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Entire contents copyrighted © 2017, Marketing Partners, Inc. Performance Advantage is a business unit of Marketing Partners, Inc.

Hope is Not a Strategy New Approaches to Fundraising Based on

Performance Improvement Principles

Steven A. Reed President, Performance Advantage


2


THE CORE PROCESS STAGE GATES

FPI Fundraising Performance Improvement

Qualification Cultivation Solicitation

SO MUCH TO SAY… ... so little time





Today’s Agenda

• A smidgen of theory

• The essence of FPI

• The possibilities

• 10 reasons Why Fundraising Underperforms

• The Four Pillars of FPI

• Key FPI Strategies


After all, it’s really very simple.


The Essence of FPI

1. Focus majority of resources on front-line work with qualified major gift prospects

2. Maximize face time with established and potential donors

3. Ensure a donor-centric approach through principles embedded in a well-defined process

4. Ensure time is spent with the most-likely prospects

5. Systemize prospecting to ensure an abundant flow of potential prospects


Performance Improvement

• Process Improvement measures outputs of an organizational process or procedure, then modifies the process or procedure to increase the output, increase efficiency, or increase the effectiveness of the process or procedure.

• Performance Improvement applies systems thinking to focus resources for maximum return on investment.


Rarely is our ability to raise money limited by external factors

—our constraints are almost always internal


Lean Six Sigma combines an emphasis on speed and

resource use with a focus on process quality

Six Sigma Lean

10


Lean Six Sigma combines an emphasis on speed and

resource use with a focus on process quality

Six Sigma • Measurement and

measurable results

• Accurate and disciplined use of

statistical data and factual

information and constantly

improving and reinventing the

work modules

• Eliminate variance

• Focus on the customer

Lean • Process velocity and

resource use

• Streamlined process flow,

reduced cycle times, efficient

use of resources by minimizing

non-value activities and waste,

and continuous innovation

• Eliminate variance

• Focus on the customer

11


12

End-to-End Development Process

Pipeline

Process

Core

Process

Stewardship

Process


13


Core

Process



Core Process Stages & Gates


The most essential essence of FPI

What you stop doing is equally important to what you start doing!


Five Most-Heard Reasons “It Won’t Work”

1. We’re different because ______________.

2. We can’t stop ______________________.

3. My team won’t like being measured.

4. My board won’t be willing to __________.

5. This “sucks the soul out of fundraising!”


Leading Change, John Kotter




The Numbers From To % Change

Amount Raised (Production) $10,000,000 $45,000,000 350%



% from major gifts (Production) 0.20 0.87 335%

% from major gifts (Production) 0.40 0.80 100%

Number of MG > $1,000,000 (Annually) 1 12 1100%

Number of gifts <$2,500 (Production) 15,799 6,002 -62%

Total Number of Gifts (Production) 23,852 16,341 -31%

CPDR (Production) 0.58 0.38 -35%

CPDR (Production) 0.35 0.17 -51%

% Revenue from Events (Production) 0.40 0.16 -60%

% Revenue from Direct Mail (Production) 0.13 0.08 -40%

Number of MGO Processes 14 1 -93%

Gift Processing Steps (10/1 Processes) 93 18 -81%

Staff Hours in Internal Meetings (Annually) 2,772 693 -75%

Donor Visits 1,848 4,312 133%


The Increases From To % Change

Amount Raised $10,000,000 $45,000,000 350%

Amount Raised $6,161,335 $9,819,077 59%

Amount Raised $1,966,045 $4,911,332 150%

% from major gifts 0.20 0.87 335%

% from major gifts 0.40 0.80 100%

MG >$1 Million 1 12 1100%

Donor Visits 1,848 4,312 133%


The Decreases From To % Change

Number of gifts <$2,500 (Production) 15,799 6,002 -62%

Total Number of Gifts (Production)

23,852

16,341 -31%

CPDR (Production)

0.58

0.38 -35%

CPDR (Production)

0.35

0.17 -51%

% Revenue from Events (Production)

0.40

0.16 -60%

% Revenue from Direct Mail (Production)

0.13

0.08 -40%

Number of MGO Processes

14

1 -93%

Gift Processing Steps (10/1 Processes)

93

18 -81%

Staff Hours in Internal Meetings (Annual)

2,772

693 -75%


Key Planning Metrics

Association for Healthcare Philanthropy findings from two landmark studies

investigating fundraising performance showed the 12 highest-performing hospitals

and medical centers achieved median returns on each dollar spent that were up to six

times higher than the more than 300 other hospitals and health systems surveyed.

