How Much Money Are You Leaving On the Table?

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Tell it to me quick and short: What is Performance Advantage promising?

That we can help you increase your fundraising revenue by as much as two or three times. The power of process is the engine we use for a highly effective major gifts effort. This process will lead to exponentially greater success for you. And we have the track record to prove it.

Wow! Pardon me, but this claim sounds grandiose, like you’re a carnival barker or something.

No barking here, only stating the truth. The fact is, we encourage our clients to set a three- to five-year goal of doubling or tripling the amount they raise annually.

How can your clients achieve such results?

In a word, through the principles of quality improvement, which manufacturing has used for decades. Hospitals also have used this method, mainly to improve quality, safety and costs.

But some savvy hospitals are also using these principles – the shorthand word is process – for their fundraising. By adapting process to fundraising they can increase the speed of fundraising, trim waste and make the best use of staff and volunteer resources through data-driven systems. In development organizations, “waste” and “defects” take many forms. For example, they can include loss of time, actively managing prospects with only low potential, or poorly deploying key advocates such as board members, executives and physicians.

We focus on the fundamentals, not the fast-fading fads. We make fundamental improvements in the process, structure and technology of our clients. We don’t do campaigns or act as campaign consultants. Our work goes deeper.

But what are the specific components of your approach?

We use the principles of lean manufacturing, six sigma and the theory of constraints. “Lean thinking” permeates everything we bring to our clients.

Ours is a rigorous approach that has proved itself over and over again in significantly boosting fundraising. Among its components are: process engineering, work flow redesign, the application of IT-supported measures, cycle-time metrics, critical-to-quality criteria, elimination of out-of-bounds process variance, and a Core Process using stage-gate theory to manage the donor pipeline in a four-stage flow: identify to engage to cultivate to solicit.

But we’re not purists or expert technicians in any one technique or “school” for improvement. We use a hybrid approach. It’s a mixture of the quality movement coupled with a lot of experience in fundraising campaigns and the application of performance improvement to fundraising.

At the base of our approach are what we call the four pillars: Capacity, Constituency, Case and Culture. They sit on a foundation of change management.

It sounds to me like this is kind of a bloodless, scientific approach. What about the human element? What about those relationships we’ve nurtured with key donors over the years? Do they have to surrender to science?

Not at all. Performance Advantage’s approach with every engagement also honors those donor-centric relationships that are of course vital to hospitals. We recognize that fundraising is a matter of science PLUS art – the art being the human element. The “artistic” portion of an engagement includes assigning to your staff and volunteers the roles of Connectors, Mavens and Closers, which are somewhat based on Malcolm Gladwell’s book, “The Tipping Point.”

We also help you fashion a Breakthrough Case for support. It’s OK to rely on the continuing good works of your healthcare system if you’re doing annual fund solicitations. But if you want to undertake something really big, you’ll need a “big” case that is tailored to the interest of potential large donors. This case will inspire the excitement that attracts sizeable gifts. It will dramatically differentiate your institution in the marketplace from the other institutions and nonprofits vying for dollars.

What are the major steps in an engagement?

HFM Performance Advantage specializes in helping healthcare organizations achieve higher levels of ROI through performance improvement. Our goal: a quantum increase in results, usually on the order of 2x or 3x within a foreseeable time frame.

Major Components:

  • A focus on people, process and technology to build and sustain a culture of high achievement. We go beyond the traditional focus on process improvement for better outcomes.
  • Use of both quality assurance (QA) and organizational development (OD) methodologies. An ongoing, systematic approach to improve performance through structural redesign, human factors and process improvements. Key elements: the principles of Toyota’s Lean Manufacturing System, GE’s Six Sigma and Goldratt’s Theory of Constraints.

The Steps of a First Look:

  • A series of interviews and meetings. Overarching goal: to determine if further exploration of a performance improvement plan is warranted.
  • This first-blush view provides a quick, highly subjective preliminary evaluation of an organization’s situation, capabilities and readiness for performance improvement. The analysis enables us to arrive at general observations and preliminary recommendations.
  • We present a brief report.

If the organization then decides to pursue performance improvement in earnest, the next phase is more substantive investigation and planning to develop a definitive long-range action plan. The steps of this phase include:

  • The consultant’s review of facts and data supplied by the client.
  • A series of on-site, one-on-one meetings with members of the Foundation leadership team and selected volunteer leadership over a two-day period.
  • If it can be arranged, the consultant will also conduct a workshop with all available employees during the afternoon of the second day. The objectives: to provide them a look at performance improvement potential and to gain insight into change readiness by observing staff reactions and questions.
  • Telephone calls with Foundation personnel both before and after the on-site visit.

Areas of Investigation:

The principle First Look areas of investigation are organization structure, capabilities and climate, change readiness, existing infrastructure, and past and current programs and practices.

This preliminary look does not include an attempt to assess market factors. While there obviously is some saturation point for philanthropy in any market, our observation generally is that neither market potential nor competition are the prime factors limiting the performance of health care fundraising operations. Any factors limiting performance are likely more internal than external.

What’s the profile of your typical prospect?

She or he is a likely to be a fundraising professional with 10 to 20 years’ experience, mostly in healthcare fundraising. Yet this person is frustrated by an inability to significantly increase his or her shop’s performance level.

She or he is very skeptical of consultants and all of the “great ideas” and fads that permeate healthcare. This professional definitely sees fundraising as much more of an art than a science but has heard about Lean and Six Sigma due to such initiatives within the hospital.

