Why you should not outsource your fundraising

Posted on June 21, 2010 by Pastor Foley

Tedfellow Peter Haas asks a question always worth re-examining in his post entitled Show me The Money-Disasters, Restrictions, and The Future Of The Fundraising Industry.

The question: Why shouldn’t a nonprofit organization outsource its fundraising to a professional fundraising contractor?

Peter is not talking about bringing in a consultant to train the nonprofit to do a better job raising money. He’s talking about outsourcing fundraising altogether–that is, hiring an experienced pro on a commission basis to bring in the financial resources that a nonprofit needs to do its work:

If the mission of the NGO is the service to the community, and fund raising is truly something administrative (as most donors like to classify it in costs analysis), then it should be something an NGO can easily subcontract. NGOs subcontract back end services all the time, book keeping, accounting, payroll. I don’t hire somebody to tell me how to reach into my heart and find my inner book keeper, I hire a book keeper. Why not fund raising?

To make this feasible for small nonprofits, Peter contends, it has to be done on commission:

Aside from finding the right contractor the boutique fund raising pricing is out of whack with the resources of its potential customers. Contrary to common development director and contractor beliefs, to build a truly sustainable client base they need to work just from commission or fee on delivery of gifts. The barrier to entry for customers in this industry is that most the the small, effective and compelling orgs lack the funds to pay a fee up front to hire one of these contractors.

Compelling set of arguments, these, and no doubt persuasive to many nonprofit leaders who, like Peter, do not see fundraising as either a personal strength or joy. Peter’s own question is:

Why aren’t there more fundraising contractors out there working this way?

Perhaps, he says, it may be bad advertising on their part:

Where are all the big fund raising contractors? The professional solicitors? This is an industry with thousands of professionals yet none of them has a google adword? Interestingly similar fundraising term searches with adwords had hacker SQL injection attacks in the adwords. Hackers and scammers know NGOs need money, why don’t the pros?

What I have learned from this is that either A) the companies and private practices that should be good at this are thinking way too small and a market opportunity exists for a serious player to dominate B) These companies need to hire me part time to manage their SEO because they suck at it . . .really. I might not be so great at the fund raising but honestly folks your google results are pathetic.

Or perhaps, he suggests, it may be a growth industry:

This is an industry that is waiting for its day. Small orgs need the big gift the most. I have often lamented that impact philanthropy has strangled out all the institution building big gift philanthropy of the late 80s and early 90s. Most the groups I respect in terms of impact, Partners in Health, Echoing Green, Teach For America, City Year, all started with a major million dollar or more gift in the first year. For an entrepreneur that is pretty darn useful to start an enterprise, you can staff off of that, you can build both a program execution and a fund raising team. Starting with 50-100K it’s a bit more of a challenge. You are constantly just treading water to creep upwards with your budget.

I’d suggest three other reasons why outsourcing fundraising to contract fundraisers is not more popular:

  1. It’s viewed by the largest professional fundraising society as unethical.The Association of Fundraising Professionals wrote a white paper on the subject, listing six reasons why they frown on the practice. My guess is that Peter won’t find much of their reasoning to be especially persuasive. From a pragmatic standpoint, the one that carries the most juice is the recognition of how rare it is that there is a 1:1 correspondence between a particular solicitation and a gift, or even between a particular solicitor and a gift. Big gifts especially are like fine wine; they mature with age, and their cork is best popped in the company of many.
  2. It’s a strategy whose time has come…and gone.There may have been a day when wealthy individuals were looking for places to park their dough where their hands and their checks would separate. In fact, the whole of traditional transactional fundraising is still based on that elusive hope. Increasingly, however, as we document in this blog, there is an ever-strengthening connection between people’s money and their involvement. (As we noted recently, volunteers to an organization give 50% more than non-volunteers.) This goes even beyond the point made above that a number of non-financial activities go into a donor’s decision to give. (Were that the case, we could just say to the contractor, “Tough. That’s just the cost of customer development.”) What the stat recognizes is that donors seek to interact in a certain way with an organization, and the nonprofit must be permeable and amenable to that approach. A nonprofit that outsources fundraising is unlikely to develop the kind of corporate culture in which donors and potential donors feel welcome to volunteer and participate in meaningful ways. If it did, it wouldn’t need to outsource its fundraising.
  3. Only bad fundraising is truly something administrative.It’s not like bookkeeping really, Peter. I supposed bookkeeping may in some circumstances be personally transformative. But good fundraising must be so. As Sean Stannard-Stockton notes and often laments, donors who say “I’m looking for a really good organization that’s making a significant impact that I can give a lot of money to” are as rare as unicorns. There’s just no way to take the transformation out of fundraising and have that be effective. And that transformation comes from personal participation, engagement, and ownership in the cause…not an encounter with a salesman for high end luxury goods.

