The Power of Four

power

The Power of 4

High-performance fundraising isn’t easy: Here’s a four-point program for investing in performance improvement.

By Steven A. Reed

The only way you can reach significantly higher fundraising targets is by attracting new major donors. And major donors are not going to switch from the beneficiaries they currently support unless your case catches their attention and gives them good reason.

Build a process-based, data-driven, highly leveraged, integrated fundraising organization. Today, hospitals are embracing process as the key to improving quality, safety and costs, and they are beginning to adopt the quality improvement principles used in manufacturing, such as those employed in Toyota’s Lean and GE’s Six Sigma programs. A Lean organization strives to cut waste and increase value for customers by creating an efficient flow of products and services. Six Sigma is a disciplined, data-driven approach to eliminate defects in any process. When you combine the methodologies, Lean Six Sigma emphasizes speed, reduced waste and making the best use of staff and volunteer resources through a powerful data-driven system. In the development organization, “waste” and “defects” take many forms, including loss of time, active management of low potential prospects and poor deployment of key advocates, including board members. Use Lean Six Sigma tools and you will have an invisible infrastructure to guide your development process while you continue to honor the importance of donor-centric relationships.

Build a compelling, donor-centric breakthrough case for support. The role of the case in performance improvement tends to be overlooked. Your goal is to double or triple the amount you raise. That means you have to attract new major donors from outside your existing constituency by creating an urgent and compelling breakthrough case for giving that dramatically differentiates your mission in the marketplace. The only way you can reach significantly higher fundraising targets is by attracting new major donors — who are not going to switch from the beneficiaries they currently support unless your case catches their attention and gives them good reason.

Build an effective fundraising board structure and composition. Instead of the traditional governance-oriented board with members who have neither significant personal giving capacity nor the right connections, you can create a high-performance board composed entirely of donors — with a narrowly defined, less time-intensive, but highly valuable role. These board members should be enabled to use their own natural talents and skills to connect others to the mission. To hone their skills, they can tap the insights about how people share information and relate to each other in Malcolm Gladwell’s book, “The Tipping Point.”

Build an organizational culture for philanthropy. For a long time, development professionals have been talking about the necessity of having a “culture of philanthropy.” More important is a culture for philanthropy that is focused on achieving the institutional alignment and engagement and creating the platform for performance. To create a powerful case for support, it is crucial that your healthcare company engage the right advocates, including board members, executives and physicians. Culture also involves strategically aligned project selection, appropriate investment in the development program, focus on grateful patients, systematic program evaluation, synergy with marketing to create one inspiring brand and other elements of integration between the supported healthcare organization and its philanthropic arm. Raising substantial sums requires the organization to position philanthropy as a strategic and valued revenue-creating endeavor.

Based on these assumptions, what’s the result if we invest $1 million to increase service line revenue and another $1 million to increase philanthropic revenue, and both efforts are successful? Through philanthropy, you need to bring in $4 million in gifts to put $3 million on the bottom line. Through service line operations, you need to earn $60 million in revenue to get the same bottom line results.

So if you put a fundraising performance improvement initiative in place, and it yields an additional $4 million in philanthropy, you achieve the same bottom line impact as increasing other revenue by $60 million — or even more, depending on the service line’s operating margin and the hospital’s fundraising costs.

Whether you are fundraising in a hospital setting or raising money for another kind of NPO, the solution is the same: a multiyear fundraising business plan presenting a strong performance improvement program, a credible financial pro forma, and a discussion that builds confidence in the strategy and shows a diligent assessment of risk vs. reward.

But don’t get trapped by trying to make this happen as part of the annual budget submission game. That won’t work. Real, exponential performance improvement — the kind worth investing in — doesn’t happen within the scope of a year. It takes a three-year plan, just as if you are getting ready to undertake a major campaign (which, by the way, isn’t a bad way to culminate such an improvement effort).

In the development organization, “waste” and “defects” take many forms, including loss of time, active management of low potential prospects and poor deployment of key advocates, including board members.