1 lecture 9 management management - the process of leading and directing all or part of an...

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Lecture 9Management

Management - the process of leading and directing all or part of an organization, often a business, through the deployment and manipulation of resources (e.g.: human, financial, material, intellectual or intangible)

The Development Officer has the most unique position in the entire non-profit organization:

– Posses multi-perspective, broad, deep knowledge of organization, its constituency, environmental factors

– Has perceived power; “$$ maker”– Directs leaders of the organization – Savvy, able to adapt personality style, able to motivate others– However…doesn’t have friends or peers that are millionaires,

so he/she must manage the effort!

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Four Aspects of Management:

1. Managing the Development Program

2. Managing Direct Reports

3. Managing Executive Leadership

4. Managing Volunteers (Board, Development Committee, etc.)

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Three Principles of Organizational Budgeting Fundraising is a profit center, not just another cost

center

Budgeting for fundraising should take into consideration that each initiative returns at different rates and requires specific resources

Budgeting is a planning and management function• financial planning to determine goals/objectives• management for supervising the process and reporting

results

Managing the Development Program

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How does the organization measure success of the Development Program?

– Short Answer: Metrics– Long Answer: over time (suggested three years)– Benchmarks – other Development Programs,

however be mindful to compare apples to applesE.g. One person shop of small social service organization can not be compared to American Red Cross!

A Word of Caution about Metrics…

Many large shops are very metric-centric. Is the time you are devoting to running reports associated with performance metrics taking away from your stewardship and solicitation activities?


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Measuring Overall Return (using figures from page 392):

1. Net Income:

Fund Raising Income (gross) $603,100

(expenses: indirect and direct costs) $131,115

Net Income (Loss) $471,985

2. Cost of Fund Raising:

Expenses/FR Income $131,115/$603,100

= cost to raise $1.00 =$0.22

Direct Costs = Labor/Payroll

Indirect Costs = Expenses associated with a specific fund raising programE.g.: postage, printing, purchased lists for a direct mail program


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Source: Rosso, 2002; Exhibit 28.11 Nine-Point Performance Index

Basic Data:

1. Participation = Number of donors responding with gifts

2. Income = Gross contributions

3. Expense = Fund raising costs

Performance Measurements:

4. Percent participation = Divide participants by total solicitations made

5. Average gift size = Divide income received by participants

6. Net income = Subtract expenses from income received

7. Average cost per gift = Divide expenses by participants

8. Cost of fund raising = Divide expenses by income received; multiply by 100 for percentage

9. Return = Divide net income by expenses; multiply by 100 for percentage


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Scenario #11. 1638

2. $587,000

3. $318,00

4. % participation = 16.6%

5. Ave. gift size = $353

6. Net Income = $260,000

7. Ave. cost/gift = $194

8. Cost of FR = 55% (or $0.55 to raise $1.00)

9. Return = 82%

Income = $578,000Expenses = $318,000

# of participants = 1638Total solicitations = 9,876

What does the data say?Perhaps is a very young program, or is a small grass roots organization.

This would explain the high cost of FR and ave. cost/ gift

Regardless, the program is providing benefit to the organization (probably better than any other service line)


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Scenario #21. 3667

2. $1,800,000

3. $686,000

4. % participation = 20.5%

5. Ave. gift size = $491

6. Net Income = $1,114,000

7. Ave. cost/gift = $187

8. Cost of FR = 38% (or $0.38 to raise $1.00)

9. Return = 162%

Income = $1.8MillionExpenses = $686,000

# of participants = 3667Total solicitations = 17,876

What does the data say?This Fund Raising program is more mature (than #1).

They are active fundraisers, the number of solicitations speak to a very active direct mail program.

They may be in the quiet phase of a Capital Campaign as Cost of FR seems high for an established program with that many participants.


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A word about realistic reporting…Nonprofits have historically under-reported expenses on 990’s. This has created a vicious cycle that is hard to correct because informed donors (who access 990s) reward organizations with the leanest profiles. This forces other organizations to conform, creating additional pressures from other funding streams.

