Ellen Bristol and Linda Lysakowski, ACFRE recently joined us for a webinar in which they shared some ideas on how nonprofits can fix the leaks in their own fundraising buckets.
In case you missed it, you can watch the replay here:
Steven: Well, ladies, my clock just struck 1:00. Do you want to go ahead and get started officially?
Ellen: I’m ready.
Steven: All right. Cool. Well, good afternoon to those of you on the East Coast and good morning if you’re on the West Coast or somewhere in between. Thanks for being here for today’s Bloomerang webinar, “The Leaky Fundraising Bucket: What’s Wrong and How to Fix It.” And my name is Steven Shattuck and I’m the VP of marketing here at Bloomerang and I’ll be moderating today’s discussion.
Just before we begin, I just want to let everyone know about a couple of housekeeping items. We are recording this presentation. So we’ll be sending out the recording as well as the slides a little later on this afternoon. So if you have to leave early or you perhaps want to re-watch the presentation or share it with a friend or colleague, you’ll be able to do that. Just look for an email from me later on today with the slides and the recording.
As you’re listening to the presentation today, please feel free to use that chat box right there on your screen. We’re going to try to save some time at the end for Q&A. So don’t be shy. Please ask questions, make comments and we’ll try to get to just as many questions at the end as possible.
Just in case this is your first Bloomerang webinar with us, welcome. We do these webinars just about once a week. We’ve got a special Wednesday edition today for you, which is fun. But in addition to doing all of these educational presentations and resources, our core business is our Bloomerang donor database software.
So if you’re in the market for new donor management software, fundraising software, we’d love for you to check us out. You can go to our website. You can browse our features. You can download a video demo. You don’t even have to talk to a sales person if you don’t want to. So we’d love for you to learn a little bit more about us if Bloomerang is new to you.
So I want to go ahead and introduce our guests today. I’m really pleased to have Linda Lysakowski and Ellen Bristol with us. Hey, ladies, how’s it going?
Ellen: Great. Thanks.
Steven: Good to have you here. Some of you will recognize Linda’s name for sure. Linda’s done a few webinars with us before. We just had to have her back. And Ellen, I’m really glad to have you as well. You’re a new friend to me. I’m really excited to hear what you both have to say about donor retention. But before you jump into it, I just want to let everyone know a little bit about both of you.
Linda is a graduate of Alvernia University and AFP’s Faculty Training Academy. She is a master teacher. She has her advanced CFRE designation, which only about 100 professionals worldwide have that, which is pretty cool. She’s worked in development over 30 years. She’s managed capital campaigns. She’s helped hundreds of nonprofits achieve their goals and she’s trained over 30,000 development professionals internationally, not just in the United States. So really awesome to have Linda here.
Ellen, if you don’t know Ellen, you’ve got to know Ellen. She is the president of Bristol Strategy Group. She works with nonprofits to help them improve their effectiveness, increase their total income, and diversify their funds. She helps board and staff members work more effectively, reduce turnover in their office and she helps them maintain their desired level of quality and services.
She spent her first 20 years selling computer systems. She’s a late bloomer. She’s also a non-native nonprofiteer like me. She launched Bristol Strategy Group after she discovered her true calling, which is sort of bridging that gap between the business world and fundraising.
So I’m really excited to have Ellen here. Ladies, I’m not going to take any more time away from you. Why don’t you go ahead and get us started?
Ellen: Great. You want to start, Linda?
Linda: Oh, go ahead.
Ellen: Here we are already fighting with each other. Linda and I wrote a book together that came out in 2013 called “The Leaky Bucket: What’s Wrong with Your Fundraising and How You Can Fix It.”
And we did it because when we first met I was telling Linda about my Leaky Bucket Assessment, which so many of you have taken. And I said to her, “Well, this assessment shows what’s wrong with your fundraising and how you can fix it.” And Linda’s immediate reaction was, “That’s a great title for a book.” I want you to know this is a record-breaking book. We had the manuscript done in 90 days.
