Building profiles is good fundraising

What are we to make of this announcement in the Sydney Morning Herald? 



"Elite private schools are using sophisticated technology in order to tailor their fundraising pitches."

The piece then went on to say that schools use software that:

"Builds profiles on each donor, using census data to estimate wealth based on the average wealth of their suburb and the likelihood of them donating to the school.

"It stores every email a parent or donor has ever sent to the school's fundraising body, their payment and donation history, their volunteering efforts, event attendance and community involvement, to build a profile of the donor and measure their propensity to give."

In other words, schools identify and research fundraising prospects. This is exactly what schools, universities, cultural organizations and other charities ought to be doing if they are serious about fundraising, especially if they are serious about attracting major gifts.


Alfred A. Blum, Director of Advancement at Boston College Law School is cited as the source of the following fundraising maxim:

“The best solicitation occurs when the right prospect is asked for the right gift by the right solicitor at the right time in the right way... For that to occur, research is essential”. [For non-North Americans substitute 'ask' for 'solicit'!]

You as a competent fundraiser will also be able to justify good prospect identification and research from a donor's point of view.  How would you as a donor feel about sitting and listening to a pitch from a fundraiser for a project or cause in which you have absolutely no interest? What if you were asked for an amount that would be impossible for you to consider?  Or, conversely, you were approached for a small gift for something toward which you are strongly motivated and would like the opportunity to be significantly involved with?

Good prospect identification and research stops fundraisers wasting the time and effort of donors (as well as their own time and effort). Good prospect research builds a portrait of a door that tells us their interests, their ability to give and their links with your and other organizations. Good fundraising requires keeping and constantly refreshing this information. Most fundraising software provides ways of doing this.

Additionally, there is a heap of web-based software and searchable databases, freely available or paid for, that can provide valuable information to answer the questions you need to ask about someone's interests, ability to give and linkages.  From this information, you will be able to carefully plan your fundraising approaches so as to not waste the precious time and good regard of people.

The most important consideration though is to once again put yourself in the prospect's shoes.  Every time you record and retain some data about a prospect ask yourself, "If I saw or heard that this was being kept on my record how would I feel?"

If you have any doubts about storing information remember these five principles (adapted from the  Association of Professional Researchers for Advancement Ethics and Professional Standards):

• Keep confidential information protected
• Be sure data is accurate
• Be sure data is relevant
• Be clear about the purpose of your research
• Take responsibility and be accountable for your actions as a professional fundraiser

No idea where to start interacting with your prospects?

"I have to start raising funds from individuals in a country where HNWIs have a very poorly developed culture of giving.

"...We have no idea where to start interacting with our prospects"

This message could have come from any number of schools and universities that I know of and, I suspect, a large number of other nonprofits. It has certainly been true of several organizations where I have worked either as a manager or a consultant. I've seen the problem, heard the challenge and felt the anxiety. Or you might say "Been there, done that and bought the T-shirt!"

In my experience there is a simple solution. Get out there and start talking to these HNWI prospects. It's not as difficult as you might think. The second part of this reader's problem – "a very poorly developed culture of giving" – could be precisely the hook on which to start the conversation.

The process starts as with almost all fundraising by identifying and researching the people whom you want to go and meet with. The criteria that you used to identify such people will vary according to your situation. However, in some way it will be related to their capacity to give (not just money but also experience and networks) and the strength of their connection to your institution or cause[1]. Writing this causes me to hope you are reflecting on the importance of fundraisers or someone on your fundraising team doing proper prospect research.

Having identified and qualified a list of prospects with whom you have some connection then the message I suggest you send them goes something like this:

Dear Name

You are one of our most significant supporters/friends/alumni and we are very proud of our connection with you. We know we haven't spoken with you a lot in recent times and now we would like to do so with a very specific purpose.

You, I am sure are aware, that institutions such as ours thrive, grow and make a difference in the community because of the support we receive from many quarters.

However, we recognize that one area where we have a challenge is that we have a very poorly developed culture of asking for gifts.

The purpose of this letter is to ask if we can come and talk with you to get your advice on how we might begin to approach this challenge. We feel that because of your experience and success in your field you will have faced similar challenges and will have a great deal of wisdom to offer us.

I will telephone your office sometime next week to see if I can arrange a time when we can meet you.

Yours sincerely

Of course the actual wording of such a letter will vary with your specific situation. However, the basic structure suggested above is:

• One or more opening factual statements showing that you identify with the reader.  Put yourself in their shoes. What is true about them and what is important to them enough that they will continue to read the letter?

• A short phrase summarizing your mission or case for support.

• State the specific problem (note the re-frame as “asking” not “giving”. Us not “them”).

• A request for their advice (remember the fundraising adage, "Ask someone for money and they will give you advice. Ask them for advice, and they will give you money")

• Timeframe and an indication that you intend to follow this with an action.

Then, do follow-up. Make a time to go and talk. When you do have the conversation remember another important piece of fundraising wisdom: "you have two ears and one mouth - use them in that ratio!" You will learn more and develop a better rapport by listening. 

Ask them what they think about you. How well do they think you are performing? What could you do differently? What would they do in your shoes? Who else do they know who it would be worth having a similar conversation with?

Then you will exit by saying “Thank you for those important suggestions. I will keep you up-to-date on our progress and, if I may, come back and bounce a few ideas of you at some other time.”

Of course, this is only the start of a relationship. However, you will have broken the ice. In all likelihood, you will come away having gleaned some valuable nuggets of information about the prospects, her interests, values, and connections.