Assignment: read the Bridgespan Group’s research paper in the handout section


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Source: Rosso, 2002; Exhibit 28.10 Reasonable Cost Guidelines for Solicitation Activities

Solicitation Activity Reasonable Cost Guidelines

Direct Mail (acquisition) $1.25 - $1.50 per $1.00 raised

Direct Mail (renewal) $0.20 - $0.25 per $1.00 raised

Membership Associations $0.20 - $0.30 per $1.00 raised

Special Events, Benefits $0.50 per $1.00 raised (gross revenue and direct costs only)

Donor Clubs, Support Group Orgs. $0.20 - $0.30 per $1.00 raised

Volunteer-led personal solicitations $0.10 - $0.20 per $1.00 raised

Corporation, Foundations $0.20 per $1.00 raised

Special Projects $0.10 - $0.20 per $1.00 raised

Capital Campaigns $0.10 - $0.20 per $1.00 raised

Planned Giving $0.20 - $0.30 per $1.00 raised

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Translating Outcomes into Community Benefits:

• How has the org made a difference in the community?

• Can the results be measured against the mission through its programs and services?

• Is the org effecting change in the community / industry?

• Is the org providing a direct benefit to community residents?

• Has the organization improved residents’ quality of life?

• Can quality and quantity in terms of a positive difference be demonstrated?

• How well is the organization accomplishing these things in light of the funds it receives?

Source: Rosso, 2002; Exhibit 28.10 Reasonable Cost Guidelines for Solicitation ActivitiesTr


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Job Descriptions• The Chief Development Officer (CDO) is the principal planner

and manager for fundraising– Various titles: Director of Development, VP of Institutional

Advancement, VP for Development, Development Manager

– Often in charge of multiple tasks: e.g.: Director of Development & Marketing, Director of Development and Training, etc.

• CDO Responsibilities include:– Chief assistant/advisor to the CEO (for development purposes)– Develop the concept (vision) of “how” the organization will

meet its short- and long-term charitable gift needs– Management and functional responsibilities for development:

a) Ensure that development activities happen in a timely, efficient, cost effective, productive, and ethical manner

Source: CFRE Review Course-Faculty Manual, 2004 Edition

Managing the Direct Reports

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• CDO Responsibilities (continued):• Provide guidance, leadership, and support to staff, volunteers, donors, and the

community regarding philanthropic fund raising

– Human Resource skills in order to fill the needs of various development roles

• Identify skills that are needed: hire, coach, manage, train, and build team effectiveness

• Evaluate, terminate or reassign ineffective staff as needed

– A member of the institution’s senior management team

Different organizations have different organizational structures. It is always the most effective when the CDO reports directly to the CEO, reports to the Board (and is allowed access to Board Members), and is a member of the senior leadership team


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• CDO knowledge areas:– General Management (finance and personnel)– Nonprofit Management and training– Volunteer Management and training– Knowledge of external environment (i.e.: trends in fund raising profession, ethics, the

non profit sector, and the basics of tax law)– Non profit law, including state/province and local regulations– Trends, opportunities and threats in the industry and the community; strengths and

weaknesses of the institution– Marketing, public relations, and communications– Constituency development and cultivation– Fund development planning and evaluation– Prospect identification, research, and qualification– HR, individual dynamics, group dynamics– Gift processing, reporting, donor relations, recognition, acknowledgement



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Job Descriptions (continued)

• CDO Skills:– Communication– Organizational Management– Reports and information management systems– Donor and prospect research– Financial– Marketing– Enabling

• This list is exhaustive because it includes ALL of the duties in the Development Office. As more staff members are added, the CDO can delegate responsibilities to the appropriate person.


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• Other Development Staff– Titles and duties correlate with the size of the department, here are some examples (not

education) and staffing structures:

• Small Shop (1 – 3 people): 1. CDO – Planning and implementation, Annual Fund (appeals, events), Major Gifts/Face-to-

Face Solicitations, *Planned Giving, Board Development/Training, Manage the Database, Manage the Grants Program

2. Development Associate/Assistant – Administrative Duties, Gift Entry/Processing/Acknowledgements

3. Grant Writer/Foundation & Corporate Relations – Researches potential prospects, develops and prepares grant proposals (depending on the skill set, may or may not write the case/case statements)


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• Medium Shop (4 – 7 people): 1. CDO – Oversee management of department, responsible for guiding the CEO and the Board

in fund raising, Board Development, promoting a culture of philanthropy throughout the organization, Major Gifts/Face-to-Face Solicitations, *Planned Giving