Source: HFM Performance Advantage LLC, based on research data published by the Association for Healthcare Philanthropy

Key Performance Drivers High Third Mid Point Low Third

Cost-Per-Dollar-Raised < $0.20 $0.25 > $0.30

% Revenue/Major Gifts > 80% 60% < 50%

% Staff Ratio Direct FTEs > 55% 50% < 45%

$ Per Direct FTE >$1,500,000 $1,000,000 < $750,000

$ Per FTE (Total Staff) >$750,000 $500,000 < $350,000


Catch the Wave:

A tsunami of demographic forces will offer unprecedented opportunities for philanthropy


Catch the Wave:



Catch the Wave:



Boomers will donate about

$6.6 trillion

in philanthropy during the next 20 years.


10 Reasons Why

Fundraising

Underperforms


10. Reliance on special events

and direct mail as

principal fundraising

strategies


9. Boards not aligned

to major gift

fundraising

8. Leadership not

oriented to fundraising as

a responsibility


Self-Centered Fundraising

7. Cases for support that do

not inspire excitement

6. Inadequate stewardship

programs and poor donor

retention


5. Organizational structures

that promote neither

effective teamwork nor

performance-oriented

specialization


4. Lack of process, rigor and

accountability

3. Absence of multi-year

strategic development

plans and performance

metrics


No Culture for Philanthropy

2. Disconnects between

fundraising operations

and the institutions they

support


Leaving Money on the Table

1. Relatively small staffs and

inadequate resources

compared to the potential

dollars that could be

raised


The Pillars of FPI

36


The Pillars of FPI

• Organizational culture



Why You Should Really Care About Creating a Culture FOR Philanthropy

What to do about it

• Constantly educate and advocate

• Don’t be a “rounding error”

• Show ROI through multi-year budgeting


The Pillars of FPI

• Leverage


Effective Board Structure and Composition “Board of Boards”

Executive Committee

Hospital Beneficiary



Planned Giving

Major Gifts Level

Multi-Facility

Service Line

Geographic Focus

Clinical Focus

• Create a working Board focused on fundraising

• The working groups (Boards,

Councils or Committees) meet according to their own schedules

• Consolidate governance within one executive body


• Offers a comfortable role to volunteers, executives, staffers, and physicians

• Structures the cultivation and solicitation plans around donor comfort, education, and commitment

• Team approach

• Solicitation is a process rather than an event

• Encourages executive, physician and volunteer participation – They don’t ever have to ask

anybody for money!

42

The Tipping Point

42


Connectors

Mavens

Closers

The Tipping Point

43

Entire contents copyrighted © 2017, Marketing Partners, Inc. Performance Advantage is a business unit of Marketing Partners, Inc. 44

1. For each question, quickly mark the “a” or “b”

answer that you feel best fits you. Don’t agonize. We

are looking for “top-of-mind” reactions to the

questions.

2. Self-score the instrument using the answer sheet.

Working from left to right, place a check mark in the

“a” or “b” box for each question from the

questionnaire according to the corresponding

number on the answer sheet.

3. Add the columns are added to reveal the raw score.

Deduct 10 points from each raw score (with zero

being the score for any total of 10 or less) to achieve

the weighted scores, which are then expressed as

percentages.


Tipping Point Personalities

Connectors Mavens Closers Know lots of people

Have a truly

extraordinary knack

for making friends

and acquaintances

Collect people

Usually gregarious

and intensely social

Social Glue

“Friends don’t ask

friends …”

Yiddish meaning

“One who

accumulates

knowledge”

Connect us with new

information

Are motivated to

educate and to help

Are NOT persuaders

Provide the message

Have the skills and

focus to bring the

process to closure

Have natural

exuberance and love

to close deals

Have energy,

enthusiasm, charm

and likeability

Understand the art of

subtlety

45 45




Have a truly

extraordinary knack

for making friends

and acquaintances

Collect people

Usually gregarious


Social Glue


friends …”

Yiddish meaning

“One who

accumulates

knowledge”

Connect us with new

information

Are motivated to

educate and to help

Are NOT persuaders

Provide the message

Have the skills and

focus to bring the

process to closure

Have natural

exuberance and love

to close deals

Have energy,

enthusiasm, charm

and likeability


subtlety

46 46




Have a truly

extraordinary knack

for making friends

and acquaintances

Collect people

Usually gregarious


Social Glue


friends …”