This first interaction should only be the beginning of a series of interactions which you will use to bring that person closer and closer to what your organization does. If you treat their ideas and connections with respect you will undoubtedly when their support and that of others like them.

In another blog, I will suggest some ideas on how to continue to bring major prospects closer and closer.

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[1] Your target here will be someone who is one of the “wealthy, wise and well connected”.

Don't research, don't ask

One university Vice Chancellor whom I have worked with takes the view "just ask!"

Luckily for him, his fundraising team doesn’t take this to heart.

Many years ago, when I should have known better, I accompanied another Vice Chancellor on a visit to ask a prospect for a seven figure gifts. I had only been engaged by that particular university a few days previously and didn't think it politic to dissuade him from the ask. The ask was made around a boardroom table with several other people in the room. The temperature dropped several degrees and had a pin hit the floor it would have sounded like a dropped dumbbell.

I should have known better because as a newcomer to major gift fundraising I had the good fortune to share an office with a then, little-known breed of professional called a Prospect Researcher. Until then I hadn't known such a job existed. Since then I have been enormously grateful to the skills I learned from her and a growing number of other professional prospect researchers with whom I've worked.

Success at major gift asking depends on you asking (or as I prefer to say offering an opportunity) for a gift that will make a significant difference in an area which is central to the giver's moral universe. Research will help you understand that person’s moral biography[1].

Research also help you know the size of gift that a potential donor is able to make. This is likely to be a product of their past giving record, where the opportunity that you are offering fits within that moral universe, and their wealth (assets and liquidity).

Research will also help you identify the prospects social and professional networks. This will help you work out whom to involve with you as you begin to draw the prospect towards the opportunity to give and who can help you weave the narrative of your case for support.

It will also help you know the prospects social and cultural tastes and enable you to plan a series of events and moments which are likely to develop the bonds of friendship between the donor and your organization.

To be more concrete, this is what you want to discover through prospect research

• Basic contact and demographic details, including addresses, occupation, family circumstances, age and education.
• Networks and affiliations such as particular recreations, clubs and societies professional and personal), professional networks including board and trustee roles
• Already existing philanthropy (ideally including amounts given) and volunteering
• Income, which can often be inferred from occupation and other indicators; and wealth, which is often much harder to know and seldom has a basis in appearances.

It is my belief that the majority of major gift prospects will expect you to have done this homework. Not doing it and wasting someone's time with an ill judged ask is a major discourtesy. 

The biggest ask I've managed was the leading gift to a medical research institute.  The final stage was a dinner hosted by the chief executive of the organization, in an exclusive and hard to obtain historic venue. There was live classical music (another of his interests) and a formal presentation by the leading researcher and a full table of the institution's leaders and existing supporters. A proposal that had been carefully shaped to conform to the giver's well known tastes and inclinations had previously been submitted. We knew this was what the donor expected.

It was the discourtesy of not doing research that resulted in the frosty silence that I first described above.

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[1] ‘Moral biography’ is the term used by Paul Schervish, the leading researcher of HNWI philanthropy. The term moral biography refers to the way that individuals conscientiously combine in daily life two elements: personal capacity and moral compass (Schervish, PG 2006, 'The Moral Biography of Wealth; Schervish, PG 2008, 'Why the Wealthy Give').

The crack cocaine of fundraising?

Feasibility studies are the crack cocaine of fundraising, says the author of a forthcoming book.

The Chronicle of Philanthropy has run two pieces canvassing the for and against  this provocative suggestion.

Disclaimer alert! I happen to believe that one of the best, if not the best service people like me can offer you as a fundraiser is a feasibility study. I make my living, in part, from doing them. And, curiously, I have heard campaign director after campaign director stand up at fundraising conferences and say just exactly the same: how important it is to engage a consultant to conduct a feasibility study before embarking on a major fundraising campaign.

By major fundraising campaign, I am talking about major capital campaigns. 

A capital campaign, briefly explained, is a fundraising campaign aiming to raise a) a significant amount of money, b) in a defined period of time, c) mainly from very large gifts from wealthy individuals and institutions, d) for a specific, or series of specific projects.

A campaign of this nature can be extremely effective and extremely demanding of all those involved. And all those involved will include your CEO, chair and board and most of your senior colleagues. You will also need to budget spending somewhere in the region of 15% of your campaign target. So immediately, you are talking about a very major investment of your organisation's resources.

You are also going to be 'nailing your colours to the mast' by focusing a lot of your communications and publicity around your capital campaign once it is underway.

Should you seriously consider any of the above without having had a good look at the feasibility of your plan and its likelihood of success?

Could you do a feasibility study yourself? Yes, possibly. But would it be as expert and robust? Well here in essence is what a capital campaign fundraising feasibility study does. When you have finished reading ask yourself these questions again.

The feasibility study will put your case for support to people both within and outside of your organisation and ask, does this make sense? Can this be done? Would you support it? Do you know anyone else who would support it? How can it be improved?

The feasibility study will look at the leadership of your organisation and assess whether it is strong and focused enough to withstand the scrutiny that major gift givers will give it. The study will ask tough questions about the abilities of your chair, CEO and board to achieve what your case for support proposes.

The feasibility study will look at your existing donors and other connections. It will ask what research you have done? Who amongst these people are wealthy and well-connected? How strong is your relationship with them? How likely is it that they are either going to make large gifts themselves or lead you to large gifts?

It will test the information received from these last questions using a tried and tested algorithm – the capital campaign gift chart. From that study will conclude the likelihood of you achieving your target.

