways to intensify donor involvement, including volunteer programs, special events, surveys and questionnaires, and other “involvement devices” in direct mail or online. The essence of this strategy is to make donors more active so they gain a greater stake in the organization’s success.

 Visibility. For many nonprofit organizations (perhaps most), name recognition is fundamental to success in fundraising. Under a visibility strategy, an organization seeks to raise its public profile, using fundraising methods (such as television or print advertising, for example) that is calculated to increase its visibility as well as raise funds. In fact, some of the time, fundraising may take a back seat to building name recognition.

 Efficiency. Some nonprofit organizations face unrelenting demands to minimize their fundraising costs. Self-appointed “charity watchdogs,” state legislators and regulators, and exacting donors may insist that the organization keep its fundraising cost within narrow limits. An Efficiency strategy is deigned to enable a nonprofit organization to lower its fundraising ratio (the percentage of revenues that are used for fundraising, or, more simply, the cost to raise a dollar).

 Stability. Obviously, almost every nonprofit seeks stability. But few are in a position to plan for stability for decades or centuries to come. That’s the manner in which I use the phrase in this context. For a nonprofit institution—a university or a prestigious medical research center, for example—ensuring truly long-term survival may be a paramount consideration when choosing fundraising techniques.

 G + I + V + E + S = GIVES

Now, before you run off and try to determine how your current fundraising program serves each of these five strategic ends, consider that my approach requires that an organization select only one primary strategy and one secondary strategy. To avoid dispersing your efforts in many directions . . . to avoid the muddle that comes from lack of focus . . . you simply cannot pursue all five simultaneously. For one thing, some strategies are mutually exclusive. More importantly, one or two of these strategic requirements will be paramount at any given stage in your organization’s development—and your fundraising program must be focused to support those priorities.

I’ve written extensively about this strategic planning method for fundraising in two books published by Jossey-Bass: The Five Strategies for Fundraising Success: A Mission-Based Guide to Achieving Your Goals (2000) and (with Stephen Hitchcock) Ten Steps to Fundraising Success: Choosing the Right Strategy for Your Organization (2001). The latter is a workbook that contains worksheets and checklists designed to guide you through the process of picking your own primary and secondary strategies—and matching them to the mix of fundraising techniques (tactics) that is uniquely suited for your organization at this stage in its development.

Use my method, someone else’s, or your own. But make sure your organization (read: your fundraising director) is using some method to focus your development program in a clear, thoughtful, and consistent manner. If she is, then you’re likely to find that the performance of your fundraising activities is superior. In any case, you can’t avoid looking at the numbers. They’re not the paramount consideration, in my opinion—but they’re critical nonetheless.

Program performance

There are at least three different ways to assess the performance of your development program:

 Progress toward the goals specified in your strategic plan.
 Performance against the benchmarks you’ve established for ongoing evaluation.
 Notable accomplishments or shortcomings.

You may choose just one or two of these approaches, or use all three and weight them in some manner that seems most appropriate in your organization’s circumstances. But it seems to me that at some point you’ll want to refer to the accumulated experience of the nonprofit sector as a whole and adopt one or more key benchmarks as a way to quantify your program’s performance.

In my estimation, there are ten benchmarks that encompass the most critical performance measures in fundraising. It’s a rare organization that would find all ten to be relevant to its unique circumstances. In all likelihood, however, the first five noted in the listing below will be useful, along with one or more of the others.

Keep in mind that benchmarking is most useful if it’s based on a limited and comprehensible number of measurements. It’s far easier to understand (and remember) three or four key benchmarks than eight or ten.

Here, then, are the ten benchmarks I propose for your consideration:

1) Revenue trends. It’s rare for any nonprofit organization to be content with revenue that’s flat from year to year. Inflation, rising demands for services, and sheer ambition all conspire to force nonprofits to raise more money from year to year. So you’ll want to get a fix on whether or how your revenue in growing. Just be sure to distinguish between gross and net revenue! And you’ll probably want to look at a three- or five-year income trend.

2) Donor renewal rates. Any organization that depends heavily on support from individual donors must measure the extent to which donors continue to provide financial support. Two such measures are paramount: the first-year renewal rate, and the multi-year rate. You’re likely to find that the rate of renewal is much lower among those donors who gave for the first time last year and those who have been giving for two or more years. Each of these benchmarks is independently worthwhile.

