How Administrative Support for an MGO Nets More Money for the Nonprofit
There is a controversy on administrative support for major-gifts officers (MGOs) going on right now that doesn't make any sense to me.
The conservative managers/leaders are saying: "An MGO does not need support to do his or her job!" They are emphatic about it. These are the same folks who want the MGO to be OUT OF THE OFFICE!! I capitalized that because that is how STRONGLY they feel about it.
Does anyone see a conflict here? They want the MGO to be out with donors while they also want the MGO to do all the in-office work necessary to make the major-gifts effort successful. Crazy.
So, the proponents of the traditional argument believe that an MGO does not need administrative support, that solid revenue can be secured and donors can be properly cared for without this critical support. The less risk aversive of these folks believe that admin support can be shared with other MGOs and even with other executives/positions.
While extenuating circumstances, at times, may lend credence to the notion that an MGO can be effective without support, I am going to make an economic case against that view.
First, some definitions. I have created three scenarios. All of them assume a starting first-year caseload value of $1 million. Please keep this in mind as you read on:
- The fully dedicated scenario: Here the MGO has a fully functional, 100 percent dedicated administrative assistant.
- The half-functional scenario: Here the MGO has an admin assistant but that assistant, either because he is shared and/or not fully competent, is operating at "half" level.
- The no administrative support scenario: Here the MGO does not have an administrative assistant.
So, keep these three scenarios in mind as you read on.
The next thing to keep in mind is that we are starting with a caseload that has 150 qualified donors who collectively have given the organization $1 million. This means the caseload value in the first year is $1 million.
Assuming certain cost and donor value attrition factors, which Veritus Group has tracked for a number of years, here is the net second-year value of the $1 million we started with in the original caseload: See image 1.
The result is that having a fully dedicated administrative assistant that is fully functional vs. not having one at all netted the organization $289,900 more! And the ROI was 4.5:1 — for every dollar spent on the MGO and his or her administrative support, $4.50 came back. That's pretty good.
Note also that having a fully dedicated and fully functional administrative assistant is $200,000 net better than having a half functioning administrative assistant.
So, there are plenty of arguments why a manager should equip his or her MGOs with a fully functional and competent administrative assistant.
Now note that the half functional vs. none scenario nets the organization an additional $89,900 at a ROI of 3.6:1. This is still better than not having an assistant.
Lastly, the no administrative support scenario nets the organization $331,350 at a ROI of 3.8:1 which from a ROI point of view is better than the half functional scenario but is $89,000 less in net revenue.
Here is the point of this whole exercise. It is far better, from a ROI and net revenue point of view, on a caseload of $750,000 or more (in some cases less), to have a fully functioning, competent administrative assistant.
Here is how I arrived at my numbers. First the cost side of things (see image 2). The chart in image 2 shows what I have put into the cost side of the ledger. I am assuming benefits equal to 25 percent of salary. I have also put in "operating costs," which for the MGO include office and travel and for the assistant include office expenses. Note the totals for MGO plus assistant and MGO only.
Here's the revenue side (see image 3). Here you see the original first-year caseload value and how that value goes down:
- Down by 20 percent in a fully functional scenario.
- Down by 40 percent in a half functional scenario.
- Down by 55 percent in a no administrative support scenario.
I know that the minute you see these value reductions/drops you will say something along the lines of, "You mean to tell me that I will experience a 20 percent decline in revenue even when I am paying full attention to the caseload?"
Yes, I do.
If you fully manage the caseload as you should and you have not cultivated substantially larger gifts from five to eight top-tier donors on your caseload, the "normal" value attrition we see across clients and prospects is 20 percent. Anything 20 percent and under is "good" attrition. Now, this point does not address the fact that if you are cultivating your top-tier donors your total caseload value should increase year to year. But that is another subject. What I am trying to do in this post is explore the effects of support or lack of it on revenue.
The argument I am also making here is that if an MGO is expected to do all the in-office work as well as meet with donors, he cannot manage the donors as he should. The net effect of this reality is that donor attrition is substantially higher. We have seen this over and over again. Very high attrition for "non-managed" caseloads — a lot lower attrition for those that are properly resourced and managed.
Now, your numbers might not be exactly like this. In fact, they, likely will not be. But, one thing I know for sure is this: There is a net economic benefit to supporting the MGO with good, solid administrative help. If you don't believe it, just think about it this way. If your MGO is actually out there with good donors and not having to do all that work in the office, you will agree that (a) more relationships will be built; (b) more information will be secured; (c) more offers, proposals and matches to donor interests will be made; and therefore (d) more money will be raised.
Think about this logically. Then have the courage to support your MGO.
If you’re hanging with Richard it won’t be long before you’ll be laughing.
He always finds something funny in everything. But when the conversation is about people, their money and giving, you’ll find a deeply caring counselor who helps donors fulfill their passions and interests. Richard believes that successful major-gift fundraising is not fundamentally about securing revenue for good causes. Instead it is about helping donors express who they are through their giving. The Connections blog will provide practical information on how to do this successfully. Richard has more than 30 years of nonprofit leadership and fundraising experience, and is founding partner of the Veritus Group.