Now, back to those questions. Is this a process that you can see, hear or feel yourself undertaking? How honest will the people you know and work with be about your case for support? How rigorous will your questioning be of the leadership, the people who pay your salary?  How objective  do you think potential donors are likely to be when you test your case for support on them? What indication of the likelihood of a gift and the size of that gift will they make to you?

It takes money to raise money

One of the challenges many of you will face in major gift fundraising is convincing your CEO and board that it takes money to raise money.

Sometimes, this happens because by the time  your nonprofit comes around to thinking seriously about major gift fundraising its finances are already constrained. Other times, it may be simple naiveté. A byproduct of the notion that somehow nonprofit means low-cost and that paring administration or overhead to the bone is the right thing to do.

Major gift fundraising is by far the most cost-effective of many fundraising strategy. The return on investment generally achieved by a focused major gift or capital campaign will be around 4 to 5 times the amount expended. However, this means if your target is to raise, $1 million you are going to need a budget of somewhere between $200,000 to $250,000. Do the math and add zeros depending on how much it is that you need to raise.  

Let's have a look at some of the reasons why. First, for anyone of you new to major gift fundraising here is a quick rundown of the basics. You will need a case for support. That case is a well researched and tested argument which will be the basis of your communication and asking for donations. Next you will be to identify and understand who your most likely major givers are. That done, you will need to reach them, have conversations with them, and eventually win their support. All of this will cost money.

To develop a good case for support you will need to develop a thorough understanding of whatever it is for which you are fundraising (this could include your entire organisation, a particular program or project, or building or facility). This does not mean taking for granted and using your organisation’s operational strategies and documents as your case. You will need to flesh these out into language that will resonate with potential donors. This means talking to those responsible for generating these documents. It means talking to those who will be involved in actually doing the work that these documents describe. It means talking to those who will benefit from this work. And, most importantly, it means talking to some of your most likely major givers to test their likely response to your case for support. All of this is going to cost in time and travel. You will probably need to undertake around 20 interviews of say an hour each. The travel costs will depend on the location of your personnel, beneficiaries and major gift prospects. If you are fortunate they are local.  But for many of you the gift prospects may involve airfares and accommodation.

To be successful asking for a major gift it is important that you have a thorough knowledge and have developed an effective plan about how you are going to approach the potential major giver. There is only one way to do this is to carefully research that person or organization. You will need to know what they are likely to support, how much they are likely to give and also how best to approach them. You can do this yourself.  A thorough research profile will take half to a day of work if you have access to the right tools (there are many sources of free information but sometimes really good, accurate information requires paying for subscription services). The alternative, is to use a specialist professional prospect researcher who will charge in the ball park of $250 to $350 per prospect. For larger campaigns, or ongoing major gift fundraising, a full-time in-house prospect researcher as part of your fundraising team, is almost certainly the best way to go.

Having done your research, you will need to plan how you are going to take your case for support out to your major gift prospects and persuade them to make a gift. The general consensus among experienced major gift fundraisers is that you will need to have had somewhere between three and five ‘conversations’ (used here in its widest sense) with a prospect before they are willing to be asked.  Your best major gift prospects will probably be scattered around a wide geography and you won’t always be able to wait for them to come to you.  Proper conversations will usually involve more than one person from your organization, often your CEO or Chair and therefore their travel and accommodation.  Effective conversations and persuasion to support you also will also often require expenditure on hospitality of some sort or another.

Asking, thanking, and looking after your major donors once they have committed will likewise involve more than one person and their travel plus expenditure on additional hospitality, the costs of visits to view results and other communications about outcomes and progress.

Added to this are myriad other expenses related to communication and administration. You will probably want to produce some campaign collateral materials. Usually there will be some events associated with the campaign – the campaign launch, site visits and ultimately some form of completion celebration. There will be phone calls, invitations, thank you cards, progress reports, receipts, data entry and so on all of which will be additional to your normal routine costs.

Have I missed anything? Please feel free to add to this list with your own experience or conjecture. It is vital that you are able to convince your CEO and board that you are given sufficient budget to run a campaign successfully. Anything less is courting disaster.

Words or Numbers?

One of the enduring debates in the not-for-profit world is what I loosely label words versus numbers or  qualitative versus quantitative. It can take many forms.

I hinted at it in my last blog about the two organisations in India that connect donors with nonprofits. In this blog I aim to look at it further.

This argument has its parallels in other fields, including in the social sciences where it is framed as an argument between positivists and ethnographers. I blogged about another aspect of it under the title Whiteboards and herbal tea. In that I was alluding to an important debate about foundation funding criteria between two leading thinkers in contemporary American philanthropy William Schambra  and Paul Brest .

However, my mind at present is focused on making your case for support and how you might construct appeals. My contention is that words and stories (i.e. the qualitative elements) are far more powerful than numbers and statistics (the quantitative). Another argument might be that pictures are vitally important: but that's an argument for another day.

The argument could also be framed in the heart versus head rubric. Of course, I am not arguing that some numeric data may not be important. For example, when you are making a case for support for a capital campaign it will be important to explain the costing which your campaign is based. It may also be important to provide some information about your organisations overall finances and its balance sheet. Those potential donors who may be considering making very large gifts might (and I emphasise might because it is far from always the case) apply their ‘investment logic’ before they commit to a gift. Supposing, for instance, that they come from the world of business investment decision-making? 

However, it is my belief that for major gifts decisions, in particular, donations are more often made for moral, ethical or even emotional reasons. Donors support medical projects because of a personal history touched by health and medicine. They support educational institutions, again because of a personal history touched by education: and, often as an alumna/us of the institution that they are supporting.