Our typical prospect is also: well educated, with a master’s degree, though not in fundraising, and with CFRE or FAHP accreditation; very knowledgeable about all of the traditional methods of fundraising; ambitious; curious; fond of innovation and interested in learning better ways to do things; and more willing than most to go out on a limb. Our prospect is definitely the buyer who looks under the hood — admittedly a minority within the larger crowd.

Who is NOT a likely prospect?

Someone who is satisfied with relatively low levels of performance, loves special events for their own sake, likes meeting with a relatively small number of prospects over and over again, loves going to service club meetings and being on the hospital’s Presidents Council and similar ways of spending their time.

How much will it cost us to hire your agency?

In one sense – nothing.

That’s because, after the first year, your increase in revenue should more than equal the cost of hiring us. And in the long term we will at least double your revenue. We don’t usually take on a client unless we think dramatic gains are likely. Our initial, “first-look” cost is $10,000. After that, the cost will typically run $15,000 a month.

If you really do the math, the cost of hiring us is “below zero” when you compare expenses against increased revenues.

We don’t have a very big pipeline of donors. In fact, we’ve tapped our donors for all we can reasonably expect them to give. How will “process” overcome this problem?

You’ve hit on the key element of our approach. Our entire process is designed, and depends on, creating an abundant pipeline. To do this we set up processes that involve board members, campaign volunteers, physicians, hospital executives and donors. We develop high-volume, point-of-entry activities and programs to create abundant prospect flow into the pipeline. We designate Connectors (mentioned above), who are volunteers with personal giving capacity and high-dollar connections. They connect potential major donors with fundraising staff. Some of the people contacted by the Connectors become qualified prospects and move through the process.

A good metric is this: For every 10 people brought in by the initial Connector, one gives a gift at the target level. (And, usually, two or more gifts at lesser levels also result from among these 10 people.)

The process increases the number of donor-facing times by a quantum factor. Compared with traditional fundraising, it is more narrowly defined and less time intensive.

What have you found to be universally the No. 1 problem in hospital fundraising?

Hands down, it’s too much emphasis on high-expense, but relatively low-ROI activities like golf outings and galas. Special events are fine in themselves, but too many healthcare fundraisers put way too much stock in them. We call this problem the topmost of the “10 Problems Hope Won’t Cure.”

So what’s the best antidote to this weakness?

The best antidote is the Lean approach. We’re talking about flexibly placing resources where they will generate the most value. This approach includes focusing sufficient firepower on major gifts. You will, of course, need a complete pyramid of fundraising strategies and methods. But if you concentrate on maximizing your major gifts program, you can boost your ROI in a big way.

OK, I do understand the role of major gifts. But give me a major gifts target we can aim for in a fundraising campaign.

One measure of a high-performing operation is to raise about 80% of total dollars from major gifts, which in number make up about 20% of total gifts. You can quickly see why fundraisers need to align their efforts to get “the most bang for the buck.”

Would hiring you be an “all-or-nothing” sort of thing? Would it only be going at 200 mph with an Indy-size pit crew, or could we go a little slower and not staff up a huge degree?

Here’s some good news for smaller hospitals or larger systems just wanting to test the waters: We can tailor our approach to what you want and need. You can go as fast, or as slowly, as you want.

Our services can range, at a minimum, from “tweaking” certain parts of your operation all the way to partnering with you in a multiyear major makeover. We can be onsite for a couple of days a week, averaging one or two weeks a month. Or we can work offsite through designated agents on your staff and deliver training through web-based channels. The latter approach would keep your expenses down, because we would be onsite only for major events, like fundraising board orientations and training or staff retreats, and we would form teaching and coaching relationships with your designated staff.

Do you offer any other options?

Yes, we have a sister organization, the Fundraising Performance Institute. This involves finding two or three other organizations of similar size and situation to yours. You would go on a shared performance improvement journey with them, a journey that includes [meeting in Orlando for xx days to ———–.] This membership approach would require some flexibility on your part, but the Fundraising Performance Institute offers dramatically lower costs.

And here’s another advantage: You would enjoy peer-to-peer learning and mutual support throughout your journey.

How long does a typical engagement last?

Some have lasted as long as 3 to 5 years, others as long as 24 months. It really depends on the magnitude of the opportunity for fundraising. However, we generally work with clients for an average of 3 years.

We are a very small operation. How big do you have to be to make your approach worthwhile?

At a minimum, one fundraiser and one assistant. Even with a tiny staff you can raise significantly more money.

But how?

Again, by the processes we’ll set in place. They will provide the kind of structure to help you become a major gifts fundraiser. We ought to note here candidly that usually our involvement ends up resulting in a larger staff – but it’s a staff that more than pays for itself. Through the years we have found that most healthcare fundraising staffs are understaffed – and underperforming.

It seems like your approach requires a lot of data collection, analyses and reporting. Do you have a standard Dashboard and data collection tools you recommend to your clients?

Yes, we do offer a Dashboard. We have a lot of resources for data collection and statistical analysis that we custom-fit to the size of your organization, your fundraising strategies and so forth.

When prospective clients say they won’t engage Performance Advantage, or any similar fundraising consulting agency for that matter, what do they say?

The No. 1 reason we’ve heard from CDOs goes something like this: “Boy, I’m so busy running the race that I just don’t think we have the time to take this on.” Many CDOs do seem to be overwhelmed. The No. 2 response is: “My board will never support major change.” And the No. 3 reason we’ve heard is: “Why would I want to subject myself to increased expectations?”

We recently increased out donations by over 200%. We’re exceeding expectations. I don’t think we need your services.

We agree. Would you tell us how you did that?