2. Administrative Assistant – Provides administrative support to the department and its staff

3. Database Coordinator - Gift Entry/Processing/Acknowledgements; report generation, database maintenance

4. Grants Officer (Foundation & Corporate Relations) – Researches potential prospects, develops and prepares grant proposals

5. Major Gifts Officer - Responsible for cultivating and stewarding a portfolio of donors (aprx. 150 – 200) to making major gifts to the organization; may also have planned giving responsibilities

6. Annual Fund Officer - Manage and implement a year-long annual fund program that includes: direct mail appeals, fundraising events and stewardship activities

7. Research Assistant – Conducts Foundation research, wealth screening for individual prospects, industry reporting, legislation


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• Large Shop (8 – 12+ people):

Note: Larger shops tend to have a taller structure

1. CDO/VP of Philanthropy – Oversee management of department, responsible for guiding the CEO and the Board in fund raising, Board Development, promoting a culture of philanthropy throughout the organization; provides supervision to the Assistant to VP, Grants Team, Major Gifts Team

2. Associate VP of Philanthropy – “Number two” in command; provides supervision to: Annual Fund Team, Database Team

3. Assistant to the VP – Provides administrative support to the VP and the AVP

4. Director of Foundation & Corporate Relations – Designs proposal plan, writes case statements, works with department heads to manage grants/solicitations, prepares large, complex proposals

5. Grant Writer – prepares smaller grant proposals, reveiws/edits submissions. Reports to the Director of Foundations & Corporate Relations

6. Director, Annual Fund - Manage and implement a year-long annual fund program that includes: direct mail appeals, fundraising events and stewardship activities


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• Large Shop (continued):

7. Director of Information Systems (i.e. database) - Gift Entry/Processing/Acknowledgements; report generation, database maintenance; also in charge of all other sources of information used for research (i.e. how to use them)

8. Gift Entry Clerk – Enters the donations into the database

9. Director of Major Gifts – Responsible for cultivating and stewarding a portfolio of donors (aprx. 100) to making major gifts to the organization; also responsible for planned giving; supervises the Major Gifts Officer and the research assistant

10. Major Gifts Officer - Responsible for cultivating and stewarding a portfolio of donors (aprx. 150 – 200) to making major gifts to the organization; may also have planned giving responsibilities

11. Research Assistant – Conducts wealth screening for individual prospects, industry reporting, legislation; administratively supports the Major Gifts team

12. Development Associate – Provided administrative support to the annual fund and grants team


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• Additional Titles & Duties:– Stewardship Officer – Annual Fund or Major Giving; responsible for

strengthening the bond between donor and organization

– Communications Officer – Responsible for designing the communications plan for the fund raising department (e.g. donor newsletter, e-blasts, designing the tone of messaging)

– Marketing Officer – Responsible for the marketing program associated with the fund raising department

– Copy Writer – writes the copy for the web pages, appeal letters, donor newsletter, campaign case statements

– Social Media Officer – updates Twitter, face book, etc. as a strategy to recruit philanthropy and steward donors

– Capital Campaign Coordinator – Organizes the facets of the Capital Campaign; administrative in nature


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Performance Metrics• Research shows that the use of performance metrics increases

the productivity of the Development Office– Aids employees in achieving their maximum capacity with out goals– Institute a reward system (e.g. bonus) for meet/exceeding goals (positive

reinforcement)– Institute a coaching/mentoring system to catch underperformers and guide

them toward success (the CDO needs to possess these competencies)– Stretch goals– Should include non-monetary measurements– Requires continuous evaluation of the environment– Benchmarking (compare to “like” organizations or departments)– Right-size for your shop


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Performance MetricsSolicitation Activity Reasonable Cost Guidelines

Direct Mail (acquisition) $1.25 - $1.50 per $1.00 raised

Direct Mail (renewal) $0.20 - $0.25 per $1.00 raised

Membership Associations $0.20 - $0.30 per $1.00 raised

Special Events, Benefits $0.50 per $1.00 raised (gross revenue and direct costs only)

Donor Clubs, Support Group Orgs. $0.20 - $0.30 per $1.00 raised

Volunteer-led personal solicitations $0.10 - $0.20 per $1.00 raised

Corporation, Foundations $0.20 per $1.00 raised

Special Projects $0.10 - $0.20 per $1.00 raised

Capital Campaigns $0.10 - $0.20 per $1.00 raised

Planned Giving $0.20 - $0.30 per $1.00 raised

Source: Rosso, 2002


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Performance MetricsOther Examples:

Talk to one board member/week Volunteer Management/culture of philanthropy

Meet with five different departments throughout the year

Culture of philanthropy; position fund raising as a “go to” department/i.e. a resource

Go to one community-based event/month

Increase awareness of your organization

Talk to a development professional who has the same title in a different organization

Peer learning; gather benchmarks and tactics

Attend one professional education session/quarter; read two books/year

Increase and add to the body of knowledge

Call all new donors to say “thank you” Creates a habit and comfort level of calling on donors; validates the donor’s gift (negating buyer’s remorse)


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Performance MetricsOther Tactics:

– Work with employee to come up with measurements together; this increases buy-in and ownership

– Different measures for different stages of the program. E.g. year one of major gifts: 10-12 visits per month (no monetary goal); year two: same number of visits but with a goal of $250,000 in proposals (one per month)

– Tie your employees’ goals into your goals (as the CDO); tie your goals into your CEO’s goals

– Don’t get hung up on goals that didn’t work out – recognize why and move on– People (employees) do what they enjoy; incorporate that into their job function

and measurements– Balanced Scorecard (four perspectives: financial, internal, external, personal)

Remember: what you measure, must be managed; keep it simple


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Ask your Organizational Contact…

How do they measure performance (of employees, volunteers and/or the development program)?


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“I want the development department to be as successful as it can with the resources it has”

“…I hate events…each year I have nightmares that I am doing the welcome address and no one is in the audience!”

“Can’t we pay the grant writer based on the money they raise?”

“We can’t tell prospective board members they have to raise money too! They won’t join our board!”

“We need you to raise the budgetary shortfall of $X”

“You can go on the visit without me…just tell them I said it was ok”

“I don’t want to go to community events, you can go in my place”

Managing the Executive Management

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The CDO is a unique position

– You possess, and add to, this “body of knowledge” that is

primarily based on experience

– You direct people that are your superiors (i.e. they can fire you!)

– Executive managers only see “the ask”

– You are continually validating and defending your actions and

purpose

– You need to be more than a “Jack of All Trades”; speaker of all

languages

– Executive managers tend to have long-terms desires on a

short-term budget


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Managing the CEO…This can be difficult, however, will be the most rewarding for your

development program (and your organization); start off right:1. Ask about this during your interview (if you are looking for a CDO position)

2. If a new CEO is coming on board, ask the search committee to consider “comfort level with fundraising” as a competency

“My CEO/ED doesn’t like/understand fundraising”1. Start small to establish “wins”:

• Solicit Board Members• Engage Staff Members• Thank you calls to donors• Calls to Foundation/Corporate funders• Escort on visits; you be the model• Role play (note: difficult tactic)


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2. Benchmarks (other “like” organizations)• Three similar organizations that are successful in fund

raising• Set up a meeting/lunch with the ED and the CDO to discuss

factors contributing to success• Pick two or three tactics that could be implemented in your

organization (and implement them)• Track and report process• Reward success (positive reinforcement)• Most Importantly – position the exercise as one to help

you (i.e. the CDO) improve your performance!


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3. Shared Goals • Development program goals (like all program goals) should be based

on the organizational strategic plan• Before devising your (i.e. the CDO) goals, ask to see your ED’s goals

for the upcoming year because you “want to make her more successful”

• Align your goals with hers and add some development-specific objectives such as:

1. Attend the Chamber of Commerce Annual Meeting, with the CEO, and collect three business cards from people I’ve never met

2. Ask CEO to mandate all members of Executive Management to have fund raising goals; I (the CDO) will work with the team to devise meaningful, non-threatening tactics

3. Host bi-annual budget preview meetings with all members of executive management to look opportunities two-years out for major gift funding targets

4. With the CEO, meet with each board member (individually) to determine individual goals


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Managing other members of executive management… Depending on the size of your organization, executive management may

be three people (including the CEO) or as many as 10.