In less biographically touching appeals, I still believe that the emotional, 'heart' pulling effect of stories and the words are far more convincing than statistics. This is true even when the statistics are grim. It is shocking to point out that more than 10 percent of the world lives on less than a dollar a day or, that 17,000 children under age five die every day. 

However, if you can really tell the story, or paint the picture of  a child born in a village in sub Saharan Africa to parents whose every waking moment was devoted to scouring for such miserable sustenance that the harsh environment provided. And that even this survival was everyday threatened by effects of climate change and political upheavals. And then your story continues, that the future of that child can be met  with appropriate help and that they will survive and even thrive. Or better still,  you can show how existing funding is changing the ecosystem and infrastructure in the community where that child lives. In summary, tell a story or paint a picture showing there is hope. Isn't that far more compelling than bare statistics?

The great advantage of storytelling over fact-telling is especially reinforced in these examples from the SOFII website *, each of which uses various combinations of media and technology. Another advantage of making your case with stories is that they lend themselves to being retold in multiple ways (and there's only so much you can do with numbers!!)

• Every day in developing countries thousands of women (mainly) face the difficult task of fetching and carrying water from its source to their homes. It's a grueling daily duty most donors would find very hard to imagine.  This is the story told by WaterAid 

• Martin was volunteering in Afghanistan with when he met a young girl called Hadisa. At eight months old, she was carried hundreds of miles by her father to receive treatment after the village elders tried to stone her to death for the shame they thought she brought to their community. The medical facilities in Kabul were not equipped to deal with the severity of Hadisa’s condition. This was the story that led to  Martin founding Facing the World.

• It’s easy for you to ignore a homeless person as they walk past them on the street, but  if you had a homeless person telling their story on your phone for three days you would see that the issues behind youth homelessness are complex and varied.

Please add your own examples of compelling stories, well told (or even the compelling use of numbers!)

* BTW Here also is the story of SOFII told by its founder - himself a master of storytelling.  

The very, very rich got even richer

Wealth-X and UBS have just released their 2014 research into the world's billionaires. 

The numbers have increased, which will surprise nobody who subscribes to Thomas Picketty's argument that you and I will never catch up to the wealth of people who are already rich.

There are now 2,325 people with a net worth of at least $1 billion this year – 155 more, or a 7% increase, from 2013. They collectively control $7.3 trillion dollars in total wealth. Jacob Davidson, in Money put is, "that means a group of people about the size of a typical suburban high school student population could fund the entire United States defense budget for 14 years." 

The report provides some interesting tidbits for those who are interested in the lives of the rich and famous. For example it offers a month by month billionaires' social calendar, noting the events they are most likely to attend. The US Masters and PGA Championship feature prominently . But also, at least 23% of the world’s billionaires are likely to attend at least one, if not more, of the many elite art shows held annually around the world.

However, more comforting is the discovery that more than 70% are active in the philanthropic sphere. Excluding future pledges, the report says "billionaires, on average, donate just over US$100  million cumulatively over their lifetimes. This is equivalent to 3% of their net worth – more than the average  billionaire’s real estate holdings".

Topping the list are Chicago's billionaires. 100% of these billionaires are active philanthropists. New York and Los Angeles follow at 96%. Riyadh, Saudi Arabia at 95% beats Singapore's 94% of philanthropically inclined billionaires. Only 85% in London show interest in philanthropy.

Education, and Higher Education are top two on their list of preferred causes. The Arts come fourth after Health. Religion, unlike for the population more generally (most studies show) falls bottom with only about 4.5% supporting church, temple or mosque.

Chicago's billionaires give especially towards improving living conditions and the developmentof their city. Those from Tokyo, in contrast, show interest in disaster relief and the environment.

Also just published is a new book by Brookings Institute academic Darrell M West 'Billionaires: Reflections on the Uppercrust.' One of this book's cautions is that we need to be aware of new models of billionaire gift giving. Cultivating wealthy individuals requires considerable tact, persistence, personal contacts, and know-how, he rightly notes. Being results oriented, many billionaires focus on concrete objectives, and they want demonstrable impact for their money.

West cites Matthew Bishop Michael Green, the authors of Philanthrocapitalism . They describe how the very wealthy bring skills and tools from the business world to their philanthropy. They push nonprofits to focus "in some cases for the very first time" on specific outcomes for their work and performance metrics.

He could also have cited Paul G Schervish, who coined the term hyperagency for the behaviour of the very wealthy. As he describes it:

"Hyperagency  is the ability to exercise effective control over the conditions and circumstances of life rather than merely living within them. Hyperagency, in contrast to agency, means that the wealthy are able to construct a world that suits their interests". Schervish, PG & Herman, A 1988, 'Empowerment and Beneficence'.

In a later work, Schervish - who has studied the philanthropy of the very wealthy in United States in greater depth that anyone - has also identified 13 strategies followed by philanthropists in what he likes to call the New Golden Age of Philanthropy. (Schervish, PG 2000, 'The modern Medici')

Theresa Lloyd and Beth Breeze have recently published a study of why rich people in the UK give to charitable causes.Lloyd, T & Breeze, B 2013, 'Richer Lives: Why Rich People Give' 

For Australians, a work worth reading on what motivates major donors (though not billionaires per se) has been written by  Wendy Scaife, Katie McDonald and Sue Smyllie (2011 'A Transformational Role).