3) Donor attrition. The most common measure of donor attrition is simply the flip side of the renewal rate coin—the percentage of donors who do not renew. But that number isn’t meaningful. What’s more meaningful is the hard number of individual donors who failed to give in the most recent 12-month period. That’s the number of donors you’ll have to recruit this year to ensure that your donor base doesn’t shrink. If you want to grow, you’ll need to recruit even more.

4) Frequency and average gift. It’s often important to know how many gifts on average your donors are giving in the course of a year. The difference between an average of 1.25 and one of 1.5 can mean a whole lot of extra revenue. Similarly, the overall average contribution from your donors during a year can be meaningful, especially if it’s higher or lower than last year’s. From a diagnostic perspective, each of these measurements can be significant, too, since each may suggest different courses of action in your development program.

5) Upgrades and downgrades. Normally, it’s expected that some proportion of an organization’s donors will increase the size of their gifts over time. By measuring the percentage of donors whose gifts this year were greater than last year’s, and which percentage “downgraded,” you can get a fix on the trajectory of your fundraising program.

6) Graduation count. This is a benchmark I recommend as an easily understandable way to track the progress of an upgrade strategy. Rather than measure percentages, which can hide meaningful realities, I believe it’s more important to note the number of donors who reach a certain milestone in their giving history. For example, many nonprofits define a “major gift” as one of $1,000 or more. It’s useful in such cases for an organization to track the number of people who give gifts at that level or higher for the first time—annually, perhaps quarterly, even monthly.

7) Donor counts. The sheer number of donors is important and is worth keeping track of. But other, more detailed measurements will reveal more fully the dynamics of your donor development program. Those measurements encompass the three criteria which fundraisers customarily use as the basis for donor file segmentation: recency, frequency, and monetary amount (the “RFM” formula). Comprehensive donors will track each of these three aspects of donor behavior in comparison with each of the others. Unfortunately, paper reports permit only two-dimensional reporting. Still, such reports are indispensable in preparing segmentation plans for individual appeals. The same reports offer insight on the program’s overall performance.

8) Fundraising ratio. As far as I’m concerned, there’s far too much attention paid to the sheer cost of fundraising. Cost-effectiveness is far more meaningful. However, in many circumstances, it’s impossible to avoid focusing on fundraising cost, or the “fundraising ratio” (which is otherwise stated as the cost to raise a dollar). Certainly, in any case, it’s worthwhile knowing whether that ratio is rising or falling.

9) Market share and market penetration. In commercial marketing, these measurements are often critical. Consumer goods marketers speak of market share and often little else. The application of these twin concepts is much more limited in the nonprofit sector, because few charities can hope to gain a level of dominance at which a measurement of market share would be meaningful. There are notable exceptions, of course. For instance, universities seeking to maximize the participation of their alumni in annual funds. Or name-brand charities such as the American Red Cross and the Salvation Army on a national basis, or major museums and public television stations in regional markets. For most of us, though, it’s not worthwhile to know what small portion of one percent of the market we’ve brought into the fold through our donor acquisition programs—or even what percentage of the number of households in our service area have been reached through our efforts.

10) Return on Investment: Donor Acquisition Cost and Long-Term Value. In many ways, Return on Investment (ROI) is the most meaningful benchmark in fundraising. Some large, well-funded nonprofits employ sophisticated number-crunchers who can determine this number through proprietary means. For most nonprofits, however, a straightforward comparison of the Donor Acquisition Cost and Long-Term Donor Value will serve the purpose. Both numbers are averages and are best calculated on the basis of a full year or more of experience; three-year rolling averages may be the ideal way to treat these benchmarks. Both Donor Acquisition Cost and Long-Term Value can be determined in a straightforward fashion (which your fundraising manager should understand!). However, accurate readings of these benchmarks require several years of detailed data at a minimum.

If you can make your way through this benchmarking exercise and gain perspective on the performance of your fundraising program, then you’re almost done. You’ll have most of the information you need to make an informed judgment about whether you’re getting your money’s worth from your fundraising manager or consultant. But there are certain external factors that may need to be taken into account before you can pass judgment. These external factors are what is loosely called reality.

