Lecture 9 Management

1. 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!

2. Four Aspects of Management: • Managing the Development Program • Managing Direct Reports • Managing Executive Leadership • Managing Volunteers (Board, Development Committee, etc.)

3. Managing the Development Program 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

4. Managing the Development Program 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 apples E.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?

5. Managing the Development Program 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 program E.g.: postage, printing, purchased lists for a direct mail program

6. Managing the Development Program Source: Rosso, 2002; Exhibit 28.11 Nine-Point Performance Index

7. Managing the Development Program Scenario #1 • 1638 • $587,000 • $318,00 • % participation = 16.6% • Ave. gift size = $353 • Net Income = $260,000 • Ave. cost/gift = $194 • Cost of FR = 55% (or $0.55 to raise $1.00) • Return = 82% Income = $578,000 Expenses = $318,000 # of participants = 1638 Total 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)

8. Managing the Development Program Scenario #2 • 3667 • $1,800,000 • $686,000 • % participation = 20.5% • Ave. gift size = $491 • Net Income = $1,114,000 • Ave. cost/gift = $187 • Cost of FR = 38% (or $0.38 to raise $1.00) • Return = 162% Income = $1.8Million Expenses = $686,000 # of participants = 3667 Total 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.

9. Managing the Development Program 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

10. Managing the Development Program Source: Rosso, 2002; Exhibit 28.10 Reasonable Cost Guidelines for Solicitation Activities

11. Managing the Development Program 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

12. Managing the Direct Reports 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: • Ensure that development activities happen in a timely, efficient, cost effective, productive, and ethical manner Source: CFRE Review Course-Faculty Manual, 2004 Edition

13. Managing the Direct Reports • 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

14. Managing the Direct Reports • 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 Source: CFRE Review Course-Faculty Manual, 2004 Edition

15. Managing the Direct Reports 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.

16. Managing the Direct Reports • 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): • 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 • Development Associate/Assistant – Administrative Duties, Gift Entry/Processing/Acknowledgements • 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)

17. Managing the Direct Reports • Medium Shop (4 – 7 people): • 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 • Administrative Assistant – Provides administrative support to the department and its staff • Database Coordinator - Gift Entry/Processing/Acknowledgements; report generation, database maintenance • Grants Officer (Foundation & Corporate Relations) – Researches potential prospects, develops and prepares grant proposals • 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 • Annual Fund Officer - Manage and implement a year-long annual fund program that includes: direct mail appeals, fundraising events and stewardship activities • Research Assistant – Conducts Foundation research, wealth screening for individual prospects, industry reporting, legislation

18. Managing the Direct Reports • Large Shop (8 – 12+ people): Note: Larger shops tend to have a taller structure • 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 • Associate VP of Philanthropy – “Number two” in command; provides supervision to: Annual Fund Team, Database Team • Assistant to the VP – Provides administrative support to the VP and the AVP • Director of Foundation & Corporate Relations – Designs proposal plan, writes case statements, works with department heads to manage grants/solicitations, prepares large, complex proposals • Grant Writer – prepares smaller grant proposals, reveiws/edits submissions. Reports to the Director of Foundations & Corporate Relations • Director, Annual Fund - Manage and implement a year-long annual fund program that includes: direct mail appeals, fundraising events and stewardship activities

19. Managing the Direct Reports • Large Shop (continued): • 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) • Gift Entry Clerk – Enters the donations into the database • 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 • 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 • Research Assistant – Conducts wealth screening for individual prospects, industry reporting, legislation; administratively supports the Major Gifts team • Development Associate – Provided administrative support to the annual fund and grants team

20. Managing the Direct Reports • 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

21. Managing the Direct Reports 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

22. Managing the Direct Reports Performance Metrics Source: Rosso, 2002

23. Managing the Direct Reports Performance Metrics Other Examples:

24. Managing the Direct Reports Performance Metrics Other 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

25. Managing the Direct Reports Ask your Organizational Contact… How do they measure performance (of employees, volunteers and/or the development program)?

26. Managing the Executive Management “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”

27. Managing the Executive Management 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

28. Managing the Executive Management Managing the CEO… This can be difficult, however, will be the most rewarding for your development program (and your organization); start off right: • Ask about this during your interview (if you are looking for a CDO position) • 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” • 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)

29. Managing the Executive Management • 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!

30. Managing the Executive Management • 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: • Attend the Chamber of Commerce Annual Meeting, with the CEO, and collect three business cards from people I’ve never met • 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 • Host bi-annual budget preview meetings with all members of executive management to look opportunities two-years out for major gift funding targets • With the CEO, meet with each board member (individually) to determine individual goals

31. Managing the Executive Management 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

32. Managing the Executive Management 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

33. Managing the Executive Management 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)

34. Managing the Executive Management 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…”

35. Managing the Executive Management 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

36. Managing the Executive Management 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

37. Managing the Volunteers 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

38. Managing the Volunteers 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 Source: CFRE Review Course-Faculty Manual, 2004 Edition

39. Managing the Volunteers 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

40. Managing the Volunteers 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!

41. Managing the Volunteers 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

42. Managing the Volunteers 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 • Have Board Members evaluate the Board as a whole; confidential; remit to CEO & Board Chair for review • 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

43. Managing the Volunteers 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!

44. Managing the Volunteers 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

45. Managing the Volunteers “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)

46. Managing the Volunteers • 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

47. Managing the Volunteers 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

48. Managing Volunteers 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?