Data protection spells disaster for fundraising

I was struck by the headline of an item in Third Sector. "EU data protection plans 'potentially disastrous' for charity fundraising" it proclaims.

The article went on to quote from a report from a fundraising agency "Fundraising depends on big numbers and economies of scale; by generating enough new donors, the cost of finding and keeping each one gets small enough to make donor recruitment profitable." My question is, "Does it?" 

Without wanting to denigrate the commitment of those of you fundraisers who specialize in mass appeals, my understanding of successful fundraising leads me to quite the opposite conclusion. Could it not be that instead of disaster, perhaps restrictions on the use of lists, telephone campaigns and direct mail would be a victory for effective fundraising?

Effective fundraising, it is generally reckoned even by those who practice more mass-market approaches to fundraising, requires building a relationship. So what if suddenly we switched our effort from list-buying, mailing and calling segments, postcodes and sociodemographic profiles? Instead, what if we spent our time identifying and researching people who  really are connected and close to us? Who are part of our real social constituency not just the product of data analysis. Our existing donors, our volunteers and their families and friends? And, those that have been touched by and share in our causes? What if we actually took time to talk personally and directly to these people? What if we got to know them on a one to one basis? What if we asked them to become part of a network of personal connections? What if our contact with them was social, face-to-face and responded to their interest and passion for what we do uniquely, valuing them as a person instead of as a data point?

That, of course is the basis of major gift fundraising. It is also the way to successfully approach business partnerships and to get support from trusts and foundations.

However, if we step back in time it was also the way that philanthropy originally was born. Mass-market fundraising only really started in the early part of the last century. Street fundraising originated with the YMCA and wasn't popularised until the 1980s by Greenpeace. Direct mail fundraising is really only a post World War II phenomenen. Its precursor direct mail marketing began the 1900s. Telephone fundraising, as I'm sure many of you know came much, much later.

Prior to these, fundraising for social causes including the arts and education was achieved by personal connection between social activists, volunteers and donors. The main fundraising tools were events of various sorts including balls, concerts and lectures. Fundraising letters were written personally -think of Mrs Jellaby in Dickens' Bleak House. Other forms of  eighteenth and nineteenth century fundraising also included financial tools and instruments curiously similar to those that we describe as "new philanthropy". The significance of any of these older forms of fundraising is that they involved networks of individuals interacting viscerally, personally and socially.

So, if suddenly, governments introduced regulations that limit our ability to buy lists, to mail and telephone people whom we don't know, will that really be such a disaster?

Has digital killed the donor pyramid?

A fascinating debate has erupted between two important names in fundraising.  Claire Axelrad is the proposer. Andrea Kihlstedt the opposer.  The proposition? That social media has killed the donor pyramid.
You know the pyramid?  Legacies (or "ultimate gifts") at the top and one-off, first time donors at the base. 

Claire milked the pyramid metaphor for all it was worth in her opening salvo. "They’re where people go to die".  Though, perhaps her more balanced comment was: “The pyramids were built in Egypt. On the backs of slaves. Nobody’s got 100,000 workers (aka direct-mail donors) building a solid pyramid anymore."

Andrea's riposte referenced Mark Twain that "reports of its [the pyramid's] death have been greatly exaggerated"  Andrea continued, "When organizations use the donor pyramid to focus their attention on raising large gifts, that’s just what happens — they raise large gifts."

It emerged in the debate, that both Claire and Andrea agree on two things.  A relief to me because they are things that I firmly believe as well: 

1. Major gift fundraising is extraordinarily important.
2. The Pareto Rule (80/20) is alive and well.

So why the furore? In my view, Claire and Andrea start from different places. Claire references research done by Adrian Sargeant and Penelope Burke on the attrition rates of first time donors (they're the ones at the bottom of the pyramid).  She then, correctly, proposes that social media provides great ways for nonprofits to engage with people.  And, in part, she is saying that attrition is avoided through engagement (aka stewarding) donors.  Social media is effective at engaging first time donors. But, actually, she expands this by saying that social media is effective at engaging many more than first time donors.  It can engage all donors, at any of the traditional levels and non-donors alike. Who would argue with that? (Claire proposes a vortex model for all this high energy, swirling engagement.)

Andrea, though, suggests the pyramid has a quite different role. In my interpretation, her view of the pyramid is really as a planning model. She says the pyramid "makes sense of complexity by reminding us to focus a disproportionate amount of attention to the precious few donors who can breathe life into our mission in the way that small donors, even collectively, can not".  And, frankly, I agree with her.

Yes, it is vitally important to attract and engage with first time donors. (Actually, that would better read, "attract and engage with non-donors") . And social media offers great ways of doing that.  Via Twitter, LinkedIn, Facebook, Google+ and even texts, as Claire says. However, for most organisations I know, the truly transformative, target-reaching mouth-watering gifts and bequests have come through carefully planned relationships with a few carefully identified and researched individuals and organisations.  Those represented by the top of the pyramid.

And yes, the swirling vortex impacts and involves those at the top - and those that influence them too. So for heaven's sake let’s have both the pyramid and the vortex. But please make sure they both work together.  Or else, Claire prediction will come true.  The vortex will "crumble" the Pyramid " … slowly, surely … until there [is] nothing left but an empty frame."  And then where will fundraising be?

What does size matter?

Have you ever thought what would your ideal size fundraising office would be? I have been reading a couple of reports recently that appear to suggest that the ideal number of staff is around seven. 

That made me wonder what exactly an ideal fundraising team would look, sound and feel like.