So I’m going to ask Linda to talk to you a little bit about the book and then we’re going to share with you the biggest findings we have from our Leaky Bucket Assessment and how they’re meaningful for you today.
Linda: Okay. Thanks, Ellen.
Linda: As Ellen said, we wrote this book together and I have to tell you that I’m an author of about a dozen books, some I’ve coauthored. After I coauthored one book, I said, “I don’t know if this is such a great idea. It actually takes twice as long to write with a coauthor.” But when Ellen and I met, we realized we immediately had something in common.
Actually, before we met in person, we met through the Internet through Charity Channel Press and we discovered that we both came from a business background and we both brought to the nonprofit world a little bit of a different perspective.
So we decided, after I said to Ellen, “Well, that’s a great title for a book. Let’s write it,” we actually turned this book around in 90 days. I think that’s the fastest I’ve ever written a book with someone or without someone else. I think you’ll really enjoy this book if you don’t already have it. At the end, we’re going to give you a special offer on the book so we’ll wait until then to give you that.
I think it’s really been a pleasure and it’s been great for us to work together because we’ve both found that our business expertise and background really gave us a different perspective on nonprofits and how they can still maintain their nonprofit mission but work in a more businesslike manner. So I’m going to let Ellen tell you about the nonprofit Leaky Bucket Assessment and how that all works before we get started. So Ellen, take it away.
Ellen: I shall do just that. So this whole thing revolves around a hypothesis regarding productivity. Having spent my entire several decade career generating revenue, I also became really interested in productivity and I’m kind of a geek for performance management and metrics and productivity. So the hypothesis here is that effectiveness, efficiency and productivity leak out of development efforts in ways we don’t notice until the pipes burst and there’s a fundraising crisis, which is no good.
So our Leaky Bucket Assessment measures nine standard practices that we evaluate at four highly scientific levels. It’s either leaking like a sieve or it’s watertight or it’s somewhere in between. We also have–excuse me, I jumped over something–three core assumptions about fundraising that we’re going off. These three areas–prospecting, managing the opportunity pipeline and metrics and measurement–are three enormous areas where fundraising can leak out of the process.
And if any of you listeners work with small agencies where you know you have either no staff or part-time development staff, you know how much your time is at a premium. We look at nine development practices. These practices pervade. So the question isn’t whether or not you have them. It’s whether or not the way you use them contributes to or detracts from your productivity.
So we gathered up all this cool data and we analyzed it in our mad scientist hat. When we had 700 responses, this is what we discovered from the Leaky Bucket. There are a few factoids here that Linda and I fell on the floor over.
For example, only 47% of our respondents . . . by the way, we have close to 1,000 now, but about 47% of the respondents lack a strategic plan. Only 6% use an ideal documented ideal donor profile that includes the standard capacity and wealth profile but also donor motivation. It sort of floored us that 37% of our respondents tracked nothing, no performance indicators around income.
But I think our all-time favorite was what happens when fundraising results fall below desired level and it is that nearly half, 49%, of respondents say, “We’ll um
throw more events.” You want to make a comment about that, Linda, before I go on?
Linda: Yeah. I think this was one of the most appalling statistics that we uncovered. I wasn’t surprised by this one, I must say, because that’s been my experience with all the teaching and selling that I’ve done. I think this is the response is if we’re not meeting our goals, we’ll just throw another event or we’ll hire somebody to crank out grants all day long.
And they look at the most expensive things to really improve the performance instead of looking at some of the things they could do that wouldn’t be as high-cost and would yield much better results, for instance, further refining their case for support, training their board. Those are fairly low cost and low time involvement things, which would be much more productive to increase fundraising results. So this one I think didn’t surprise me. It really did kind of shock me.
The two things that really did surprise me were how many people don’t even track their income. I was just totally blown away by that. I’m a former banker. So anybody that’s not tracking as far as how much money is coming in or where it’s coming from but not even tracking their income at all just blew my mind.
The other thing that really surprised me was how few have a strategic plan. I could not believe that over half the respondents don’t even have a strategic plan. So it’s hard to set goals for your organization if you don’t even have a plan in place. So those were some of the things in the results that really amazed me.
