Sunday, March 24, 2013

What If Our Measures Undermined Our Mission

This past week I witnessed a thread on Linkedin focused on the roi measurement of money raised by Major gift officers. Measuring for money raised leads directly to mediocrity and our industry statistics seem to prove that point. Now please know I fully understand what the outcomes of an advancement effort need to be, however what I have experienced first hand is that you can push results much much further then imagined by focusing on another set of metrics that will drive the results you seek.

Do a google search for Harvard Business school professor Clay Christensen. After a little research one of the many things you will find is that he very simply describes why successful companies fail. The reason is simple....they are looking to be profitable in the short term. By focusing on the short term profit they loose sight of the really key long term stuff.

Now marry that to our world of philanthropy. We are all about short term metrics. Cost per dollar raised, average size gift, participation and many others. The majority of our measures are focused on the transaction, the money part.

I thought we were about relationships? What relationships are build via measuring transactions? Looking at the AFP Fundraising Effectiveness it is quite clear that our short term focused measures isn't working if we are looking to build and relationship momentum. Another indicator for us to pay attention to is the fact that the nonprofit sector has not gained any market share in 4 decades.  In forty years we have not been able to gain any ground on the for profit sector with giving remaining at 2% of GDP. How many indicators will it take for us to just stop and pivot to something else. But where?

So what should we measure for optimal success? Over the past year the New Science Of Philanthropy team has beta tested a tool to measure the momentum and financial impact of donor connections. If we can agree that a retained donor is better than a lapsed one than please read on :-).  The raising of money requires having a donor, not one that leaves in 2 years.  In addition most people do not lead with their very best gift. Keeping donors significantly longer than our national averages will be required in order to successfully fund our missions. But, as Clay Christensen suggests, if we continue to measure for short term profitability we will keep up our 40 year trend of zero market gain, lose donors at a 58% annual rate, un-fund our important work but most importantly not design the opportunity for so many to lead a life of value and service. Measuring for our ability to sustain and grow relationships is the most important metric to understand and it requires long term questions.

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