The most recent of the reports came from the Association for Health Care Philanthropy. The report Characteristics for Sustaining High Performance applied statistical analysis to benchmarking data drawn from North American hospitals, health foundations and University medical schools. The results identify a group of 12 organisations raised almost  four and a half times as much funding as the rest. It then discovered that the most significant difference between this group and the others was the size and resourcing of its fundraising teams. Further drilling down in the data revealed these highest performing organisations put their main focus on major gifts.

The second report I have been looking at is the Ross-CASE survey of UK higher education fundraising – Giving to Excellence.  It looks at funds raised and money spent on fundraising. It breaks this data into clusters based on the age of the universities' fundraising activities. Again, the results showed a significant increase in total funds raised correlated to the size of fundraising team and the team budget. The institutions, described in the report as having 'moderate fundraising programs' have 10 fundraising staff compared to only 3 staff in 'emerging fundraising programs'. The former spend slightly more than three times as much on fundraising. But they raised almost 15 times as much funding. Again, the report remarks that "very large gifts" were the source of much of this funding. increased engagement with alumni is a another feature of those organisations with more resources and staff.

So what might be ideal fundraising team be? Being prescriptive is a little foolish, given I don't know your particular circumstances. However I would suggest an effective team would comprise a full-time operations/database manager, a dedicated researcher, a data entry officer, a direct marketing manager (responsible for telephone/digital/mail campaigns), two major gift fundraisers and a director. Here is why think each of these positions are so necessary.

The database is the engine room of the fundraising ship. To keep her sailing requires a dedicated Chief engineer. The last thing anyone wants the middle of a major event, or a mailing from telephone campaign are glitches or data crashes. The operations manager will keep on top of all that is needed to ensure that this doesn't happen or that speedy recovery is possible.

Prospect research is absolutely essential for effective major gift fundraising. That person with the right instinct and interest, who enjoys discovering piecing together the interests and connections of your potential donors will make connecting with them, then developing your relationship with them significantly easier.

The data entry officer is that orderly person to make sure everything is recorded accurately and on time. Addresses, thank yous, reminders etc will go out to the right people at the right time.

The lifeblood of fundraising is the steady, frequent flow of regular donations. Your direct marketing manager is the person ensuring that stream continues to flow. That stream, incidentally, is from where your researcher fishes your major gift prospects(if I'm not mixing metaphors too much).

Then the two major gift specialists. Why two? Because, as both these studies have shown it is from major gifts that most funding will come. Managing the major gift process and, especially, managing relationships with major gift prospects is a demanding (although very exciting and enjoyable) role. A good major gifts manager will probably be capable of managing between 50 and hundred major gift prospects. As they manage these prospects through the major gift cycle they will need to get to know them better and spent more more time on them. The Pareto principle will apply and 80% of a major gift manager's time may need to be spent on only 20 prospects as the ask gets nearer. Of course, this time is not spent face-to-face with the prospect. It involves juggling diaries, preparing briefings, planning and logistics to ensure that the right people make the right ask at the right time.

And then there is the director. The metaphor I prefer to use for the director is that he or she is the film or stage  director,  or orchestra conductor managing all the forces. Backstage, onstage, singers, stars or support artists. He or she is seldom the star but always there ensuring optimum performance and making sure the audience and the players alike get exactly what they want to achieve from their respective involvement in the great fundraising and philanthropy performance.

Anyway, those are my thoughts.  What are yours?  There's a couple of other positions you might want to throw in. An events manager? Social media manager? What if you are too small an organisation ever to aspire to this many positions - what roles could you double up?

I'd love to see and hear your thoughts.

Charity vs philanthropy

This month you will have been in a world where people in the Phillipines are crying out for basic necessities while million dollar gifts are on the rise to universities. Is this a dilemma for you as a fundraiser?

I believe not. But the dichotomy is illustrative of a wider principal – the distinction between charity and philanthropy.  The distinction is practical not semantic.  The roots of both words (one Greek one Latin) are comparable.  “Love” is in the etymology of both.  Both have been used interchangeably in the English and other languages for centuries.  Yet in practice there is I believe a distinction.

I have friends in the Philippines who are volunteering to help provide the essentials of life to their fellow citizens in some of the more remote regions of Cebu.  They point out that 150 pesos (about $3.50) = 3 packets of noodles, 2 canned goods, 1.25liter of drinking water , 2kilos of rice.  A modest contribution can make a big difference to one or more person’s individual condition.

Contrast this with gifts to Australia universities by Andrew and Nicola Forrest  or Graeme and Louise Tuckwell.  These multi million dollar gifts will fund research and scholarship.  What will be done through enhanced research and scholarship?  Or rather, a better question is what has been achieved throughout history by researchers and scholars?  We may not live in a perfect world but the achievements and progress we enjoy has to a large degree been the fruit of  education and inquiry.

The analogy, it seems to me is with curing symptoms and finding causes.  Both are essential. Charity and philanthropy are both essential.  We need to develop expertise at both.

Another paradox was in the philanthropy news this month.  Bill Gates - channelling Peter Singer - asked “why anyone would donate money to build a new wing for a museum rather than spend it on preventing illnesses that can lead to blindness?”

The essence of that dilemma was encapsulated by this remark in the Wall  Street Journal.  “Somerset Maugham said in his novel Cakes and Ale: ‘Beauty is an ecstasy; it is as simple as hunger’." Philanthropy has a role in contributing to both.

What do you think?

 

 

 

Is this any way to fundraise?

You might not go quite as far as Manuela Hoelterhoff's recommendation  in Bloomberg, "City Opera’s Board Should be Pilloried”, but you do have to wonder about the board of New York City Opera.