Yiddish meaning

“One who

accumulates

knowledge”

Connect us with new

information

Are motivated to

educate and to help

Are NOT persuaders

Provide the message

Have the skills and

focus to bring the

process to closure

Have natural

exuberance and love

to close deals

Have energy,

enthusiasm, charm

and likeability


subtlety

47 47


CONNECTOR CONNECTOR-MAVEN CONNECTOR-CLOSER

Pure Connectors are highly sociable and

especially oriented to other people. They are

“joiners” who naturally create and nurture

relationships. They are perceived as warm,

empathetic, responsive, and responsible.

They are highly attuned to the emotions,

needs and motivations of others. They

instinctively put relationships first, even

sometimes at the expense of other

considerations.

Connector-Mavens are people-oriented but

perhaps a bit quieter than pure Connectors.

They are perceived as friendly, but also as

responsible and conscientious due to being

thorough, painstaking and accurate in their

work. They do remember specifics about

people who are important to them and are

concerned with how others feel. They seek

meaning and connection in ideas and

relationships, and want to understand what

motivates people. They are insightful about

others.

The Connector-Closer is warmhearted,

conscientious, wants harmony and will work

with determination to establish it, while

getting results. He or she prefers to work

with others to complete tasks accurately and

on time and notices what others need and

tries to provide it. They are often perceived

as outgoing, friendly, and exuberant lovers of

life. Flexible and spontaneous, they adapt

readily to new people and environments. A

Connector-Closer is decisive and can be

quick to implement decisions, but pays

roughly equal attention to results and

people’s feelings.

MAVEN MAVEN-CONNECTOR MAVEN-CLOSER

Pure Mavens (Yiddish for expert) are

sometimes more focused on ideas, solutions

and things than people. Often natural

teachers, they can be excellent presenters—

though they may immerse an audience in

detail. Skeptical, sometimes critical, always

analytical, they seek logical explanations for

everything that interests them. The

theoretical and abstract are very often more

compelling to them than social interaction.

They are often perceived as quiet,

contained, flexible, adaptable and

sometimes distant. Pure Mavens have

unusual ability to focus in depth to solve

problems in their areas of interest.

Maven-Connectors combine an intellectual

focus with a tendency to enjoy the present

moment. They seek to understand people

and to help them fulfill their potential. Maven-

Connectors often prefer to work within their

own time frame and in their own ways, but

are committed to the things and people who

are important to them. They tend to dislike

disagreements and conflicts, and avoid

forcing their opinions or values on others.

They are perceived as curious, quick to see

possibilities, and can be catalysts for

implementing ideas.

Maven-Closers have original minds and

great drive for implementing their ideas and

achieving their goals. Skeptical and

independent, they have high standards of

competence and performance - for

themselves and others. They succeed by

being thorough and dependable. They are

usually perceived as quiet, serious, practical,

realistic and responsible. They quickly see

patterns. Interested in cause and effect, they

organize facts using logical principles and

value efficiency. A Maven-Closer will tend to

decide logically what should be done and

work toward it steadily, regardless of

distractions.

CLOSER CLOSER-MAVEN CLOSER-CONNECTOR

Closers get the “deal” done. Pure Closers

are decisive, quick to implement decisions,

and tend sometimes to put results ahead of

everything else. Ingenious, stimulating, alert,

and outspoken, they are resourceful and

exceptionally adept at generating conceptual

possibilities and analyzing them strategically.

They are bored by routine, good at reading

other people, and tend to focus on getting

results in the most efficient way possible.

Pure Closers can be quite forceful in

implementing their plans.

A Closer-Maven tends to be frank, decisive,

and assume leadership readily. Usually well

informed and well read, they enjoy

expanding their knowledge and passing it on

to others. They quickly see illogical and

inefficient procedures and policies. More

collaborative than pure Closers, they enjoy

long-term planning and goal setting. They

can be perceived as forceful in presenting

their ideas.

A Closer-Connector is bored by theories and

conceptual explanations. They want to act

energetically. They tend to be spontaneous,

enthusiastic and imaginative—and they

enjoy working with others. Flexible and

tolerant, they take a pragmatic approach

focused on immediate results. They “connect

the dots” quickly and then confidently move

ahead based on the patterns they see.

