Metrics, Friend or Foe? (Part Three)

Boyle, Janice

By Janice Boyle

A tale of two perspectives: The fundraiser vs. the accountant.

For a quick recap we have covered three of the most ubiquitous and challenging metrics that are (mis)applied to demonstrate the success or failure of fundraising. Today, I want to talk a little more about what I have observed when a strong focus is placed on the metric of cost per dollar raised.

First, I have a quick disclaimer. Anyone who I’ve worked with would describe me as being quite patient and calm. In my work life, I have only ever raised my voice twice, and one of those times happened in a heated debate with our accountant. I think it’s because the financial statements are used to measure almost everything in organizations that the CFO’s position can ascend to that of a Demigod as the producer of those statements. They are viewed as the font of all organizational knowledge. Sometimes, that gets to me. That being said, some of the most influential and brilliant mentors that I have had in my career have been both accountants and financial sector executives. What I most appreciated about their characteristics included pragmatism, the ability to make decisions based on available evidence, and their critical thinking skills. They were also good systems thinkers, and like in fundraising, their work was relatively easy to measure, and it was challenging to earn their respect. It took time, perseverance, and demonstrable, repeated achievement. They are a difficult group to impress.

I also ran into some accountants that at some point in their career had negative experiences with fundraising professionals that led to some initial distrust (we all bring our own baggage into new roles). Ever had an accountant raise their eyebrow or stifle a snicker when you talked about tracking pledges? Or moves? For them, it’s not a real achievement until it’s been deposited in the bank. Ever rolled your eyes…I mean… looked to the heavens for guidance…when you announced a successful and very large, multi-year pledge, and the first question from you accountant/CFO/Director of Finance is “Yes, but when is the cheque coming?”

Their pragmatism (and the hard work of supporting all of us in achieving a balanced budget) leads them to use financial statements as the benchmark for fundraising, like everyone else. Again, this happens in the absence of being educated on what metrics they should be using to evaluate the success of fundraising. Throughout my articles you may be getting the impression that I dislike financial statements. That’s not true. I do like them. It’s an important report that provides critical information on the balance between revenue and expense, financial position, etc. It’s just not appropriate as an evaluative report to measure either fundraising or mission effectiveness. It’s too blunt of an instrument for that.

What I have learned from accounting pragmatism that has been infinitely helpful is that if you are able to demonstrate something that works, they support it. A number of years ago, my Development Committee Chair was an executive with HSBC. He taught me almost everything I know about presenting to and working with board committees. At one point, having just finished Penelope Burke’s Donor Centred Fundraising, I developed a plan to significantly expand the numbers of donors we were calling to personally thank. The top 2.5% of our donors were already taken care of with an assigned development professional and/or board member, but we had several thousand more donors that, I believed, with additional attention, would be more loyal. Having originally come from a telemarketing background, I figured we could essentially use the first half of a telemarketing script (Thank you for your last gift!), and recruit volunteers in the evenings. Low cost, high impact, I was feeling pretty good.

Penelope Burke also said that you can ask for the next gift after you thank them for the last one, and at the time, our receipts were often not as quick as our next ask. This would help solve that problem. So, all excited, I ran it by my Board committee chair. He was less than enthusiastic for two reasons. Firstly, other board members questioned if it was a good use of resources to thank without an ask. On a personal level, as a donor, he preferred not to be thanked, so why would we look at doing this on a large-scale and potentially alienate supporters? I was crestfallen, but they were both valid concerns. And the challenge with trying something new is you have an educated guess on what the outcome might be, but success is by no means certain.

I had the Penelope Burke research in my debate arsenal, but it wasn’t enough. So I suggested a test. I asked him to give me two months to conduct thank you calls with volunteers, and we would track their giving patterns for six months after the call. We would control for other variables, and once we had the results we could decide if it was a strategy worth pursuing. He was very supportive.

We called several thousand donors over two months to thank them and tell them what their gift paid for. The responses on the phone were often comical, because after we thanked them, there was a silence while they waited for the other shoe to drop. And they were always surprised (and thrilled) we just called to thank them. One $50 donor was worried he didn’t put a decimal point on the cheque, because he could understand if we were calling to thank him for a $5,000 gift, but $50? And the volunteers had a blast. It’s probably one of the most rewarding, feel good activities I’ve ever done.

