Torpedo the Ratio
Yesterday I heard a highly respected peer-to-peer fundraising professional say out loud, "If we had $500 million I believe my organization could cure 'X' based on the research in our pipeline to fund."
My brain did a back flip.
My kid has "X." Seriously, she does. Suddenly, I don't care about the expense-to-income ratio of achieving $500 million in net income. I just want $500 million so my kid won't have "X" anymore. Launch the freaking torpedoes and to hell with GuideStar (just kidding).
I recognize the inherent risks associated with letting go of tight financial controls. I see the awkwardness of talking to donors about the cost of raising a dollar. I see our industry playing Twister—Semantic Version with expense allocation, coming out with legal structures that allow us to say, "100 precent of your donation goes to the cause." We all know that offices, desks, computers, employees, etc., are not free. We know a marketing-minded visionary donor agreed to "0 percent of your donation goes to the cause" to allow us to make that other statement legally, though not logically.
Maybe we need to talk to our donors a different way. Maybe we need to brace up and make a very educated projection on what it is going to take to achieve a mission goal and publish it. And, if we can't make that educated mission projection on what it is going to take, should we be taking anybody's money anyway? Should I take a donation because "I want the world to be free of "X"? No, I should take a donation because I have a plan to make the world free of "X" and my plan is going to cost this much.
Would a venture capitalist fund anything based on an entrepreneur's firm conviction that "somebody ought to buy my product"? Or, would the venture capitalist want to hear, "Here's what it is going to take to achieve $X million in sales"?
Newer charities like charity: water tell us what it is going to take to achieve a mission goal. This much money equals a well in this locality to be started on this date. And, we're going to tell you when that well is finished. The public loves it and supports it as evidenced by charity: water's success.
Why can't we all do that? We'd like to say "because curing 'x' is not as measurable as building a well." You might be saying that right now. Nothing worth doing is completely unmeasurable. Nothing. Your measurement may not be exactly the same, but it would be better than the milk-toast "... improve the quality of life ..." portion of most our mission statements that proves we are virtually directionless and without metrics for success.
If I am focused on raising my $500 million to achieve the cure my daughter needs, I am going to finance my fundraising department differently and measure the success of my mission delivery department differently. My fundraisers will be measured by the net they raise, not gross revenue with a tight fist around expenses. They will be managing portfolios to produce net revenue, without less constraint on how and at what expense. My mission delivery/program people have to tell us what it is going to take financially to achieve the goal and report regularly on how close we are.
And we would all have to accept being pariahs in our industry.
Otis 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 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 also regularly shares her wit and business experiences on her and Otis Fulton's NonProfit PRO blog “Peeling the Onion.” 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.