Closer-Connectors seek affirmation from

others, and readily give appreciation and

support. They often rely on their ability to

improvise and their verbal fluency

The Nine

FRSAT Tipping Point

Profiles


The Pillars of FPI

• Compelling and donor-centric


People don’t give money to needs,

they give to dreams, ideas, or solutions

for problems.

Development

Decision

Documentation

Research

Continued Refinement

A compelling, donor-centric case

for giving

© 2011-14, Marketing Partners, Inc.


Three-Bucket Capital Allocation Process

Gotta Do It Wanna Do It

Let’s see if we can raise some money for this


Testing to Identify a Breakthrough Case

When conducting reconnaissance interviews:

• Is it unexpected? Does it startle prospective donors?

• Does it raise questions of feasibility in terms of ability to

execute, not just in terms of raising the money?

• Do prospective donors probe for detail?

• Do prospective donors thank you for bringing the case

information to them?

And …

• Does it make you just a little nervous?


The Pillars of FPI

• Lean Six Sigma


5 4

Galas

Golf tournaments

Fashion shows

Runs

Direct mail

Etc.

Do more of the things that truly

make a difference

Peer-to-peer

connects

Face-to-face

fundraising

Major gifts and

Planned giving

Expensive (Lower ROI) Efficient (Higher ROI)


55

Major Gifts 15.8%

Annual Gifts 9.8%

Planned Gifts 31.6%

Private Foundations

10.5%

Corporations 1.1%

Government Grants 5.5%

Events 25.7% Major Gifts

Change the Revenue Mix

Key Success Factor:



Scope of Development Services

Data Follow-

Up

Reports Processing

Touches Focus

Does it involve data or

prospect information?

Does it directly support active

development work?

Does it help the front-line

fundraiser maintain focus?


Development Services Benefits:

1. We raise more money – Development professionals spend more time doing

what they do best • The number of purposeful donor-facing meetings is a robust

predictor of funds raised

– Senior development professionals reach new levels of

performance

– Less experienced development professionals benefit

from the process structure and support



2. A dramatic reduction in development

management overhead – Stage Gates lay “template track” for prospect development

strategy

– Feedback and structure enables professional self-management

– Management operating system and reports enable

management–by-exception

An effective Development Services team

allows a foundation to scale-up its cadre of

donor-facing FTEs without a corresponding

increase in overhead costs!



3. An enhanced prospect and donor

experience – Planned and purposeful interactions

• Development professionals are focused on the

people with whom they are interacting rather than

office tasks and ‘to-do” lists

– Consistently high-quality work products

• Six-sigma performance eliminates errors and

omissions


Development Services Provides:

• Entering contact reports

• Generating all routine

management reports

• Generating routine reports for gift

officers

• Creating diagnostic or other

special reports

• Scheduling assistance and other

miscellaneous support for gift

officers

• Weekly and 60 day Planners for

gift officers (calendar reports)

• Preparing notes and letters for gift

officers

• Prospect research

• Major and Principal Gift proposals

• Grant applications

• Management summary reports

• Stewardship reports

• Planned Giving reports

• All data entry and updates (including all gift data entry and acknowledgements, but not the finance functions associated with deposits and posting)

• “Data pulls” for various uses

• Process support and performance improvement

• Event Logistics


62

• Focus resources on highest value activity

• Increase quality, decrease cost, eliminate waste, increase satisfaction

The

LEAN

Journey

Process-based, metric-measured operations

• Rarely is our ability to raise money limited by external factors—our major constraints are almost always internal

• Lean and other PI tools help us eliminate constraints and provide a return on investment

• A process-based organization develops more capacity

Key Success Factor:


What is a Process? • Sequences

• Boundaries

• Measures

63


64


Pipeline

Process

Core

Process

Stewardship

Process


The Stage Gate Funnel

10

Connects

Yields 2

Asks

Solicit Identify Engage Cultivate

• Basic Principle: Provide opportunity to the greatest number of potential prospects, but pursue only those who show most interest



Core Process Stages & Gates


Stage Gate Ground Rules

• Focus on only those actions that are prior to the stage gate

• Limited number of encounters within each stage

• Criteria for stage-gate completion

• Exit strategy/annual gift solicitation (when appropriate)

67


Core Process

Objectives:

1. Begin a prospect-centered relationship

2. Hear the potential prospect’s story

3. Talk about the potential prospect’s giving (learn his or her three favorite charities and the why for each)

4. Learn if he or she is a viable prospect

68


69

Connector

Maven

Closer

What aspect of our case

for giving or work overall

resonates with the

prospect?