But then came the time to see whether or not the calls made any difference. I was nervous, because I had been so sure it would, but now it actually had to show in the numbers. It’s probably why 11 years later, I still remember the results. In the 6 months since the calls were made, the donors who got a thank you call gave on average 37% more than those who did not get a call! I was so happy, I actually cried. My Board committee chair was convinced by the evidence. (As an aside it didn’t hurt that his sister-in-law was called, and she called him raving about getting the call. I swear that was not intentional! Honest!).

Where the most obvious difference in the Accountant vs. the Fundraiser perspective appears in how each views the goals and objectives of the “back end” of fundraising, or donations processing and receipting. Below, I have a comparison highlighting those differences (and yes, they’re from actual experience).

The goal: Increase net revenue (we both agree on this)

The Fundraiser The Accountant
Professional Perspective: How can we improve the donor experience to drive retention and upgrading? Professional Perspective: How can we control/reduce costs to ensure more net revenue?
Strategy: complete, accurate and fast (7 days) tax receipts. Strategy: process efficiency
Tactics:

·      Streamline data entry processes

·      Increase staffing and incur overtime as necessary to maintain 7 day target in peak seasons (+$)

·      Recruit and train volunteers to support staff efforts

·      Data entry completed before sent to finance for deposit (ensures priority to donor service first and that database and accounts are reconciled)

·      Outsource activities that can be completed faster and more cost effectively than in-house (by hand). E.g. Printing and mailing(+$)

·      Purchase or rent office equipment to speed routing tasks e.g. Letter opener, check stamper, scanner that takes any size paper by automatic feeder for checks. (+$)

·      Focus on data clean up during slower times

Tactics:

·      Streamline data entry processes

·      Hire staffing sufficient to meet annual volume demand (no change in peak periods). (-$)

·      Decrease amount of information entered in peak season eg. Phone numbers, spouse, etc. (-$)

·      Recruit and train volunteers to support staff efforts

·      Gifts deposited first, given to donations processing after (financial statements, getting revenue deposited before month/year-end a priority)

·      All activities completed in-house by existing staff or volunteers. (-$)

·      Utilize standard office equipment to complete all work (-$)

·      Ensure staffing resources minimized to eliminate “slow” times (-$)

Outcomes/Metrics:

Consistent 7 day production of receipts

Increase in annual donor retention rate

Increase in frequency of giving

Increase in average gift

Reduction in returned mail

Reduction in donor complaints

Increased gross revenue

Increased expenses

Increased net revenue

Outcomes/metrics:

Lowest possible cost to complete required work

So, which arm of the organization should be in charge of donations processing? Would it surprise you to know that I believe it shouldn’t matter? Whoever is in charge of it, as long as the goals of the work are clear and agreed to, the appropriate strategies and metrics become obvious.

With the above example, I simply wanted to demonstrate how different perspectives powerfully drive our strategies and metrics (and misunderstandings and arguments). Both perspectives are valid. Both are useful. Both professionals are achieving their goals. My skills and abilities as a leader have been well honed working with those in the financial sector. Learning another perspective is like learning another language. It’s another tool in the tool bag.

What I have found more important than anything else when working with the finance department is that you have to start the conversation with them about your perspectives on how to achieve more net revenue. I’ve been most professionally frustrated when I have assumed we have the same approach. And we know what “assume”ing does to “u” and “me”.

OK, I feel like I’ve got my frustrations about financial statements as an overused yardstick off my chest. If you find yourself frustrated with your own accountant, I have this advice. Invite them out for an after-work drink/coffee/libation of your choice and have a conversation. Get to know them. I promise you it will be worth it.

Janice Boyle started her fundraising career as a student caller for UBC’s annual fund. Her career has spanned the social services, education and healthcare sectors over the last 20 years in senior leadership roles. She is passionate about improving her local community, with her specialties in non-profit leadership, supportive infrastructure, and team building. She was recognized in 2011 with the Association of Fundraising Professionals’ Outstanding Professional Fundraiser Award as well as the Business in Vancouver’s 40 Under 40 Outstanding Achievement Award in 2002. She can be contacted at Janice.boyle53@icloud.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s