Part I
Which Funders Are “Right” for You?
The first of the two major SMART Way™ components is the ideal-funder profile, a reliable way to evaluate lifetime donor value, so that's the subject of Part I. (Part II focuses on the cultivation process.) You will learn how to develop criteria that demonstrate the difference between funders offering high potential lifetime value and justifying a high level of effort, and those that don't. After all, those who meet your criteria already want to give to you. So why would you throw your scarce and precious time and money at funders who don't want to give to you? It's all about knowing which is which.
By providing more objective controls over prospect selection, you take the first step toward revolutionizing fundraising performance.
We all want funders to give generously to our causes. We agonize over those who don't give. We try to think up cool new ways of convincing them to give. We work our wiles, leverage our connections, and try to get the compromising photos that will guilt-trip them to give to us. Unfortunately, many of us don't seem to have mastered what I call the Cousin Judy approach.
When we were in middle school and high school, my cousin Judy (my real cousin) always had a line of boys trailing her down the hallways, calling her up at home, and hoping that she would agree to go out with them. I, however, sat home most weekends feeling sorry for myself, trying to understand why the boys didn't like me. To make things worse, you need to know that Judy was also a perfectly ordinary-looking person with a perfectly ordinary face and figure. She wasn't wealthy; she didn't come from a prominent family; she didn't have a cool car; she wasn't even a cheerleader. She was just nice, funny, and a great friend.1 One fine day years later, I asked her why she was so popular at that time. I'll never forget her answer. She said, “Oh, I never worried about whether they liked me. I only wondered if I liked them.”
Cousin Judy's approach to selecting a date translates very well to the world of fundraising. Maybe we shouldn't worry so much about whether the funder will “like” us or our agency, mission, programs. Maybe we should worry instead about whether that funder is good enough for us. Good enough according to an agreed-upon set of criteria that makes sense for our agencies, and good enough in terms of potential for lifetime giving, with a decent return on effort. When you flip the standard thought process upside down, things look mighty different, don't they.
Maybe that's why I haven't been surprised to discover that a huge proportion of nonprofit agencies—about 59 percent of respondents in the Leaky Bucket study—lack documented qualifying criteria to help the development team decide if their donor prospects are good enough. If such profiles were available, the development shop and the CEO and the board would be able to see if their development officers were using their time appropriately, investing in high-potential opportunities and not squandering their hours on prospects whose potential is only so-so or worse. When no such profiles exist, prospect selection may be very costly; it's hit or miss.
If you think your team is great at prospect research, that makes me happy. It means you've already developed some good disciplines. But conventional prospect research doesn't cover everything, so please don't skip Part I. The whole issue of how to select, cultivate, and acquire funders is the most likely part of the process to leak (hemorrhage?) productivity. The Leaky Bucket data show that if the agency has any kind of prospect profile, it's more likely to include “database-able” characteristics such as demographics and giving history only, while ignoring qualitative criteria such as charitable philosophy and motivations for giving. When those criteria are ignored, there's a high likelihood that development staff may spend significantly more time than is justified on prospects who may not give at all, may give at modest levels that don't meet the desired level of return on effort, or may even make you sorry you won their gifts altogether.
The level of the donor's wealth has relatively little to do with the way they select the causes and charities they intend to support. That stuff comes from the donor's personal history, insights, and concerns. It's best if you actually know what those motivations may be.
Chapter 1 sets the context for fund development, with ways to calculate the true cost of achieving your mission, understanding the financial implications of your fundraising time, and articulating your unique value proposition (UVP) and value-added. Your value-added represents the strengths of your agency, cause, mission, and programs that are interesting to your ideal funders. They are what you're selling. If you have ever said anything like, “I hope you can give us money because we really need it,” you need to read this chapter and take it to heart. Without a clear way to present your strengths to your target market, it's impossible to figure out which donors are going to be right for you and which aren't. Plus, you can't really begin to calculate return on effort if you don't have a way to articulate opportunity cost or organizational value.
In Chapter 2, you'll learn how to analyze your best funders' charitable motivations or “value-sought,” then see how it aligns with your “value-added.” This effort produces the exchange of value, the dynamic relationship between funder and agency. This exchange is the basis for your case for support, which in turn is the source for virtually all marketing messages from the personal conversation to the latest tweet.
This is the chapter where we can put the Cousin Judy approach to work and figure out what makes a funding prospect good enough for you. You'll also see why it's important to understand charitable motivations in each funding category, including smaller donors, grant seeking, and corporate giving. When you're clear on the ideal funder's value-sought, and you can see the dynamic play between value-sought and value-added, your team's productivity goes up.
Chapter 3 is where you'll build your SMART Way Prospect Scorecards, your qualifying benchmarks. Scorecards are weighted scoring matrices that calculate prospects' potential for lifetime giving, and rank them accordingly, a significant productivity gain because the A prospects justify much more investment of effort than the D's—and you and your team can see the difference. Now, this doesn't mean you'll stop trying to raise money from those with lower ranks; it just means you'll use less costly methods to do so. Since the pursuit of underqualified prospects has such a powerful negative impact on fundraising effectiveness, this chapter offers a great deal of food for thought.
Finally, in Chapter 4, you will learn how to validate and refine your Scorecard through regular use and review. You'll develop a set of suggested probing questions and use them for interviewing current funding sources. The insights you'll gain will enable you to tweak your Scorecards so that they—and you!—will be more persuasive and able to establish rapport more quickly. The Scorecards you build will be unique to your agency. They even include “cheat sheets,” including suggested probing questions that help you find out how well the prospect matches your criteria, and even shorthand ways to figure out how well the prospect scores. That's important, because I want to make sure that you and Jane and Joe and Jack all score a given prospect the same way. The point is to make the subjective more objective.
Note
1. We're grandmothers now and we still love each other. 