At what level of giving

might this prospect be

comfortable considering

a philanthropic

commitment in the

future?

Have the right people met

this prospect?

Has this prospect been

invited to and participated

in the right activities and

events?

Did we receive a positive

response to the Trial Ask?


response to the formal

request?

Are all the terms and

conditions of the gift in

writing and agreed to by

all parties?

Do we have a

recognition plan in place

that is agreed to by all

parties?

© 2007, Marketing Partners, Inc All rights reserved.

At what level does this

person or family have

sufficient income or

disposable assets to be a

donor?

What, if any, connections

do they have with us?

Do they have a history of

philanthropy?

Which are their three

favorite charities?

Engage Cultivate SolicitIdentify

Stage Gate Requirements


Core Process

Objectives:

1. Continue to build a prospect-centered relationship

2. Learn where his or her charitable interests intersect with our beneficiaries’ and focus the continuing conversation on the potential “match”

3. Learn at what consideration level (range) the prospect will be comfortable

70


71

Connector

Maven

Closer



resonates with the

prospect?




a philanthropic

commitment in the

future?


this prospect?




events?





request?




all parties?

Do we have a



parties?






donor?




philanthropy?


favorite charities?




Core Process

Objectives:

1. Expand the prospect-centered relationship to make him or her feel a part of the “family”

2. Provide focused case for giving information

3. Complete a Trial Ask

72


73

Connector

Maven

Closer



resonates with the

prospect?




a philanthropic

commitment in the

future?


this prospect?




events?





request?




all parties?

Do we have a



parties?






donor?




philanthropy?


favorite charities?




Core Process

Objectives:

1. Close the solicitation process with a formal request.

2. Achieve clear agreement regarding recognition.

3. Secure a written Gift Agreement.

4. Celebrate!

5. Ensure a positive start to the stewardship phase

74


75

Connector

Maven

Closer



resonates with the

prospect?




a philanthropic

commitment in the

future?


this prospect?




events?





request?




all parties?

Do we have a



parties?






donor?




philanthropy?


favorite charities?





Measurement Inversion Hubbard’s Law: The more something matters the less we tend to measure it and the less we know about it. Reed’s Corollary: The more important the measure, the more imprecise the available measurement tools.


78

Metric-Measured, Process-Based Operating Model Objectives

• Achieve highest possible return on the investment in the development team

• Recruit and retain the highest achieving development professionals

• Provide the best possible donor experience while streamlining the process



Core Process Cycle Time Metrics Middle Gifts

Stage Total Median Median Maximum

Identify 60 40 40 60

Engage 30 20 60 90

Cultivate 60 40 100 150

Solicit 30 20 120 180

Major Gifts



Engage 120 80 120 180

Cultivate 150 100 220 330

Solicit 60 50 270 390

Principal Gifts



Engage 150 100 140 210

Cultivate 210 140 280 420

Solicit 90 85 365 510

In Stage Cumulative

In Stage Cumulative

In Stage Cumulative


Support for the Development Team

• Rolling Qx Reports

• Rolling 60 Day My

Calendar

• Weekly Qa Action Report

• Overdue Action Report

• Voice to Text & Phone-in

Contact Reports

• Automatic Personalized

Follow-Ups

• Weekly Prospecting List

of 100

• PIMS


• End-to-End Development Processes

• Measures and Metrics

• Information Technology

• Reports and Tools

• Monday meetings and stage gate clearances

• Strategy documents

• Process clinics

Major Gift Operating System

82

Accelerating Major Gifts


10 Key FPI Strategies

1. Manage the revenue mix.

2. Structure for highest and best use.

3. Rebalance staffing ratios.

4. Consolidate portfolios and pipelines.

5. Use the power of process.

6. Use stage-gates to focus resources.

7. Create abundant flow.

8. Measure against proven metrics.

9. Eliminate unnecessary variance.

10. Continuously Improve Processes.



Thank You Steve Reed 269 208 3577 [email protected]

Documents

New Approaches to Fundraising Based on Performance ...afptoronto.org/wp-content/uploads/2017/05/R-04...Lean Six Sigma combines an emphasis on speed and resource use with a focus on