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Using Data to Drive Your Organization’s Success
The Finance and Administration Roundtable
Sacha Litman Managing Director
Measuring Success, LLC
Questions? Contact [email protected]
Goals for Today
See the potential in our CFO/CPA roles to go beyond budget and audit data
Leverage our data competency into other data organization has to help achieve mission
Help your organization identify and track new data to measure impact
Questions? Contact [email protected]
Today: 3 Examplesfrom data you have to data you can
obtainA. Activity-based accountingB. Fundraising dataC. Measurement systems
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Client: chapter-based community centers
Experiencing some with member drops, financial insolvency.
Challenge to business model & brand consistency.
Association HQ
Local Affiliates or Regions(N=150)
Individual Members / Users(N=1000 to 10,000 per affiliate)
Questions? Contact [email protected]
A. Managerial Accounting using Activity Based Costing
Organization runs 13 different program areas (early childhood, after school, tutoring, sports, fitness, adult education, etc)
Assumed were running surpluses in high-fee programs like early childhood and fitness based on direct budget analysis (fees & direct costs)
Indirect costs & revenues allocated using: Administrative staff time (time sheets) Square feet in facility Foot traffic (participant hours) Member priorities (survey)
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1. On average, 73% of expenses were in “black box”!
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2. Organization did not understand how resource intensive some program
areas were
Early ChildhoodElem SchoolMiddle SchoolTeenAdult EdCounselingReligious ServicesCommunity EventsWeekend EventsSocial Action
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3. Early Childhood example: 14% of administrative staff time 46% of indoor square footage 35% of foot traffic Yet only 2% of membership ‘allocation’
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4. Early childhood was, once incorporated indirect items, running a
massive deficit!
Early ChildhoodElem SchoolMiddle SchoolTeenAdult EdCounselingReligious ServicesCommunity EventsWeekend EventsSocial Action
Questions? Contact [email protected]
5. Changes as a result of analysis New goal for early childhood: cost neutral.
Achieved in 2 years by raising fees and diverting some overhead resources to other programs.
Changed budgeting process to activity-based accounting.
Cost-neutrality of all programs: eliminated cross-subsidization of programs unless board could justify it strategically
Senior management team and board does better job prioritizing now understand the financial costs associated with their time (“time is money”)
Questions? Contact [email protected]
B. Fundraising Client heavily dependent on annual fundraising In good years, fundraising flat or marginally up.
In bad years, suffered 10-15% drops in fundraising
Wanted to reverse the trend Fundraising staff overwhelmed: 10,000
priorities on desk, did not know where to focus – Events? Relationship building? Education?
Sitting on treasure trove of fundraising data that was untapped
Questions? Contact [email protected]
Aligned Charitable
Values
PerceivedOperating Efficiency
DonorContact &
Recognition
DonorPersonal
Relationships with Org
PerceivedImpact
DonorInvolvement
in Org
Increased Unrestricted
Gift
1. Seek to understand why some donors increased gift by 100%, while others barely increased, others stayed flat or dropped?
Leveraged database and donor survey
Database held giving, events, solicitor, etc
Hypothesized drivers: tested 50 actionable activities
Tested across 26 affiliates in various cities
Donor
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2. Focused on what statistical analysis revealed as top issues
Organization educates me about charitable giving values
22%
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3. Dismissed other long-held assumptions
‘Missions’: same effect on gift increase as sending person to a conference (which is much cheaper)
Placement on board: no effect on giving Criticism of operating efficiency drives
down giving: no evidence, in fact ignorance is the problem.
Questions? Contact [email protected]
4. Used Dashboards to Motivate Action
16
Question Rank (of 15)
% Str Agr
Priority
Strategy
Aggregate charitable values
7 25%
Low A
Improved alignment over 3 years
2 35%
Low B
Education on charitable values
14 16%
High C
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5. Results
One local affiliate: Restructured staffing in its development
department to focus on donor education, involvement, and personal relationships
Eliminated missions program More transparent about educating
donors on operating costs and why
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C. New Data Measurement System Experiencing some with member drops, financial
insolvency. Challenge to business model & brand consistency.