What is an industry that’s waiting for its day are donor representatives who are more than financial advisors–individuals who work for givers, not organizations, and who are trained to scout out the nonprofits who want more than money and who can provide more than a good social investment.

Unfortunately, if you try to google those folks at the present time, you’ll come up empty, too.

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A Grand Vision of What Donor Development Can Be Coming From, Um, Tax Preparation Software

Posted on June 18, 2010 by Pastor Foley

We get letters–well, emails, anyway. (When was the last time you received a handwritten letter? Nope, cards don’t count.)

An especially good email came in last week from one of the nonprofit leader champions I coach personally. It went like this:

I believe in TG wholeheartedly.  I appreciate and read and watch your material on the subject.  SPOT ON.  I apply the same philosophical concepts in all of my daily routine conversations with champions.  But when confronted with how to do a true get-out-the-chart coaching call I’m lost…. I think you are the best teacher I know and you have spent hours on me trying to help me comprehend and visualize doing a chart with someone….  I’m sure not the brightest guy on the block but I think I am average.  If an average guy cannot get it from the best coach in the nation I don’t have a lot of confidence of my success in coaching others.

Fresh off our post on vision earlier this week, I’ve been musing that the best way to help my earnest and honest champion move forward in his understanding of P/E/O may be through a picture of what P/E/O is intended to accomplish.

(By the way, P/E/O–which is short for Participation/Engagement/Ownership–is the operating system on which Transformational Giving runs. A couple of background posts–this one and this one–will help bring you up to speed on the subject.)

Strangely, the picture came from Seoul USA/.W COO Matt Dubois by way of a legal project management email he reads in which the writer, Paul C. Easton, was talking about tax preparation software and the Department of Defense.

You take inspiration wherever you can find it, y’know.

Here’s Paul’s fascinating “vision picture”:

The Defense Advanced Research Projects Agency (DARPA) is currently developing software to help military-mission planners make better decisions. The mission-optimization software program is titled OBTW, initials for “Oh By The Way,” and is inspired by the guided decision-making featured in tax-preparation software:

OBTW is inspired by modern software systems (e.g., tax preparation packages) that are capable of guiding novice users through a complex problem-solving environment to produce expert-level results. In the case of tax preparation software, tax code expertise is encoded and made available through a question-and-answer interface that enables taxpayers who possess only a very limited knowledge of tax code to produce tax returns that would otherwise require an expert-level understanding of tax code. The OBTW program seeks to extend this model to mission-planning environments that, unlike the tax domain, are neither well codified nor limited in scope. Still, the interface metaphor is compelling. OBTW aims to develop a software capability that can engage the user and make suggestions based upon stored expertise. For example, “Under the specified conditions, the safest, most effective evacuation is by helicopter. And oh, by the way, if you’re going to use helicopters, Unit X has three that appear to be available. And oh, by the way, you ought to consider flying at night, because….”

So what does this have to do with P/E/O?

Substituting a few words here and there into Paul’s post gives us a P/E/O “vision picture” that may help explain what we’re after with these P/E/O charts in the first place:

P/E/O is inspired by modern software systems (e.g., tax preparation packages) that are capable of guiding novice users through a complex problem-solving environment to produce expert-level results. In the case of tax preparation software, tax code expertise is encoded and made available through a question-and-answer interface that enables taxpayers who possess only a very limited knowledge of tax code to produce tax returns that would otherwise require an expert-level understanding of tax code. The P/E/O process seeks to extend this model to nonprofit causes that, unlike the tax domain, are neither well codified nor limited in scope. P/E/O aims to develop in the donor/champion a capability of getting involved in the cause at a surprisingly high level by providing a platform that makes advanced action easy while also making suggestions for participation, engagement, and ownership based upon the expertise and experience of the coach who is guiding the process.

Codifying and making accessible your expertise and experience to your champions in such a way that they can get involved in the cause at a surprisingly high level: that’s the purpose of–and the vision for–P/E/O.