In early September this year, City Opera, New York’s number two opera company announced that it would be forced to cancel most of its current season and all of its next season if it failed to raise $20 million by year’s end; the first $7 million was needed by end of September. On Oct 3 the company filed for bankruptcy.

Apparently they were persuaded by one of the development team to raise $1 million of this via Kickstarter. The Kickstarter crowd funding closed $700,000 short.  What on earth let the board and CEO to believe that any of this crisis fuelled fundraising was possible, especially in the light of their past performance?  If fundraising is about relationships, trust, good stewardship and knowing your donors and prospects, what follows is a story of how not to fundraise.

Much of the back story is told in the Metropolitan Opera Guild's Opera News. The author describes it as, "… an epic saga of economic hardship, mismanagement and just plain bad luck". Money problems had dogged City Opera throughout its history. Even in its heyday, under the general directorship of Beverley Sills, the company racked up a $3-million deficit. Yet Sills was a consummate fund raiser as well as a terrific artistic leader. She worked her social connections for everything they were worth. "She knew who had money and knew who would give it," according to one person who worked with her. "And she had no problem asking anybody for it."  She was the face of the company — and she knew it," said another former employee. The donors who gave to New York City Opera were giving money to her, someone whom they trusted and respected. Unfortunately none of her successors had the same strengths at fundraising.

But there was an endowment. In 2003, City Opera was sitting on an endowment of $57 million. That seemed like insurance against hard times ahead. But it didn't last for long.  As the New York Times  noted by 2009 City Opera had raided these funds.  They had been reduced to $16 million, to pay off debts and cover operating expenses. The practice is known in the US as endowment invasion - Wikipedia gives some background. Another egregious recent example of endowment raiding was Brooklyn’s Long Island College Hospital.

[For more on the endowment read this story in The New York Times published after this blog was originally written]

The board's penultimate appointment as CEO was Gerard Mortier, a former artistic director of La Monnaie in Brussels, the Salzburg Festival and Paris Opera. In each of his previous roles Mr Mortier had been well insulated from the pressures of box office and fundraising by the very, very generous government subsidies that were the norm in Europe at the time. Mortier resigned in November 2008 at the height of the Wall Street crash on discovering that a promised budget of $60 million was a chimera. According to the New York Times  the board had counted on his name  and help in fundraising to make the larger budgets he was asking for possible:  “The board understood they were going to work closely with Gerard towards the raising of $60 million.”

The present CEO, George Steel, was untried in the complex and demanding role of managing a large arts company. He had been a success at Columbia University's small music theatre space, Miller Theater.  From there he had been briefly, and some say unsuccessfully, at Dallas Opera.  His City Opera programming failed to draw audiences. Ticket sales for the 2010–11 season hovered near a dismal 40 percent of capacity. In 2012 the company announced that it would finally be leaving Lincoln Center, the company's home for more than forty years. 

The final last efforts to raise funds saw acts of desperation such as approaching George Vilar. Vilar has served time for fraud and his name had to be chiseled off the walls of Royal Opera House Covent Garden among other opera companies to whom he had promised donations that were never fulfilled.

The denouement may well have been the final production staged by the company. The work was 'Anna Nicole', a salute to the tragic life and death of blonde model/actress/reality-show-star, Anna Nicole Smith. Anna Nicole had married J. Howard Marshall II, an oil tycoon. The rest of the  Marshall family loathed her, fighting bitterly to keep her from inheriting any of the family estate. Billionaire philanthropist David H. Koch had in the past been a big donor to City Opera. However, Marshall once had been a big investor in Koch Industries. When approached , Koch declined to make the kind of gift that might have saved the New York City Opera - "Out of respect for the wishes of the Marshall family".

Another version of this story by me appeared as a Nonprofit Quarterly Newswire

Really big gifts are transformational

I love being a major gift fundraiser.  I am convinced that it is the most effective and enjoyable form of fundraising.  So I was thrilled to come across a slew of blogs on major gift fundraising this week.

The great thing about major gifts from the perspective of a nonprofit is that they make major initiatives possible.  Terry Burton, blogs "Really big gifts can have a transformational effect on a nonprofit organization". Terry amongst other things is the author of a definitive text on Naming Rights. Naming Rights, you will know often go with transformational gifts. Reading his book is a good way to begin to plan how you will build a naming rights policy into your major gift strategy.

But back to the more recent blogs I mentioned. Fundraising consultant, David Landsdowne talks about Board Misperceptions and Other Issues Related to Major Gifts.  Among the misconceptions he deals with that old chestnut "We need to raise $100,000. Let's just find a hundred people who'll give $1,000 each."  He also reinforces the importance of stating a dollar amount when asking for a gift.  My favourite definition of asking for a gift comes from another fundraising consultant.  He says asking for a gift is simply putting a figure on the table.

The  blog Ten Reasons (Besides Money) That You Should Plan a Capital Campaign Now!  by fundraising consultants Gail Perry and Andrea Kihlstedt is worth a look as you think about your own potential to get stuck into major gift fundraising. This is the question they pose:

"Do you have big dreams for your organization but find yourself limited to taking tiny steps forward? Wouldn't you love to move forward boldly and make an even bigger—maybe even a huge—difference in the world? Are you ready to be inspired and excited by big thoughts and plans?"


