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RWR Preview: Where Should I Focus?

Tomorrow I’ll be speaking at the annual Run-Walk-Ride Conference in Atlanta. As is the case every year, our team will have a large presence at the event and will be leading several sessions today and tomorrow. I wanted to share a quick preview of my keynote tomorrow, reprinted from the Event 360 blog. I hope to see you at the conference later today!

Last month, I wrote about the link between strategy and focus for the Event 360 blog. Specifically, I mentioned that in an increasingly busy world, competitive advantage isn’t about being able to do more, but rather about being able to focus on those things that make a difference. We all have limited time and resources. Trying to be excellent at everything is the quickest way to guarantee you won’t actually excel at anything.

In the several weeks since we published the article, I’ve heard from many of you who’ve essentially said, “Okay – I believe you. I’m ready to focus. But, where should I focus?”

The answer to this question obviously depends upon your function within your organization and upon what your organization is trying to accomplish. No two specific answers are the same. That said, the general answer is always the same: You have to focus on what is going to make the most impact.

So the real question is, how do you identify what is going to make the most impact? And, how do you know what is going to deliver the most return?

Just like all questions of strategy, these aren’t ones that can be solved with a calculator. It would be great to plug numbers into a spreadsheet and find out where you need to focus your time. But of course, life doesn’t work that way. There’s more to what we do than math. Still, I want to share at least one mathematical property that can help you focus your efforts.

At the beginning of the 20th century, an Italian economist named Vilfredo Pareto was studying the distribution of land in his home country. He noticed something interesting: 80% of the land was owned by the wealthiest 20% of the citizens. A century later, we’ve inherited this observation under a few different names: Pareto’s Principle, the power-law distribution, or as it is most commonly known, the 80/20 rule.

Now, it’s worth mentioning that there’s nothing inherently magical about the numbers 80 and 20. It could be that 60% of your management headaches come from 10% of your team members. Or that 70% of your monthly income is spent on 15% of your hobbies. What the principle is really saying, in more general terms, is that in many situations, a large part of the result is caused by a small number of the inputs.

What is amazing about Pareto’s Principle is how many applications it has. You can find it in business (the bulk of the revenue of Fortune 500 companies is concentrated in a small number of the largest firms). You can find it in healthcare (the bulk of money spent on healthcare is directed at a small number of patients). You can find it in social issues (the majority of crime is perpetrated by a small percentage of criminals). And most importantly for our use, you can find it in fundraising, where it is very common that most fundraising revenue comes from a small number of donors.

In our consulting work we have seen power-law distributions in almost every level of every fundraising initiative we’ve studied. Most fundraising programs derive the vast majority of their revenue from a small percentage of constituents. Sometimes, programs that look to have thousands of donors are really powered by a handful of generous people. The bad news is that this means our organizations are dependent on far fewer constituents than we might imagine. The good news is that this means that to influence profound change we usually need to direct our efforts to a small subset of our total universe.

After working with dozens of nonprofits I’m convinced that Pareto’s Principle applies to our day-to-day activities as well. Most of what we spend time on does not directly impact our missions; and most nonprofit leaders I talk with can quickly identify what actually impacts their organizations and what is busy work. Answering trite emails, sitting in bland management meetings, reviewing work other people are supposed to do – these are activities that usually contribute little or nothing to our long-term goals and, yet, often occupy the bulk of our time.

To make significant change, we have to be willing to decrease or eliminate the time we spend on busy work, and shift our focus to those things that directly power our missions: meeting new people, sharing our vision of a better world, and asking others to join us in creating that world. All of the above is easier said than done. To learn more, I invite you to join me at next week’s Run Walk Ride Conference in Atlanta, where I’ll explore Pareto’s Principle, what it means, and how it can help us change the world.

Perspectives on 2012: Putting Facebook In Its Place

This article is the first in a short series of musings about 2012, its opportunities and challenges, and how to best meet them. 

It’s a snowy, cold first Monday of January here in Indiana — and I’m sure I’m the better for it. After twelve days of holiday break, hours of wrapping and unwrapping, countless toy-assembly sessions, a few toy-repair sessions, and lots and lots of play time with the kids, I badly need a day off before the official start of the work year. I need to get myself squared away. From big picture thinking like setting my 2012 goals to fundamental necessities like clearing off my desk (I swear, the wood surface is here somewhere), I need a few hours to decide what is going to be important in the new year. And, what isn’t.