Focus on:• Director of Finance (CFO) – this is the person who wants to balance

the budget or even make a small return• Director of Operations (COO) – this is the person that will usually

have large capital needs (new buildings, renovations, equipment)• Director of Programs – this is the person is charge of service

delivery; i.e. the reason for your organization’s existence


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Director of Finance– The Development Office and the Finance Office need each other to

survive; synergistic relationship• Finance ensures the donor’s contribution is spent as the DOs designated• Finance constructs the budget and is able to decipher “nuggets” in an

organizational budget that might be fundable • Finance is usually the first to hear about program needs, wishes or

desires; if communicated, could be built into a Development Plan and funding recruited

• Fund raising can be leveraged; it can lower financing costs• Fund raising provides alternative revenue to costly programs that are

central to the organization’s mission• Fund raising provides a steady stream of CASH; especially important for

organization’s funded largely by governmental payers


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Director of Operations– Operations oversees the facility; which is the largest cost center and the

easiest target for philanthropy (namely via foundation grants)• Sit with the COO and review the facilities plan for the next five years; target

major renovations for funding in the Foundation Grants plan• Attend energy conferences/sessions with the COO to learn about

implementing energy efficient operation using philanthropy revenue (or a government grant)

• Benchmark – what “like” organizations have made major improvements thanks to fund raising revenue

• Host meetings with the COO and vendors of the organization to discuss how their other non-profit clients are making improvements (also a good way to engage the vendors in fund raising)

• Inform the COO about vendors who are also donors; provide added recognition (validation)


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Director of Programs– Organizational programs are the reason for your organization’s

existence; – Donors who believe in your mission want to support your programs

• What enhancements do the programs require? Donors may be willing to support such improvements

• What programs reach the greatest number of people? Try to establish benefit to a specific population; translate how fund raising revenue will support that population

• Benchmark the programs against other programs (most likely in other states); use those examples to better your programming (also use their fund raising techniques)

• Incorporate measureable outcomes (to report to donors); many organizations simply “meet the needs…”


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Managing From the Middle:– The CDO is often not a member of Executive

Management and managing “through” systems is a common scenario

– Will use all of your skill and imagination; the most gratifying experience when all parties start to engage (and realize the benefit of a successful fund raising program)

– Suggested reading:

360° Leader by John C. Maxwell


http://www.google.com/products?hl=en&q=360+degree+leader&um=1&ie=UTF-8&ei=vuBETMfVL4v2swPKyoWZDA&sa=X&oi=product_result_group&ct=image&resnum=3&ved=0CD0QzAMwAg

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Ask your Organizational Contact…

– Does the CDO of your personal case organization report to the CEO? Is he or she a member of Executive Management?

– What tactics does the CDO of your personal case organization employ to engage the CEO or any other member of Executive Management in fund raising? Provide two


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If volunteering is the practice of people working on behalf of others or a particular cause without payment for their time and services, then what are Fundraising Volunteers?

•Fundraising Volunteers:– They are recruiters (of money and other volunteers)– They open doors to funding sources (Corporations,

Foundations of which they serve as board members)– They provide insight into how the organization is perceived in

the community at large– They provide information about community trends, challenges,

issues

Managing the Volunteers

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Like all volunteers, fundraising volunteers expect:– The fund raising staff to be professional stewards (of the

organization and the practice of philanthropy) – Training– Support and supervision– Assistance in making appropriate calls and delivering

appropriate messages– The staff to realize/appreciate that work cannot be done

without volunteers– The staff to represent the organization in a positive manner – The staff to communicate to the organizational leadership their

perceptions of community needs, challenges and trends



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Volunteers progress along the continuum, similar to donors up along the donor pyramid

• Generally, three categories of volunteers:– office volunteers – help with administrative tasks (data entry, mail

prep, phone calls)

– committee volunteers – fundraising events, board committees – involve utilizing talents and connections of the volunteer

– board members – giving of time, talent and treasure (give and get)

Disclaimer: we recognize that all volunteers are important to the mission of all non-profit organizations. However, for the purpose of this course, we are going to only discuss fundraising volunteers


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Volunteers are donors; but donors are not necessarily volunteers

this explains why our fundraising volunteers are an organization’s most important asset.

Unlike the Development Professionals:• Volunteers don’t get paid to talk highly of the organization• Volunteers don’t get paid to solicit money from prospects• Volunteers DO have friends and/or peers of influence and

affluence

All of these things contribute to higher credibility – which can be leveraged!


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Training and Guidance• Volunteers need proper training and guidance; they want to be

successful• Too often organizations expect volunteers “to know what to do”

– Do you provide a new employee training, even though they’ve worked somewhere else fulfilling the same role?

