How Hitting Goals Can Damage Your Nonprofit’s Value
We have heard several interesting things recently from different interesting people:
Bob Merrill, the Leukemia and Lymphoma Society: “Read this book—“The Blue Line Imperative: What Managing for Value Really Means.” It will challenge the idea of managing to KPIs.”
Ryan Grosenick, Turnkey’s in-house analyst: “At certain levels of engagement, certain behaviors seem to ‘turn on,’ like activating to fundraising.”
Amin Tehrani, Revunami: “No, I don’t think it is a good idea to push Facebook fundraising as the desired outcome of a social media campaign. The real question is how do we create an engaged community which will do Facebook fundraising as a natural course of their engagement with the nonprofit?”
My email platform provider: “If your clients keep emailing people who don’t open their emails, we will shut down your ability to email before we all get blacklisted.”
All these comments really mean the same thing. Each individual metric we track and try to improve upon is a KPI. And if we just try to improve KPIs, we will fail at accomplishing our missions because we are focused on the wrong things.
Why is focusing on KPIs bad? The management theory espoused in “The Blue Line Imperative” is an approach to management that emphasizes long-term value creation, rather than short-term target acquisition. “Short-term target acquisition” = KPI = your email open rate, your registration numbers or your retention numbers.
The authors of “The Blue Line Imperative” believe that most organizations squander value by focusing on short-term indicators, rather than their mission—and in our case, our relationships with our constituents. To use an example we, frankly, use to death: How often have we seen a nonprofit install a registration fee on a peer-to-peer event, fully transactionalizing the relationship? We know it will hurt the relationship with constituents in the long run, but we do it anyway because we need a guarantee of a certain amount of money now to meet goal. Revenue = KPI. Or how often have we dropped four more emails because we were off of our goal? Email delivery = KPI. Or to support Amin’s thought, did I push you to fundraise on Facebook for me when we just aren’t in that close of a relationship? Activation to Facebook fundraising = KPI.
Ultimately, according to the authors, value equates to your constituent’s happiness. “No matter what products or services we strive to create, our overall purpose is the same: delivering happiness…” The book goes on to make compelling (and intellectually-dense) arguments to support this perspective. KPI-driven companies are described as “red-line” organizations, which focus heavily on KPIs, often leading them down destructive, short-sighted paths.
We offer this—the metrics that drive our efforts in the nonprofit sector are tied to specific tools, which create KPIs. If email open rates are poor, we focus on getting email open rates up. If fundraising is poor, we focus on increasing the level of fundraising. If acquisition of new donors is low, we focus on bumping up acquisition. If social media interaction is low, we post more. If retention is poor, we focus on luring them back.
These efforts are often owned by different departments, using different strategies. This in and of itself is problematic. What is more problematic is this: We don’t consider the thing that drives all of these separate KPIs—the relationship we have with our constituents. We make noise that we do. But if we are focusing on things like email opens and clicks, and trying to fix this or that KPI, we are not focusing on the happiness and satisfaction of our constituents. We are just thinking about the KPI.
The authors of “The Blue Line Imperative” emphasize that it is crucial to resist this temptation.
Preventing this situation from arising requires a change in culture—and a clear shift to make your organization into a ”learning” one. Learning organizations are often referenced in leadership literature these days. They are characterized by an emphasis on experimentation—every activity is subjected to open-ended questions on how they can be improved. Every experiment is monitored with tangible data—KPIs. KPIs stop being targets and become indicators of success or failure. They become information that is used to adapt and improve, to learn from, not reflections of a specific individual’s (or department’s) performance.
How do you know if your organization is a candidate for this kind of change? Ask yourself the question that the authors ask in executive seminars: “How many of you have taken actions that you knew would destroy value, even if they allowed you to hit an assigned target?” If your answer is yes, it’s time for you to start thinking about following “The Blue Line.”
Otis Fulton, Ph.D., spent most of his career in the education industry, working at the psychometric research and development firm MetaMetrics Inc., Pearson Education and others. Since 2013, he has focused on the nonprofit sector, applying psychology to fundraising and donor behavior at Turnkey. He is the co-author of the 2017 book, ”Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising,” and the 2023 book, "Social Fundraising: Mining the New Peer-to-Peer Landscape," and is a frequent speaker at national nonprofit conferences. With Katrina VanHuss, he co-authors a blog at NonProfit PRO, “Peeling the Onion,” on the intersection of psychology and philanthropy.
Otis is a much sought-after copywriter for nonprofit fundraising messages. He has written campaigns for UNICEF, St. Jude’s Children’s Research Hospital, March of Dimes, Susan G. Komen, the USO and dozens of other organizations. He has a Ph.D. in social psychology from Virginia Commonwealth University and a Bachelor of Arts from the University of Virginia, where he also played on UVA’s first ACC champion basketball team.
Katrina VanHuss has helped national nonprofits raise funds and friends since 1989 when she founded Turnkey. Her client’s successes and her dedication to research have made her a sought-after speaker, presenting at national conferences for Blackbaud, Peer to Peer Professional Forum, Nonprofit PRO, The Need Help Foundation and her clients’ national meetings. The firm’s work is underpinned by the study and application of behavioral economics and social psychology. Turnkey provides project engagements, coaching, counsel and staffing to nonprofits seeking to improve revenue or create new revenue. Her work extends into organizational alignment efforts and executive coaching.
Katrina regularly shares her wit and business experiences on her and Otis Fulton's NonProfit PRO blog “Peeling the Onion.” She and Otis are also co-authors of the books, "Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising" and "Social Fundraising: Mining the New Peer-to-Peer Landscape." When not writing or researching, Katrina likes to make things — furniture from reclaimed wood, new gardens, food with no recipe. Katrina’s favorite Saturday is spent cleaning out the garage, mowing the grass, making something new, all while listening to loud music by now-deceased black women, throwing in a few sets on the weight bench off and on, then collapsing on the couch with her husband Otis to gang-watch new Netflix series whilst drinking sauvignon blanc.
Katrina grew up on a Virginia beef cattle and tobacco farm with her three brothers. She is accordingly skilled in hand to hand combat and witty repartee — skills gained at the expense of her brothers. Katrina’s claim to fame is having made it to the “American Gladiator” Richmond competition as a finalist in her late 20s, progressing in the competition until a strangely large blonde woman knocked her off a pedestal with an oversized pain-inducing Q-tip. Katrina’s mantra for life is “Be nice. Do good. Embrace embarrassment.” Clearly she’s got No. 3 down.