This second subject was the topic of a brief story by Zak Stone in yesterday’s Good (see the bottom of this post for the reference links). Stone relates an effort by web designer Ivan Cash to encourage us to take a bit of time off from the ubiquitous social networking site. It’s a good idea, at least for me, and particularly at this time of the year. It is so easy to get caught up in posting what I’m doing that I don’t actually focus on doing it. And it is equally easy to aimlessly scroll through my news feed, absentmindedly reading about what people are doing — without really connecting to anyone at all.

So, I’ve decided to take the challenge and take a week off from Facebook. The simple absurdity of writing that previous sentence as if it were a momentous decision illustrates why it is worth taking a FB sabbatical!

I’ll admit that the first few minutes were odd — I went to Cash’s link, posted the status update on my profile, and within a couple of seconds a few friends had liked my update. I unconsciously reached for the mouse to see who had commented, and then remembered that I was taking a week off. It is exactly this kind of impulse response that runs counter to accomplishing bigger picture goals, and is at the crux of what Cash and Stone are encouraging us to do.

In organizations and in our personal lives we put a lot of emphasis on setting goals, creating vision, painting a picture, and so forth. But we put far less time to deciding what we won’t do. Focus is a key component of good strategy, whether the strategy involves building a billion-dollar charity or losing that last stubborn ten pounds. And focus means making choices. You can’t be great at everything. 

Don’t get me wrong — I love Facebook, and I think it can be a great conduit for personal connections and for organizational growth. But for most of us, Facebook is just a tool towards a larger end. There’s only one organization which has a goal for you to spend more time on Facebook — and that is Facebook itself. For the rest of us, the goal isn’t to spend more time on the site, but to develop deeper connections. I’m interested to see if staying away helps me do that.

I’ve rambled through a few different topics in only five or six paragraphs, and perhaps that is fitting for a snowy, sleepy start of the new year. I look forward to expanding on these and other ideas throughout the next few months, and as always I appreciate your visit. I wish you the best as you start to outline your priorities for the year ahead. 

How To Choose An Event Fundraising Consultant

Over my career, I’ve often been asked by potential clients for advice on how to pick the best event fundraising consultant. Initially, the question left me a bit bemused – after all, as the President and CEO of an event fundraising company myself, I could hardly be called an impartial observer! Well, let’s see… um, pick me!

But I have grown to understand the question. As event fundraising programs have become more successful, they have become a more important part of a nonprofit’s fundraising portfolio. This importance means many groups are looking for clearer guideposts. And, with increasing success comes increasing competition – more and more groups are entering the space, and there’s a need for a better roadmap. 

Here are a few suggestions. 