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Are Donors Really Looking for Impact…or Vision? (And If So, Do We Even Have One?)

Posted on June 16, 2010 by Pastor Foley

Visionaries can see a world that doesn’t exist. This is the reason we call them visionary – because they can see into the future.  They can imagine products or services not yet invented. They can envision a way of living  different to the way we live now.

Great quote above from Simon Sinek in his Re:Focus post entitled The Visionary’s Dilemma. And it causes me to ask the question–amidst all of the paeans to how donors want IMPACT IMPACT IMPACT from nonprofits (or should want it, since apparently they don’t want it badly enough yet):

Are donors really looking for impact…or could it be genuine vision that they hunger for? And if so, do we know how to share ours in a way that excites them?

Hence what Sinek terms the Visionary’s Dilemma: Visionaries may see the brave new world that only exists in their mind’s eye. But they typically stink at describing it to others.

Sinek offers three really good suggestions for remedying this deficiency. I especially like point 3, which is, sadly, an exceedingly rare skill and practice among visionaries:

1. Words that require thinking should be avoided, words like “convergence,” for example. When someone says that in a sentence, I have to furl my brow and really pay attention.

2. Explain why it matters, not what you’re doing. Who cares if you’re  “developing applications for mobile devices…blah blah blah,” why should I care?

3. And most importantly, always, always speak as if you’re describing an image.  A picture.  A scene.

An image. A picture. A scene. Sinek’s phrase sent me rifling back through an old external hard drive of client proposals and other marketing documents I have written over the years. The following one was written when both Transformational Giving and I were much younger. It was never adopted by the organization to which I presented it. They’re out of business now, though I’m sure that’s sheer coincidence.

Of all the vision pieces I’ve ever written, I have to say that this one–the images, the pictures, the scenes–still captivates me the most.

And I have absolutely no idea why.

We believe in the almost magical power of the shared meal to strengthen community bonds and overcome division.  When people eat together, it’s harder for them to pull further apart.  At times, eating together can collapse boundaries that nothing else overcomes.

We bring many different groups together that are either traditionally at odds or simply strangers:  young people and old; people from different racial backgrounds or economic levels; labor and management; even different gangs and political parties.  When we gather these people together, we don’t preach.  We don’t moderate.  We don’t negotiate.  We simply prepare a hospitable table and let the sharing of a meal work its magic.

We have a variety of programs that operate at a variety of levels in society.

For individuals and families, we offer a monthly package containing all the ingredients necessary to make four delicious, nutritious, complete, and easy-to-prepare meals.  Because of our buying power, we’re able to offer high-quality food products at surprisingly low prices.  In exchange for this, however, participants are required to pledge that at least one of the meals will be used to bridge a boundary.  This hardly has to be anything so grand as hosting rival gangs at one’s house; in fact, one of the most important boundaries we work to overcome is the increasingly fractionalization of the American family: Agreeing to prepare, serve, and eat a meal with one’s own family once a week will fulfill the package requirement.

At a local level, we work to help churches and other community-based organizations rediscover the lost art of hospitality.  At the most basic level, that means that participants pick up their monthly meal packages there.  At a more advanced level, we equip these groups to host meals that strengthen bonds and overcome division in their communities—Muslims dining with Christians, for example, or Koreans dining with Americans.

At a wider community level, we work to host special events that recapture the transforming power of a community gathered at table.  Our annual Great Day of Thanksgiving, for example, seeks to restore the lost power of this great holiday to draw together whole communities.  Today, Thanksgiving has become a highly privatized family affair, but this is far away from the events of the first Thanksgiving in which an entire community gathered together across ethnic and economic boundaries to give thanks for the goodness they had received in the past year.  By hosting community-wide Thanksgiving meals, we see the holiday re-imbued with its original, almost breathtaking significance.

At a national and international level, we participate in high profile opportunities to bring at times warring factions to eat around the same table.

Further, our catalog serves as a thoughtful resource not only for treasured items like table settings, utensils, and high quality food materials like our own private label bread, but also as a gathering together of everything from cookbooks to scholarly writings about the power of a shared meal and recovering the lost art of hospitality.  Our financial base consists of revenues from meals package and catalog sales, as well as grants and donations we receive from private foundations and donors who share our conviction about the power of a shared meal.

Man. Someone should really bring that vision to life someday. Someone…

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