Ellen: I wanted to share with you guys how your results were. We really thank you for this. I want you to know that we got a few early. But in the last two days, we’ve gotten 75 responses from you Bloom respondents, which is what I called you. I’m sorry to tell you your results were distributed pretty similarly to the overall study.
I’ll give you the details on who responded. But D, 18% of you were at D. That’s leaking like a sieve; 65% of you were at call the helpline; 11% were at time for preventive maintenance and only 6% were at the watertight level. If you haven’t completed this survey, go to the Bristol Strategy Group homepage, BristolStrategyGroup.com. It’s always open. It’s always free and the links direct on our homepage.
This curve is almost identical to what we’ve seen from the entire 1,000-person study. Just so you know what the distribution of responses were like when we were at the 700 level, our responses are pretty well distributed by respondent title, size of development shop, revenue level and sector.
I’d also like you to know that although the bulk of them have come from North America, we can count amongst our responses Australia, New Zealand, most of South America, most of Europe, most of the British Isles, a few from Asia, a few from the Middle East and our all-time favorite, one from the Galapagos Islands, evidently completed by humans, not tortoises.
So the last thing I want to say about productivity is that productivity isn’t just an idea. It’s actually a measurement. And it takes a lot of things into account, but one of the major considerations is the context for productivity, which has to do with the cost of time. We figured out a way to calculate the actual cost of time, a fund development time. And we figure it by what we like to call opportunity risk.
So we figure you can’t count up how much it costs to send Becky Sue to call on Mr. Moneybags because what we haven’t taken into account is how much opportunity is pending that visit. So we created a little way to calculate this. I’m giving a copy of it to Steve at Bloomerang so you can download it.
What it tells us is that once you take away all the times that can’t be devoted to cultivating funders, you don’t have much time left. So development time is scarce. The average amount of income put at risk for each hour of development that you could lose that amount of money instead of gaining it runs between $1,000 and $3,000. We had one outfit where their opportunity risk factor was $18,500. The CEO turned green and I was afraid we were going to have to call 911.
So we’re taking all of these issues into account so that you can use what little development time you have to really optimize it. The way Linda and I like to run this presentation is I’m going to describe the leaky bucket statement and what it represents and what results it got and then Linda is going to talk about how you can fix it.
So the first of our statements is how you qualify funder prospects. And we find is that 11% have no standards at all and 61% had no documented standards. I hate to tell you this, folks, but when you don’t write it down, the preference is for acquiring a donor are what you think today and how nice that person is to you.
So this is the place where we can lose a huge amount of time. And I know we’ve all experienced this, chasing donors that we call DOA, dead on arrival for hours, weeks, months, sometimes years, even after they’ve told us. They don’t like us. They ain’t going to give nothing to us, but we’re still pouring money down the drain. So our reaction is we’ve got to fix this problem.
So Linda, can you talk about some idea practices?
Linda: Sure. Well, the first thing is that, and you’re going to hear this word in almost every instance, so don’t get bored by it, but the first thing is document those standards so many times. And this is what happens, I think, with strategic plans and development plans. People think, “We have that in our head.” Well, having it in your head isn’t doing anyone any good. It’s got to be documented. So document the qualifying standards. What is a good donor for you? It’s going to be different for every one of the hundreds of you that are listening to this.
And you can’t just look at the ability to give. The old saying in major gift fundraising was the LAI principle, that someone had to have linkage, ability and interest. It’s easy to find out who has the ability in your community. Almost everybody knows that. We all know we’d like to go to Bill Gates and Oprah Winfrey and people that have plenty of ability to give, but do they have a linkage to your organization? Do they have any interest in what your organization is doing?
So you’ve got to look at more than just the capacity of that person or that company or that foundation to give. But are they really looking for investing in an organization like yours? Someone who’s only interested in organizations that serve the blind is not going to be interested in giving to your organization if you serve the hearing impaired. So you’ve got to really look at what that donor’s motivations are to give.