– When you have a volunteer come in to do data entry or make phone calls, you give them detailed instruction – however we tend not to provide the same level of detailed instruction to our volunteer Co-Chairs for the annual gala

– Board Members are among the worst trained volunteers; leading to high turnover and unproductive boards

• The Development Office needs to ensure that proper attention is giving to volunteer training, guidance and coaching


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The Board of Directors– Job Descriptions (see Trustee Roles & Responsibility

document)– Assign individual goals that align with each duty (face to face

meeting)– Revisit throughout the year (are the Board Members on track

with these goals?) – Evaluate at the end of the year

1. Have Board Members evaluate the Board as a whole; confidential; remit to CEO & Board Chair for review

2. Self Assessment; confidential; no remittance

– Start cycle over in new year (new goals, etc.)• Be sure to inquire what the Board Member wants to gain from their

experience on XYZ Board; incorporate that into their goals in order to provide a meaningful volunteer experience


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The Board of Directors and the 3 Ts• 3 Ts = Time, Talent and Treasure – the perfect board has equal

amounts of each (given from Board Members)

• Translation to Board Member, “I only have to do one T”

• Most organizations are in need of Board Members who will

contribute all three; hence the need for goals and documents

roles & responsibilities

• Board Members are the organization’s most important

volunteers; they take on the most risk (legal, financial, ethical);

we leverage their position; and they don’t get paid…the least

we can do is give them the resources they need to be

successful!


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Don’t Eat Your Chickens…– Its tempting to go to back to the well (i.e. your Board)– It satisfies their goals and adds to your program’s bottom line

But…– it doesn’t increase your donor base; – Or bring new donors into the donor pyramid– And may burn-out your Board Members making it hard on

morale and recruitment

The “T” for Treasure has two components:• GIVE – to the best of your ability; making XYZ organization

in your giving priority set• GET – participate in fund raising by recruiting new donors

to XYZ organization


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“I’ll join the board (or XYZ Committee) as long as I don’t have to ask for money”

– e.g. Butler Hospital Development Committee – Many volunteers don’t understand the basic principals of

development (i.e. relationship building; leverage)– When they are asked to “participate in the process”; the

perception is that they are not “making the ask”; in reality their efforts are much more effective

– Fund raising is very gratifying; small successes pave a path for future success

– All actions and efforts contribute to the overall mission of fund raising program (no silos)


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A list of “No Ask” Fund Raising Tasks:• Make “thank you” phone calls to recent donors• Write a personal note on donations over $X (as a form of Thank You)• Provide a written testimonial • Contact your local legislator and let them know that you are on the board of XYZ Non-

Profit• Attend community events (not XYZ Non-Profit events) with the organization’s CEO/CDO

as a “Trustee of the XYZ Non-Profit”• Chair the Fall Appeal (or lapsed donor appeal or any appeal) by signing the appeal letter• Allow the Donor Newsletter to feature you in a “Spotlight on our Volunteers” section• Organize a speaker from XYZ Non-Profit to come speak at your business• Volunteer for the annual phone-a-thon (making calls)• Allow XYZ Non-Profit to publish and distribute a press release about your appointment to

the board• Attend cultivation events and talk about XYZ Non-Profit• Participate in rating sessions and prospecting session (i.e. do you know…?)• Attend major gift solicitations with the CEO or CDO…as a Trustee…not as the solicitor• Invite personal contacts to an educational event presented by XYZ Non-Profit


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The reality is…• Trustee lack of involvement and support in fund raising is the

among the largest complaints of CDOs

• Research shows a correlation between board giving/participating

in fund raising and successful fund raising programs

• Non-fund raising boards feel that it is “the Development Officer’s

job to raise money”

• Many EDs don’t feel comfortable participating in fundraising

• CDO/Development staff turnover is very high in non-fundraising

board/leadership organizations (note: this is a high turnover industry)

• HOWEVER, small, consistent changes can yield quick and

meaningful returns; the CDO does have the power


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In Class Exercise…

Discuss:• Should organizations have job description for its Board

Members? If yes, why?

• What do you think the two biggest challenges are in working with the Board re: fundraising might be?

• What do you think the two biggest rewards have been in working with the Board re: fundraising might be?

Managing Volunteers

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