Buddy Can You Spare a Dime?

By Virgil Carter

Does your nonprofit organization, or your foundation, actively engage in fundraising?  Are donors an important audience for you?  If so, you know that the resource development world is a challenging one, particularly since 2008 when the economy slowed and unemployment increased.

“Five Steps for Winning Conversations With Donors”, by Cody Switzer, published in a recent issue of The Chronicle of Philanthropy, offers some insights on positive and productive interactions with potential donors, based on an interview with Laura Fredericks, a fundraising consultant.  Fredericks says she has noticed a disturbing trend, “Too often fundraisers use the same formula to seek a gift, whether they are asking for $10,000 or $50,000, instead of tailoring each interaction with a potential donor to the person’s interests and values.

Conversations with donors are too important to use a standard template, Ms. Fredricks said. A guarantee that fundraisers are doing the right thing:  They should be a little nervous every time. Otherwise, it’s a sign they are coasting.  Fredricks offers five steps for improving conversations with donors: 

·         Know exactly what you want:  Before you contact a donor, you should have an idea “how much, how many, how often, and why” you want their gift, Ms. Fredricks said.

·         Prepare the conversation:  Before meeting with a donor, script out what you’d like to say, with an emphasis on open-ended questions. “These questions can help put a donor at ease and stir conversation”, Ms. Fredricks said. One of Ms. Fredricks’s favorite questions is, “When was the first time you remembered it was important to give back?”

·         Deliver with confidence:  It’s important to smile when you’re communicating with a donor, even if it’s over the phone or through e-mail. Listen to their responses to questions: Do they mention family or a hobby frequently? This can tip you off to the values that are important to them and allow you to adjust your approach. Mirror their language, and keep your requests for donations short and to the point.

·         Clarify your results:  “At the end of each conversation, repeat what you see as the results back to the donor to make sure you completely understand each other”, Ms. Fredricks said. Use a sentence starting with, “I heard you say today that …” and allow the donor to respond and correct you. If a donor gives you an adamant “no” about making a donation, ask why. ”Can I ask why it is you don’t want to give?” is the language that Ms. Fredricks recommended.

·         Plan the next move:  If the donor is still unsure about giving, set a timetable with him or her to check in again, but phrase it as a question. ”Can I get back to you next week?” or “When would be a good time to get back to you about that?” are both effective, Ms. Fredricks said. If the donor does agree to give, you should still set a next goal, with a date, and record it along with all the other information your group has about the donor.

Fundraising is always challenging, but these steps will help increase your conversations with donors and help build those important long-term relationships your organization is seeking.

Strategy for Unpredictable Times

By Virgil Carter

A traditional approach for organizational strategy is based on the view that with sufficient analysis, organizations can make reasonable assumptions about their markets, financial and human resources, technology and customer services, and be successful.  Any unforeseen elements can be addressed through strategy adjustments every few years.  Said differently, strategy for many organizations may be based on internal decisions about what the external world looks like.

But what if the future is unpredictable?  What if an organization’s internal views and preferences just don’t align with the external environment in which the organization finds itself?

 Author Lowell L. Bryan, in an article in a recent McKinsey Quarterly, “Just-in-time Strategy for a Turbulent World”, points out that “…globalization and technology are sweeping away the market and industry structures that have historically defined the nature of competition… (making it) impossible to predict, with any confidence, which markets a company will be serving or how its industry will be structured—even in a few years hence”.

 Bryan suggests an alternative to traditional organizational strategy:  a “portfolio of initiatives” intended to achieve favorable outcomes for the entire enterprise”.  He writes “usually, these initiatives will be organized around themes focused on achieving particular aspirations, such as increasing the reach of the enterprise, entering a new but related industry, or achieving the greater efficiencies.  Portfolio effects increase the likelihood that some of these aspirations will be achieved even if many others fail”.

 According to the author, a successful portfolio-of-initiatives strategy involves “creating enough initiatives offering high returns relative to the risks taken to enable a company to meet its aspirations and outperform the expectations of the markets.  The process requires the CEO and management team to “keep an open mind about where the company may be headed”.  Inherent in this approach is the understanding that “future decisions and future outcomes are likely to vary enormously from initial hypotheses”.  Bryan concludes his article by noting that “Most of the critical decisions involve subjective judgments that, unlike those generated by more deterministic strategies, will be informed by not just the highest-quality staff work but also the knowledge gained as time passes”.

 Are you operating in unpredictable times?  Perhaps a portfolio-of-initiative strategy is for you!

Using a “Third Team” for Organizational Effectiveness

By Virgil Carter

Non-profit organizational achievement is traditionally thought of as volunteer leaders, on the one hand, and staff executives, on the other, with the Executive Director playing the role of moderator and facilitator between the two disparate and often conflicting groups.  In a recent article “The ‘Third Team’ Approach to Board Effectiveness”, by Denis Mowbray and Coral Ingley from the Auckland University of Technology, appearing in Strategy + Business’s January 27, 2012 publication, gains are seen when a subset of volunteer directors and senior executives share knowledge and ideas.