And then you also have to look at danger signs. Those of you who write a lot grants have probably heard the phrase, “The good news is we got the grant. The bad news is we got the grant.” And that could be said about corporate giving. It could be said about individual giving.
Lots of times there are so many strings attached to the money that maybe you don’t want that money. Maybe that’s not an ideal donor for your organization. Maybe the donor themselves has too many strings or maybe the gift that they want to give you is just not appropriate for your organization.
So qualify those danger signs, like what would you consider a danger sign for your organization? If someone wants you to change your mission, if they want to give you a gift that you don’t want to accept and believe me, there are many gifts that you might not want to accept.
So when you qualify ideal donors, you’ve got to take all these things into place. And then you have to make sure that all your solicitors, whether their staff members, board members or volunteers are all looking at that same criteria, that they’re not just running in saying, “I’m going to talk to so and so because they have a pile of money or they just inherited money or they just sold their business and they have a lot of money.” But maybe they’re not the right donor for your organization because they don’t feel passionate about your organization’s mission.
So they’re not going to really want to give to your organization even though they have the ability to do it. So make sure you’re coaching all your team members to use this criteria, to ask the right kind of probing questions so that when you do talk to a potential donor, you’ll know if it someone who fits your ideal profile.
So Ellen, I’ll turn it back to you to talk about the second topic.
Ellen: Well, the second topic is acquiring new funders. Now, we all know donor retention is a big deal. But you always have to acquire new funders because just retaining them won’t get you growth on an absolute basis. We find the same kind of pattern. A big chunk of the respondents to the Leaky Bucket Assessment, about 65% of them, have no real target or they’re just sort of flapping around out there uselessly saying, “We just try hard.”
Now, of those who do have targets for acquiring funders, a fairly large proportion of those only think about how much new money we can acquire instead of how many new funders plus how much money.
The flaw here is when you’re just talking about new money, it’s really easy to get into the frame of mind that says, “Everything will be okay just as long as we can get that big fat grant. All our bets are on that big fat giant grant or that $200,000 gift that somebody’s brother-in-law’s cousin’s mother-in-law might give us,” instead of distributing the risk and saying, “You know, we need $250,000 in new money this year and we ought to get it from 25 new funders.” Then if you and the big fat gift, hey it’s gravy. So this is another area of concern.
Linda: Okay. And how are we going to establish those new funders? Well, I think this is really, again, establishing performance targets for acquiring new funding sources is the first step. Don’t just wish we get new donors, but establish some specific goals. How many new funders do we want to get this year? How many in each category? I think this is really important. You might have certain grants that you go and write those grants every year and every year you get funded by those foundations or those government agencies. But are there some potential foundations out there that you’re not funding getting funding from already? Those are the targets that you can say, “Maybe we want to identify three new foundations this year that are going to give us money.” When it comes to individual donors, your targets will probably be a lot higher and maybe you’ll have to do some acquisition for new donors.
Now, just so you realize it, new donor acquisition is more costly than maintaining your current donors. We’re going to talk about that in a few minutes. But at least set aside a goal for yourself of how many donors you want in the corporate sector? How many foundations do you want to acquire? How many organizations? How many individuals?
Again, publish those targets. When we say publish, we don’t mean on the front page of your newspaper, we mean internally publish those targets. Let your board members and your staff members and your volunteers know how many new donors you’re trying to accumulate so you can set targets for numbers of donors and you can also set targets for dollars that you want to receive from new donors.
All of this should be part of your development plan. Someone asked the interested to that plan referred to the strategic plan or a development plan and that referred to a strategic plan, but you also need a development plan, which even fewer people have. That development plan should list in there what are your targets for new funders in each category and what is your dollar amount so that you have something to go back and evaluate your performance against.
Setting goals is important. So you can measure whether or not you’re receiving those goals. I think it’s really interesting to do that. I think you have to make sure that you not only have those targets but that you write them down, you document them, you share them with everybody internally and then you evaluate your performance on probably a quarterly basis, if not more often, to see if you’re meeting those goals.