External factors

Most of the time we pretend, not just to the outside world but to ourselves as well, that we use rational thought processes to arrive at decisions. After all, we live at a time and in a civilization that’s based on linear, logical thinking. It’s expected of us. The fact that other, non-rational considerations may enter into the picture at any time is inconvenient, and we tend to ignore it. Better yet, we may argue (as some surely do) that there is perverse logic in bowing to illogical factors.

Here are some of those potentially embarrassing realities that you may have to take into account before rendering judgment on the fate of your fundraising director:

 Is the development director a trustee’s daughter? Let’s get real. People aren’t always hired for the best of reasons, and it’s sometimes hard to fire them for the best of reasons, either.

 Has the fundraising leader been on the job for too short a time? In all fairness, it’s important to be certain that your development VP or director has had sufficient time to get on top of the job and engineer necessary changes. And not everyone works at the same pace, or in the same way. One person might launch into a new approach at the outset. Another may wait for several months before making changes.

 Can the organization afford to make a change now? If your organization is undergoing a crisis—a PR disaster, a sudden loss of major funding, or unexpectedly high turnover in the executive ranks—then a change in the fundraising department may be unwise no matter how strong the reasons for making it.

 Are there higher priorities for change? Sometimes you’ve got bigger fish to fry. Reengineering the board, for instance. Or putting in place more competent program personnel. Or simply stanching unreasonably high staff turnover. Such circumstances might suggest that you should wait before giving serious consideration to dismissing your development manager.

 Are there few if any alternatives? All too often, the pitiful salary and limited benefits that are the most a nonprofit can offer its fundraising manager aren’t enough to attract a new person with strong experience and solid references. Or perhaps open development director jobs in your market are staying unfilled for months on end. You may not be able to afford the disruption that comes from a vacancy at the top of the fundraising department. Keep in mind, too, that grass that may look greener today could easily turn brown in short order.

 Is the manager a “legacy” from an earlier administration and “impossible to fire,” or merely near retirement? Whoever said running an organization would be easy?

Weighing it all in the balance

Once you’ve successfully made your way through each of the five aspects of the evaluation I’ve recommended, you’ll need to come up with some sort of numerical score. That could be a rating from 0 to 100, or 0 to 10, or from 1 to 5 (the equivalent of the letter-grades A, B, C, D, and F). Whatever the case, you need to calculate a score for each component on the same basis as you do for all the others—and that means that a high score for one component needs to connote the same (positive or negative) that it does for all the other components. The five scores then need to be weighted to calculate a final, overall reading. Here, to refresh your memory, is the weighting I recommend:

Component	Weight
Personal fit	30%
Case for giving	10%
Strategic direction	20%
Program performance	20%
External factors	20%
Total	100%

Finally, you’ll have to use your judgment about what constitutes an overall “passing” score.

For example, let’s say that you have taken a careful look at your fundraising director and her performance and reached the following determinations in each of the five component areas using a scale from 0 (inexcusably poor) to 100 (perfection):

Component	Score	Weight
Personal fit	75	30%
Case for giving	50	10%
Strategic direction	50	20%
Program performance	65	20%
External factors	100	20%
Total	340	100%

Under those hypothetical circumstances, you would arrive at an average score of 340/5, or 71. But that’s without weighting the individual component scores. Doing so would result in a somewhat different picture:

Component	Score	Weight	Weighted Score
Personal fit	75	30%	225
Case for giving	50	10%	50
Strategic direction	65	20%	130
Program performance	65	20%	130
External factors	80	20%	160
Total	335	100%	695
Weighted Average	71		69.50

As you can see, weighting the scores give you an overall reading of 69.5. If you’ve predetermined that 70 constitutes a passing score, then you can look at the result in a number of different ways: either you’ve found a methodical technique that has helped you make what you knew would be a tough call . . . or you now are left with the question you faced at the outset (“Do I, or don’t I?”) . . . or you just may feel you have no alternative but to flip a coin.

Anyway, whoever said personnel evaluation is a science?

Are You Getting Your Money's Worth from Your Fundraising Staff?

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