Have you ever been in a conversation when the right words came 20 minutes after the conversation finished? When you thought of the insightful comment or clever response that bit too late? Or maybe it’s just me?
For me, some of those conversations were about the cost of fundraising. Finding yourself caught in a moment without the right words or the time for a cogent response. And perhaps getting irritated that curiosity and logic seemed to be missing in action.
Often, these conversations have been with Non-Profit leaders. Arguably, people who should know better. And definitely, people who influence the way purpose is served and how resourcing enables purpose.
So, imagine a different conversation. Frame a different scenario. Present a different argument.
And that conversation might go something like this …
Non-Profit Leader (NPL): What is the cost of fundraising?
Me: 42.
NPL: 42 what?
Me: 42.
NPL: It must be 42 something, like cents in the dollar. And by the way, that seems high.
Me: No, It’s just 42.
NPL: That makes no sense.
Me: Your right. Neither the question nor the answer makes sense. So, it may as well be 42. Like the answer to the question of life, the universe, and everything is 42 in Hitchhikers Guide to the Galaxy (Douglas Adams). That’s an absurd answer too. But at least it’s fun.
NPL: Now you’re being harsh. It was a fair question.
Me: I don’t mean to be harsh – but I am making a point. And it is a fair question. Many ask it. But in fundraising, it’s the wrong question. Let me explain.
Fundraising is a relationship-based process. Any exchange is built around people’s evolving relationship with a purpose, mostly through an organisation that serves a purpose.
The important thing is the relationship and where that takes people. And that can move fast or slow.
In fundraising, we pursue a range of activities that create and sustain relationships for a purpose. Those activities need an investment, ideally sustained over time, and will sometimes yield a return, but not always in money, and also over time.
When we try to measure the relationship between that investment and the return based on a single transaction, or even a moment in time, we never see the full picture or understand the value that may be created.
NPL: You mean we can’t measure fundraising?
Me: No, I’m not saying that. I’m saying that a simple cost of fundraising metric is not a useful measure. You could call it a blunt instrument but it’s really not even an instrument. It’s more of an illusion – and unfortunately, an illusion that doesn’t get questioned enough.
Worse still, cost of fundraising has become a comparative tool that plays organisations off against each other, and creates unrealistic expectations, publicly and within organisations.
On many levels it’s really unhelpful and a flawed approach to measurement.
NPL: OK, how do you measure fundraising? After all, there’s money involved and outcomes at stake, and people are giving money in good faith. Surely there has to be accountability.
Me: Yes, all of that is bang on the money – if you pardon the pun! Thinking about measuring fundraising needs to be more complete than a simple cost ratio. It needs to consider the drivers of fundraising activity and the path to outcomes.
NPL: That’s sounding complicated and way too hard.
Me: Well, I’m not going to pretend it’s simple. Fundraising, as a relationship process, isn’t simple either because relationships aren’t simple. But it’s not hard. It just takes a bit of thought.
NPL: Go on, now I’m intrigued.
Me: Let’s start with some core denominators for measurement. Financial metrics are one, but they need to move beyond a simple Profit and Loss lens.
That’s where time is critical. There needs to be a longer-term view of quantitative and qualitative metrics.
That brings us to measuring relationships. How they start, progress, and where they may lead.
And lastly, measuring fundraising programs as a composite set of activities that relate to each other, but considering each activity as a discreet point of measurement.
NPL: That’s beginning to make sense.
Me: Great, and I can elaborate further, but if it changes your perspective for now, then that’s a great start.
Oh, and by the way. Did you notice that I used the words investment and value, rather than cost? That’s not just gilding the lily. It’s an important differentiation.
Fundraising is an investment with a tangible return over time, in both direct and indirect monetary terms, and beyond money as well. And the ultimate return, where the value is created, is in enabling a purpose to be served.
Fundraising is only a cost when it is badly managed. And that includes inadequate planning, insufficient resourcing, lack of controls and ultimately poor leadership.
NPL: That tells us that you reap what you sow.
Me: By George, I think you’ve got it!
NPL: Now you’re being harsh again!
Me: No, to the contrary, you nailed it, and that’s brilliant. If only we could have these conversations across the sector and the community.
But seriously, thanks for listening and taking the time to understand something really important. Perhaps you could share this with others.
NPL: OK, you’ve got me, with your evangelising and all. Where do I start?
Me: Now you’re being harsh, but I’ll own it.
And, you can start with the next non-profit leader you speak to, and the next, and the next ……
Nigel Harris AM