The word 'transformational' was used in the title of the comprehensive research paper (download as .pdf) published by the Australian Centre for Philanthropy and Nonprofit Studies. The headline quote in the exec summary says: "Major gifts play a transformational role in terms of making a gift that is really significant and can often make a huge difference to the organisation". The study is worth you dipping into again to remind you that, "Many... see major gifts as the most ‘underpotentialised’ area of community support in Australia". Also that major gifts have "great unrealised potential as a funding model for community need".

Pro Bono News wrote a very good summary of the paper you could revisit: Major Giving Report in Australia - Donor & Fundraiser Perspectives.

Capital Appeals are their own reward  happens to be about the institution where I was first engaged as a major gift fundraiser. It celebrates the end of a successful capital campaign for a Centre for Carbon Innovation at Edinburgh University.  My first, much earlier role as a major gift fundraiser was the start of a campaign for a Centre for Inflammation Research for the same university.

Can you suggest any other good sources of inspiration and advice on major gifts?

Whiteboards and herbal tea

There's a bit of a barney going on about 'Strategic Philanthropy' between a couple of prominent US 'philanthropoids' . It's fun to read yet somehow I feel that it’s forgotten a basic of philanthropy. Philanthropy is about love of mankind.  Real people not statistics.

William Schambra , started the ding dong with a provocative address in which he suggested that foundations in general and the Hewlett-Packard Foundation in particular were preoccupied with "whiteboards and herbal tea".  Well that wasn’t precisely what he said though it's amongst the memorable phrases.  What he was arguing was that there is a trend, in foundations especially, toward applying scientific models and metrics.  This, he says, threatens to usurp actually going to the frontline and listening to the wisdom and experience of those working at achieving the objectives of the grant seeking charity.

In response Paul Best, the head of the Hewlett-Packard Foundation paints a picture from an imagined past.  What if, he says, 19th Century philanthropy had ignored newly emerging medical research into bacteria and accepted frontline advice based on past practice and local wisdom?  Would serious problems have been tackled? (Note, that he has conflated the original argument into a defence of science as a whole, rather than Schambra's example which referred to a particular use of a specific scientific approach to foundation decision making).

The initial argument, it is acknowledged by Schambra, actually was made in an article Letting Go  in Stanford Social Innovation Review (SSIR).   It presents a real life case study of a foundation (Hewlett-Packard funnily enough!) which funded, entirely off its own bat, a  program that failed in its objectives.  A little while later some people closely involved with the intended beneficiaries of that funding came back to the foundation with a much better considered proposal.  A proposal designed from the perspective of the beneficiaries, in the knowledge of their specific circumstances and conditions.  It was funded and it was a success.

Now I am a fundraiser not a philanthropoid. For me, resonating through this argument is a more important one for  fundraisers.  When you are making your case for support or when you are running stewardship programs, are  you taking your donors or potential donors to the frontline? Are you introducing them to the people for whom their support makes a difference?

Creating a case for support in my experience is one of the hardest things a fundraiser has to do. It requires you to take a leap out of your world and into the wider world where your beneficiaries and your donors are.  You will have to talk to beneficiaries and learn their needs, wants and aspirations and turn these into stories, using sounds, feelings and pictures.

Of course, there's another strategy that you can use. How much time are you actually spending time in the frontline yourself.  Working alongside your program staff and the beneficiaries of your work. Or at the very least interacting with program staff, asking them questions and showing interest in what they do.

In fact by building rapport with your program staff, spending time in their shoes you will be able to do a much better job of  selling your case for support and dealing authentically with your donors and prospects

Philanthropy gets a Buffetting

“It’s time for a new operating system. Not a 2.0 or a 3.0, but something built from the ground up. New code”.  With these words Peter Buffett started a controversy worth taking notice of.  

In an opinion piece in the New York Times he questioned the effectiveness of philanthropy, including some examples of mistakes of his own that led to his change of view.

Quick to respond were Matt Bishop and Michael Green the authors of Philanthrocapitalism.  The solution to Buffet's issues is already here, they say.  Its name is surprise, surprise, “Philanthrocapitalism”. My own reading of what Buffett says is different from Bishop and Green.  I do, however, agree with them (and Buffett) on the importance of philanthropic money being used as risk capital, and of achieving systemic change.

Two contributors from Forbes were next off the rank. Howard Husock drew historical parallels between Buffett and two of his American predecessors – John D. Rockefeller Jr. and Henry Ford II. All three argues Husock were wrong to doubt the system that gave them each their untold wealth. 

Tom Watson, on the other hand applauds Buffet  - agreeing with one of his main points and disagreeing with another. The disagreement is on the data on which Buffet’s argument appears to be based.  His agreement too is that philanthropy ought to provide risk capital.

Phil Buchanan from the Center for Effective Philanthropy also takes Buffett to task but he doesn’t spare any of Bishop and Green, Husock or Watson either. Not surprisingly for the President of an organization dedicated to researching how to make philanthropy more effective his conclusion Buchanan approves the overall debate. “We need to ask the big questions,” he says.

Some of the big questions Buffett has asked are

• Aren't the figures who are leading philanthropy also  leaders (or former leaders) of the very system that contributed the inequity now being redressed?
• Are business principles and capitalism really the solutions?
• Do  existing models of philanthropy take sufficient regard of different cultures, geography or societal norms?

What you might wonder does Buffett’s  famous father have to say about the debate? Well he is all in favour (or 'favor' maybe) says Peter on Huff Live.  Adding, "I grew up in a family with both parents being very much around equality, humanism, how can we make this world a better place for all ... I kind of grew up in this environment of social change and saying things out loud.”

By the way, if you're looking forsome music to round this discussion off you can listen to Peter Buffett’s latest song “Already Flown”