Association HQ
Local Affiliates or Regions(N=150)
Individual Members / Users(N=1000 to 10,000 per affiliate)
Questions? Contact [email protected]
1. Association sought “early warning system” & understanding of what led
to successful outcomes
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2. Build measurement and dashboard system as pilot experiment
Engaged 6 willing chapters Built:
Customer survey Employee survey Financial analysis tool Member participation tool
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3. Focused on rankings and metrics that were statistically valid
Regression analysis ties activities to outcomes Benchmarks and Comparisons
Against peer chapters in other geographies Against local competition from other organizations Against own prior measures (longitudinal) Within demographic segments of member base (see following slides)
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4a. Identify activities associated with outcomes
(multiple regression analysis)Budget Management versus Value for Membership DollarCorrelation
Perceived Budget Management & Transparency(1= strongly disagree, 5 = strongly agree)
Val
ue
for
Mem
ber
ship
Do
llar
Ave
rage
Sco
re 1
-5 S
cale
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4b. Scores compared to peers
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4c. Scores by demographic segments
50% 43% 50% 48% 45% 40%
35% 46% 56% 47%
Not at AllOnce or
Twice a Year Quarterly MonthlyMore Often
than Monthly
36% 49% 59% 63% 69%
Less than $100,000
$100,000-$199,999
$200,000-$299,999
$300,000-$399,999
$400,000-$499,999
$500,000 and over
40% 42% 67% 63% 42% 46%
Less than 6 years 6-12 years 13-22 years
More than 22 yrs
25-34 35-44 45-54 55-64 65-74 Over 75
Age
Years of Membership
Frequency of Participation
Income
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5. Like doctor, ran diagnostics each year
Select Measures from Customer Survey
Rank (of 15)
Score% Str Agree
Priority Goals & Strategy
Member Value for the Dollar 7 25% Medium Focus on quality, budget perceptions
Professionals welcoming 2 35% Low
Budget Perceived as well managed
14 16% High Double scores in 2 years.
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6. Turnaround: focus lead to improvement from low to average in 2 years; now aiming
for top Personal Conversations with CustomersMonthly or more often
27%
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7. Chapter ruled by anecdotes: 80% of assumptions were not supported by
data Assumed they were strongest with eldest & wealthiest
portions of membership
Shock, challenged the data, acceptance Management team focused energies on improvement with
eldest and wealthiest. 2 years later, scores significantly higher there.
50% 43% 50% 48% 45% 40%
Less than $100,000
$100,000-$199,999
$200,000-$299,999
$300,000-$399,999
$400,000-$499,999
$500,000 and over
40% 42% 67% 63% 42% 46%
25-34 35-44 45-54 55-64 65-74 Over 75
Likelihood to recommend to a friend % Strongly Agree
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8. Top performer: set out to redefine limits of excellence & marketed
success
XX
Surplus Margin for Early Childhood ProgramSurplus as % of Expenses, after allocating all overhead
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9. New association policy: value, not price
Assumed that key driver of member retention was price Analysis shows not price, but perceived quality and value-
for-dollar Result: association stopped encouraging price
subsidization, encouraged perceived quality improvement Perceived value and value for dollar are tracked carefully
and promoted system wide
Highest WillingnessTo Pay (center)
A. FinancialAbility
B. CommitmentTo Issue
C. PerceivedQuality of Services Least Ability to Affect
Demand Function
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10. Outcome improvement: membership
Chapters that embraced this approach outperformed others significantly in member enrollment and financial sustainability, despite the recession
Member Retention Rate: 91% to 96%
New Member Rate: 5% to 10%
Net Membership: 96% to 106%
Financial sustainability increased: coverage ratio (% expenses from fees & membership) grew from 74% to 80%
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Q&A
Questions? Contact [email protected]
Data encourages prioritization:80% of board & mgmt team hypotheses about what we anecdotally “believe” is a problem or issue is not
supported by the data!
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From Anecdotal to Data-Driven Decision Making
1. Identify issue2. State hypothesis: “I
believe…”3. Perceived mechanism/
cause4. Design experiment5. Examine data6. Confirm or reject
hypothesis
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2. Consumer Latent Needs(Purpose-Driven)
3. InstitutionalStrategic Vision
4. FinancialSustainability
(Surplus/Deficit)5. Resource Intensiveness
(Mgmt Time, Sqft, Foot Traffic)
6. Contribution to People Pipeline
(Intake, Attrition)
1. Consumer Expressed
Wants
Data Creates Alignment & Intentionality
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Alignment
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Who is Measuring Success? Firm that combines advanced analytics, quantitative tools, and
consulting to help management and boards improve their mission and financial performance
Dedicated to shifting the culture of nonprofits and associations from anecdotal to data-driven decision making
Designed custom shared measurement systems for more than 10 associations in the past 5 years, implemented across hundreds of affiliates and tens of thousands of members.
Use survey tools, financial analysis tools, tracking tools, and benchmarking to design its custom dashboards
Use quantitative prediction models to help organizations identify which activities have the greatest impact on desired outcomes.
Offices in Washington, DC and Cambridge, MA www.measuring-success.com
Questions? Contact [email protected]
Contact Information
Sacha LitmanManaging DirectorMeasuring Success, LLCOffice: 202-684-7024Cell: 917-370-5836E-mail: [email protected] Websites: www.measuring-success.com