A Low Risk, High Reward Approach to Fundraising

January 10, 2022      Roger Craver

In recent years we’ve tried to show how breakthroughs in research, particularly in behavioral science enable knowledgeable fundraisers to reap some mighty impressive rewards that come from a more in-depth understanding of “why” a particular donor gives (identity),  why different messages are required for different donors (personality/psychological profiles) and how these elements are used in more effectively targeting groups of donors (segmentation).

Unfortunately, very few fundraisers –especially direct response fundraisers take advantage of this potent new knowledge.  Why?  Partly because in the Cuisinart existence of many fundraising shops there’s the unspoken fear that any attempt to move away from the conventional, business-as-usual practices may lead to not making this year’s number.  And partly because so much of our trade is trapped in the cult of volume that inexorably leads to the one-size-fits-all approach.

Without question it’s a lot easier to sign a purchase order for an extra two or three appeals than it is to reach out to donors to find out “why: their give and tailor future appeals to reinforce that “why.”  And far simpler and presumably “safer” to keep doing things the same old way rather than pose new hypotheses or theories to be tested.

Of course, this penchant for hanging on to the status quo lies in the mistaken belief that the least “risk”  lies in maintaining, not challenging, the status quo.

Fortunately, you don’t have to bet the entire ranch or even risk not making this year’s numbers to discover something new that works better.  In fact moving forward with new innovations is the way all trades and professions advance.

Modern medicine, for example, evolves and changes somewhere around half of its “best practices” every few years. Yet direct response fundraisers continue struggling with unchanging “best practices” where volume rules…where readily observable data (RFM) rules…and where where donor attitudes are gauged using survey techniques employed in the late ‘70s.

It doesn’t –and shouldn’t –be this way given the improved  and proven results that research and testing have uncovered in recent years.

In getting from “here” to “there” the question is: how can I minimize risk and still tap into some high reward discoveries?

The answer:  the Pilot Project.

No one wants to take a massive risk, that if misjudged, could be financially fatal. Fortunately, you don’t have to.  Enter the concept of “The Skunk Works”—a method perfected by a small group of Lockheed engineers during World War II.  Their task: to deliver on the seemingly impossible task of delivering a jet fighter in 150 days without disrupting Lockheed’s existing and mammoth war production efforts.

A young engineer named Kelly Johnson took on the challenge by setting up a select group of people outside the Lockheed and government bureaucracy—literally.  They set up shop in a rented circus tent next to a foul-smelling manufacturing plant whose odor gave the team’s effort the name “Skunk Works.”

The team built the XP-80 jet fighter plane from scratch in 143 days—a week to spare. This was not the only project Kelly took on and he applied  a few key rules to stimulate innovation:

  • Quality, not quantity of people. According to Kelly “The number of people having any connection with the project must be restricted in an almost vicious manner. Use a small number of good people.”
  • Questioning assumptions. The physical distance of the Skunk Works tent from Lockheed’s main facility also signaled a mental distance.  The mindset distance between business-as-usual and innovation.
  • Rapid Prototyping. Kelly argued for a system of quick review and flexibility in making changes without crashing the project or inhibiting to bigger tasks of Lockheed.

You can read more of the details on this in Kevin’s post Low Approach to High Yield Discovery . More importantly, Kevin makes some interesting – and valid—comparisons between the original Skunk Works and what today’s nonprofits should consider for their pilot projects.

Creating a Nonprofit Skunk Works

Here is Kevin’s summary of how to best create your own Skunk Works to prototype and test strategies aimed at the often ill-defined but coveted ‘donor-centric’ journey?

Here are several requirements:

  • An evidence-based approach. Too often, we guess or “blue-sky” or (heaven help us) “ideate” for lack of a better approach.  Why guess when, with the right subject matter experts using methodologies to reach a deeper understanding of the “why” of human behavior, we can know what is currently unknown.
  • A long-term pilot based on financial metrics. This means a test environment where you mitigate risk by limiting the number of folks in the pilot program – large enough to get significant results; small enough that failure would not cripple your program.  It should be at least a few months and ideally at least a year to capture retention metrics.  We’ve also found the “pilot” term delivers an almost magic, elixir quality to internal objections since this is, after all, only a test and every change has evidence and rationale to it.
  • Planning for strategy and implementation simultaneously. Every change needs to be documented, including what is required, what steps are needed, and what barriers need addressing, so when a test wins or loses, you can put the results into practice.
  • Rapid prototyping, like Kelly recommended. You cannot have innovation with layers of copy review and subjective decision making.  Decisions must be made quickly and based on new evidence, not historical assumptions.

Kevin’s post offers detailed examples of two major organizations that sought improvement without risking harm to their full program.  These are examples  of steps you can take within your own organization.

Now is better than later when it comes to applying some of the powerful new knowledge gleaned from behavioral science. You don’t have to change your entire program, just pick one or two opportunities ( we outline tons of ’em in the Agitator ) pick the best two or three folks available to you, pledge to free them from endless meetings and internal debates, and get started

Roger

 

 

2 responses to “A Low Risk, High Reward Approach to Fundraising”

  1. Steven Reed says:

    Another story along the same lines of the Lockheed example is how IBM–a mainframe dominated culture–was able to create the IBM PC by creating an “off-campus” skunk works. The point of the IBM case study wasn’t the need to avoid having a special project get in the way of the main thrust of IBM’s business. Quite the contrary, it was to protect the PC team from the mainframe-centric culture that would have killed the effort.

    Steve

    • Roger Craver says:

      Great illustration. Thanks Steve.

      One of the biggest barriers to innovation and growth in too many organizations is the existence of silos and the unwillingness/inability to share information. Even worse the innate need to protect sovereignty or territoriality is often the biggest culprit. It’s the rare organization –like IBM or Lockheed–that understands innovation needs to be shielded from the status quo. Organizations’ willingness to metaphorically eat their offspring is ever-present and needs to be called out. Again, thank you.