  • Area of Focus. Does the firm focus specifically on event fundraising in the nonprofit space? Many marketing and event production firms occasionally dip their toe into event fundraising. These forays seldom work. Producing concerts, competitive races, or product launches is often impressive and complicated work – but it isn’t event fundraising. Event fundraising is a specific discipline that involves creating an impactful experience to reflect an organization’s mission and coupling it with an effective, directed ask for support. It is one thing to create a fun event to sell a new product that someone may want or need; it is something altogether different to create a moving experience that convinces someone to contribute money out of generosity and empathy. Look for a firm with specific competency and experience in coupling event production with fundraising; this means experience not only in traditional marketing, but also in traditional fundraising practices as well. A good event fundraising firm understands the development pyramid and can speak to issues like donor retention and donor migration.
  • Professional Affiliations and Certifications. Following from the above, a legitimate event fundraising firm will have affiliations to prove it. Is the firm (and its principals) a member of AFP? APRA? The Giving Institute? And, has the staff spent time studying the discipline? Many of our consultants have or are pursuing certifications from the Fundraising School at the Center of Philanthropy at Indiana University. Similarly, we ask our project managers to pursue PMP certifications. 
  • Industry Familiarity. Here’s a quick litmus test: What magazines are sitting on the waiting room coffee table? Do you see the latest issues of The Chronicle of Philanthropy, the Stanford Social Innovation Review, and the Journal of the Nonprofit DMA Foundation? Or do you see AdWeek and Fast Company? There’s nothing wrong with the latter two publications – I read both of them, plus Fortune, the Harvard Business Review, and many others. But I spend a lot of time learning about the nonprofit space.
  • Methodology. Can the consultant tell you how they will approach their work? What is their process, and how is it monitored? What tools and frameworks do they use, and have those been reviewed by peers in a public setting, or are they proprietary? My experience is that there is little in the space that is actually proprietary; almost everything is derivative. I mean that in a good way. The most effective tools, methods, and approaches are adapted and improved from earlier, tested work. Event fundraising, at its core, is fundraising, and there are many proven tools and approaches that have been tested, published, and refined.
  • Fees. As you begin to talk with a firm, do not hesitate to discuss fee structure right up front. In fact, doing so can save you much consternation later. 
    • How much? A good event fundraising firm will be able to tell you a range for their fees, and be willing to refer you to another group if your needs do not match their usual profile (more on that below). 
    • Flat or proportionate? It is against the AFP Code of Ethics, as well as any sense of professional integrity as a fundraiser, to base compensation on a percentage of the amount of money raised. As more firms enter into event fundraising, I’ve noticed that this line is getting blurred. Per capita structures that are based on the number of participants who attend or the number of web hits received are just cloaked percentage structures. It is tempting to believe that such structures “align incentives”; what they really do is give a firm a reason to overcharge you if they simply do their job, and a reason to ignore you if a program doesn’t take off. A real event fundraising firm is going to say, “This is our fee.” It should be a number, period. If you have to break out a calculator to understand the fee, it might be time to end the meeting. 
    • How are participant registration fees treated? Do you get them? Some events, particularly athletic events, charge participants a registration fee in addition to required fundraising. These registration fees are your money, not the consultant’s. Sadly, with the rise of pseudo-charitable events that give a “portion” of their income to charity, this wall is eroding. An event in which you receive a portion of the net and none of the registration income is a cause-marketing relationship, not a fundraising effort. On that note: Accountants differ in what they will allow regarding treatment of these fees. I have seen some count them as donation income, and others that are violently opposed to that accounting treatment and instead treat participant registration fees as an offset to expenses. In either case, registration fees from participants should be part of the nonprofit’s income, not the income of the event fundraising firm. And if you are actually paying for the registration fees yourself… take a closer look. 
    • Are there performance bonuses involved? In some cases, firms will ask for a performance bonus upon attaining some level of achievement. We don’t usually structure our engagements in this way, but it is somewhat common. Such bonuses are not unethical (as long as they aren’t based on percentages), but can be abused. Make sure the performance in question is actually the performance you want to reward.
  • Projections. Once you get further down the road and begin talking about specifics of an event, you may see some registration and income projections. Here are a few things to watch for.
    • Did you pay for the income projections? A good event fundraising firm, like any good fundraising firm, will be very wary of giving you income projections without first being engaged (that is, hired) as part of a defined, focused feasibility effort. Yes, that means a commitment on your part – but it ensures you substantiated, researched work. Be wary of income projections that float into your office free of charge. 
    • Are they intuitively realistic? I’ve seen concept projections that show first-year events generating thousands and thousands of participants. Does that seem right to you? Would you believe it if a major giving firm told you that you could generate thousands of major donors in one year starting from a full stop? A good firm will show a growth rate, and more sophisticated firms like Event 360 will show you sensitivity analysis with a range of outcomes and risks attached to them. Just like direct mail efforts, some programs might take several years to generate net income. If you see big numbers promised and an equally big page of disclaimers in small print, it is time to ask a few more questions. 
    • Does it promise money from nothing? No effort works without capital. While most event fundraising programs become self-funding, they never start that way. How much up-front funding is required? 
  • Intellectual Property. How will intellectual property be treated? A reputable event fundraising firm will likely retain rights to specific models and intellectual frameworks, but will happily tell you, at the outset, that the rest of their work is work for hire and that you will own the event marks, iconography, collateral, and tools. 
  • Expenses. How will expenses be treated? When you get into budget specifics, make sure you bring your finance team into the room. Again, some of these questions are worth asking right at the outset. 
    • Who pays the vendors? There are two models we use in our projects, and the model we use depends entirely on the wishes of each particular client. In one model, we pay vendors directly and submit full documentation for reimbursement; in the second, we manage the relationships but the client’s own accounting group pays vendors directly. Either works, and a good event fundraising firm won’t have any skin in that game. The documentation you receive should be very thorough either way. 
    • What approvals do you have? Regardless of whose logo is on the checks, the nonprofit should have full rights to approve all expenses (above petty cash amounts) before they are incurred. Is the firm willing to grant you contractual rights to this oversight?
    • Are you allowed to use your preferred vendors? There are times when my firm may have a special pricing relationship with a vendor, in which case we would strongly suggest that a client use one vendor over another. But those cases are few and far between. In all things, from catering to marketing services to software, you should have a large say in the decisions and, if you so desire, make sure your event fundraising firm is willing to issue competitive RFPs for the subcontractors it uses. 
  • References. I’ll end with one you probably already know, but is worth repeating – a good event fundraising firm will have many performance references.
    • Are they willing to furnish names of people you can actually speak with? When you do speak with the references, make sure to ask not only about performance but relationship. What was the firm like to work with?
    • Are the references recent? In fundraising, we’re only as good as our last initiative. It is great to get the story of what happened five or ten years ago, but what is the firm doing now?
    • Is the firm willing to tell you what didn’t work? Everyone has failures, and unfortunately in fundraising not all initiatives are successful. Be wary of firms that don’t have any mistakes they can tell you about. Can you speak with clients for whom the firm’s work didn’t pan out? Can the firm’s team tell you what they learned, and how their latest work is different?