Mowbray and Ingley note “…most…research has focused on the board as one team and the executive ranks as another, with the CEO or managing director seen as playing the role of moderator between the two disparate and often conflicting groups. This study — part of a larger project examining how boards affect performance — challenges that approach, with evidence that the highest-performing firms use a third team composed of a mixed subset of directors and executives who share and enhance knowledge and ideas.”

The authors studied 64 organizations (43 corporate and 21 not for profit) in New Zealand and Australia, including several in the top 50 on the stock exchange indices of those countries.

The study revealed that in both types of organization, corporate and not-for-profit, high levels of leader–member exchange within a third team, showing evidence of trust, loyalty, and respect, were a sign of high-performing organizations but not of lower-performing organizations (which had either ignored the concept or failed to implement it effectively).

However, “to simply say that having high levels of [staff-volunteer exchange] is sufficient for high performance would be misleading,” the authors write. Their broader study is examining a number of other factors — team effectiveness, knowledge gathering, and the use of intellectual capital — that also seem to play a role in how boards affect organizational performance through the third-team approach.  “The results show that across sectors, NFP and corporate, [and across] all individuals…the elements of confidence, trust, respect, loyalty and obligation…are consistent within the [third teams] of high-performing organizations” and are inconsistent at lesser-performing companies that either don’t utilize third teams or employ them ineffectively.

Bottom Line of the study:  A so-called “third team”, comprising both board members and executives at the top of an organization’s structure, can facilitate the kind of information flow and interpersonal respect that results in better firm performance.  Could your organization benefit from a “third team”?

Planning for Success by Definition

By Virgil Carter
The first quarter of each year is the time when many non-profit organizations schedule their planning and budgeting for the next fiscal year.  Planning and budgeting for success means defining what success looks like.  How do you and your organization define success?  It’s hard to execute and measure success when there isn’t common agreement and understanding on what constitutes success.

What does your organization value most?  Is it performance?  How about customer service and member relationships?  Perhaps its knowledge-based competencies or credentialing.  Each organization is different when it comes to what matters most, not to mention why it matters.  So, to define success, there has to be agreement on what matters most.  For example, an association struggling for financial survival may define success very differently than an association whose growth has been 30% per year for the past five years.

Here are some important success categories, with suggestions how they might be used. 

1. Strategy--Does our association have a sustained record of performance to plan over time (successful strategy is not measured in 12-month cycles or someone’s personal theme for the year)?
2. Voice of the customer—Who are our key customers and how do we know if they are satisfied (yes, there may be “less important” customers)?
3. Financial—Do we have a record of sustained performance over time meeting budget or ending each year with positive variances (no margin, no mission)?
4. Business operations—What is the record of new program development and existing program retirement over the past 5 years (are you still doing what you did 5-10 years ago)?
5. Learning & growth—What investment do we make on a consistent annual basis for volunteer & staff learning and growth in their association roles (no investment, no dividends)?

When you have figured out what matters most to your association and how you will measure success, it’s time to think about annual communications planning and the year’s key audiences and messages.  Key messages are important for association leaders—volunteers and staff—to focus on, repeat and reinforce.  The messages help everyone to understand and support success.

There are many useful ways to define organizational success.  And to communicate effectively about it.  When there is common understanding about success, your volunteers, staff, customers and business allies will thank you, knowing what to expect and how to help.  How do you define and communicate organizational success?

Reviewing the Performance of Your Business Units

By Virgil Carter
Most non-profit organizations consist of a number of important business units that contribute to the profession’s or industry’s body of knowledge, and provide the knowledge-based goods and services that drive the organization.  How does one include review and planning for these key units of the organization?

Authors Renee Dye and Olivier Sibony offer these guidelines in their recent article, “How to Improve Strategic Planning”, published in a recent McKinsey Quarterly:

·         Are major trends and changes in your business unit’s environment affecting your strategic plan? Specifically, what potential developments in customer demand, technology, or the regulatory environment could have enough impact on the industry to change the entire plan?

·         How and why is this plan different from last year’s?

·         What were your forecasts for market growth, sales, and profitability last year, two years ago, and three years ago? How right or wrong were they? What did the business unit learn from those experiences?

·         What would it take to double your business unit’s growth rate and profits? Where will growth come from: expansion or gains in market share?

·         If your business unit plans to take market share from competitors, how will it do so, and how will they respond? Are you counting on a strategic advantage or superior execution?

·         What are your business unit’s distinctive competitive strengths, and how does the plan build on them?

·         How different is the strategy from those of competitors, and why? Is that a good or a bad thing?

·         Beyond the immediate planning cycle, what are the key issues, risks, and opportunities that we should discuss today?

·         What would a private-equity owner do with this business?

·         How will the business unit monitor the execution of this strategy?

 All too often, the business units of many non-profit organizations are left on their own, with the result that the units may simply evolve to doing “what they like to do”, as opposed to focusing on their markets and the changes/opportunities that take place.  In such cases, it’s not unusual for these types of business units to “always do what they’ve always done”, with little concern for their markets.  How do you review and plan for your key business units?