Why do so many nonprofit CEOs and Boards ignore ‘value’ when it comes to fundraising? In fact, why do so many fundraisers ignore it also?

Tom’s The Boss Wants to See You! provides a painful reminder that all too often the ‘flashy’, the ‘cool’, the ‘new, new thing’, not to mention expedience, ignorance and ‘going with the flow’ are major — and shallow — factors in what should be serious management decisions. Decisions with long-term implications for the future health of the nonprofit.

Why in the world would any fundraising director, not to mention CEO or CFO or board member, take a website that glows in the dark more seriously than the increase or decrease in the lifetime value of the organization’s database?

Why in the world would a CEO or any executive be bowled over and impressed by the vast number of Facebook ‘Likes’ while the organization’s donor retention rate is on life support?

Why in the world would a CEO or any executive’s eyes glaze over on reports of a growing sustainer program while cheering on the latest social medial blitz?

Why? Because far too many fundraisers, CEOs,  Boards, consultants, list brokers, data providers and telemarketers are accustomed to looking at short-term and often meaningless events. Events that please organizational or individual egos. What I call ‘Vanity Events’.

Focusing on the shiny or new or trendy is like a sugar high. It may temporarily boost the pulse and energy but it offers little by way of long-term organizational nourishment and financial health.

I wonder if that would change if a significant part of a CEO’s compensation, a board’s accomplishment, a fundraiser’s or consultant’s performance were measured by what their activities contributed to increasing long-term VALUE? As in long-term Lifetime Value, and Retention Rates.

I bet it would.

And, if it would  then why isn’t the value equation a central feature and focus of nonprofit management, leadership and governance?

Because getting to this point would require a major change in mindset and education. As Mike Cowart, Jay Love and many Agitator readers have pointed out in the past, few fundraisers, let alone boards or CEOs, have the foggiest idea what their organization’s donor retention rate is, let alone the lifetime value of their donor base.

So if I were Starting Over with a new or changed organization I’d put in place the following:

• Compensation Policies In Part Tied to Long-Term Value.

Part of every staff member’s compensation and opportunity for advancement would relate to the retention and lifetime value of donors. Why? Because it is the performance of everyone — the entire culture of the organization — that determines whether these fundamental metrics rise or fall.

• Eliminate Compensation Overly or Solely Focused on Departmental Performance.

We all know the silo is the deadliest part of most organizational structures when it comes to donor care and experiences. A quick way to break paralytic and poor donor experience performance and care is to stop honoring and rewarding solo activities.

The reality of retention and lifetime value is that donors stick around and increase their giving and loyalty because they’re appreciated and well-served by the entire organization, not by the mailing of 12, 20 or 30 special appeals and emails.

• Revisit the Way Consultants, List Brokers and Telemarketers Are Compensated.

Unless the only reason you’re paying high fees for ‘strategic’ consulting is also because the agency serves as your production unit, you should revisit how you pay them.

A great opportunity for both you and the agency to put money where their mouth is. If they’re so good at guiding ‘the donor journey’ or ‘strategically boosting retention’ or whatever long-term benefit they’ve featured in that 50 slide Powerpoint of promises, then everyone should be more than delighted to be paid on performance for increasing value.

And if you’re engaged in direct mail, don’t let your list brokers or data providers off the hook. Why should they be paid the same for non-performing, poorly performing deals while going unrewarded for whatever extraordinary contributions some of their recommendations make to the longer-term future.

Same for telemarketers. Why are so many telemarketing campaigns based on number of calls or ‘contacts’ and not results? Be good to ask your telemarketer and see if there’s a more effective and value-oriented approach.

Of course there will be a thousand reasons that will fly forth to block any change in mindset directed at a focus on value. And being prepared to meet that resistance is largely up to the fundraiser and the CFO and, hopefully, some numerate board members.

And the first step in being prepared is to understand — and calculate — those Value Metrics that determine your organization’s long-term future. (I’ve dealt with those in past posts and will revisit in the near future.)

It’s time to make a stand against the vapid and transitory and stand up for value.

What is your organization doing to focus on value?

Roger