I hope this list helps. I’ve been excited to see the growth in the event fundraising space over the last 20 years. There are more participants, donors, and nonprofits interested than ever before, and they are creating some great experiences with the help of event fundraising firms like mine. 

And perhaps that leads to my last piece of advice: There are a number of great event fundraising firms out there, and none of them do everything. I feel strongly that my team at Event 360 is the one of the brightest and most passionate you’ll ever meet. But I also know of – or actually personally know – most of  the other folks in the space, and like Event 360, each of them do some things really well. Jack Hudson at OP-3, Brian Pendleton at CauseForce, Steve Biondolillo of Biondolillo Associates, Billy Starr at Pan-Mass Challenge, Craig Miller at MZA, Dave McGillivray at DMSE Sports – all are great professionals who have made and continue to make a huge impact for nonprofits across the country. 

There is a lot of good advice out there. When you hear someone tell you they are the first, the best, and the only, it might be time to look for a second opinion.  

The Importance of Focus

This past week I had the opportunity to lead a webinar for the Run-Walk-Ride Fundraising Council, an organization designed to support fundraising professionals who focus on athletic fundraising.

The title of the presentation was “Doing More With Less” — and not surprisingly, given the difficult economic climate, a number of nonprofit professionals came on the call hoping to find ways to stretch, pull, and tweeze their dollars.

I opened the presentation by sharing the brutal fact that if we define “doing more with less” as literally increasing activity with fewer resources, we’re in for disappointment. It can’t be done; the immutable laws of physics will get in the way. Unfortunately, we cannot create something out of nothing.

However, if we define “doing more with less” as creating better results with fewer resources, then at least have a fighting chance of accomplishing something. More than a fighting chance, actually, because in my experience a great deal of fundraising activity does little more than occupy our time, while the true results come from a few key areas — specific groups of people, specific messages, specific appeals, and so forth.

The real key to thriving in times like these is not to put on another pot of coffee and double the number of hours you and your team are logging. The key is focus. Focusing on the donors, participants, tools, and areas that bring in the results requires an ability to identify those key areas, a willingness to redirect efforts to them, and a discipline to let other activities go. 

Focus is the watchword for fundraising in a difficult climate, and the organizations that understand that are not only coping well with the recession, they are well preparing themselves for the good times ahead. 

For more information and to listen to the entire webinar, click here. (For access to the slides referenced in the presentation, click here.)