I came across an interesting article in Fast Company Magazine tonight about overhead costs in the not-for-profit world. The author, Nancy Lublin, does a great job in a very concise manner of educating Fast Company readers that overhead costs aren’t the best or only metric for evaluating nonprofit organizations.

Most donors understand that nonprofits don’t work in some alternate universe where there are no expenses involved to conduct the business of raising funds. Some, however, believe that the business we’re in should find a way to do what we do at no cost so that 100% of funds raised can benefit whatever our mission is. This simply isn’t possible.

I hear this often in the annual giving world. Annual giving is inherently more expensive than major gift fundraising. The cost to raise a dollar is simply higher when you’re dealing with mass mailings, telemarketing and other forms of fundraising that acquire first time donors, renew donors with smallish gifts and do all the work necessary to build a pipeline for major gifts in the future. While this makes sense, some are quick to ask why nonprofits should continue to invest funds in such an ‘inefficient’ part of the development program.

The best answer to this question is to look at each and every major gift donor your organization has and see where s/he started their philanthropic relationship. Usually it’s with a smaller gift, many years ago, that was appropriately recognized. Over time the relationship grew, the donor became more involved and interested in the work you’re doing. The gifts became a bit larger and eventually the organization is able to help that donor realize their philanthropic dreams by making a major gift. Everybody wins, and the investment made many years ago in a program that looked inefficient in the short-term suddenly looks like the best investment you ever made.

In the business world, they might call that a loss-leader. In ours, it’s just a strategic investment in the future. If you invest wisely, have a solid case for support and engage your donors appropriately, it’s one of the best investments you can make.

If you’re reading this, I’m probably not telling you anything you didn’t already know. But it’s nice to be reminded that the work we do is important and ultimately leads to the kind of transformational gifts that make our programs successful.

An interesting study was released recently by MailerMailer, indicating that the open-rates of marketing e-mails declined to less than 13% in late 2008.  This study was highlighed in an article on the eMarketer website today. 

While many of our organizations enjoy substantially higher open-rates and click-through rates than traditional ‘spam’ marketers, this is an interesting statistic to ponder as we think about the future of our programs.  The benefits of having better relationships with our donors and friends don’t make us immune to the same fate if we fail to continually strive to offer e-mail communications that are interesting and valuable to our donors.

As more and more orgniazations utilize e-mail as a core part of their strategy it has become easier than ever to become lost in a deluge of e-mails that arrive in our in-boxes every day.

Just what is it that we can provide via e-mail (or any other communications channel for that matter) that our donors and potential donors will find useful and informative?  Are we sending e-mail, e-newsletters and other materials simply to do so, or does each communication have value?  Sometimes I wonder if we all aren’t in such a hurry to deliver SOMETHING that the something we end up delivering ends up being categorized as spam by the intended recipient.  And if it is, what happens to our e-mail when we really do have a communication of significance?  I think I know, because the ‘D’ on my ‘DEL’ key is looking a little worn these days.

It might be a good idea to ask a few donors (and potential donors) just what they want to hear about.  What types of information could the organization deliver that would maintain their interest?  How often would they like to receive e-mail?  Do they prefer a fancy email with video, or a simple note?  It’s really all about them, not us, and if we heed their advice they might just continue to click!

See the article here:  E-Mail Marketing Open and Click-Through Rates

July 1st is one of my favorite days of the year. As the prior fiscal year comes to a close there’s nothing more to do but wait for those final official numbers. When those numbers are good, it’s time to celebrate and bask in the glow of a job well done. When they aren’t (and let’s be honest, that’s the case for many this year) it’s a chance to wipe the slate clean and begin a new ‘best year ever’!

Normally, this would be the time to set a new baseline number – to build on – for the future. Take a look at those key metrics and determine what’s working, what isn’t, and what strategies should be tweaked going forward. By now you’d have a pretty good idea from numbers late in FY09, but the final counts provide a complete look at the year. How was retention? New donor acquisition? Upgrade percentage? Average gift? All those numbers that haunt us day and night can be calculated a million different ways to determine the health of our programs.

I’m not sure this is the best year for that.

As I speak with others in programs large and small, I worry that too many organizations are seeing abnormal numbers and making dramatic changes as a result of that data. Let’s not forget that FY09 was a strange year. Metrics may be wacky and in some situations it’s simply because donor behavior WAS affected by the economic climate. I’d hate to make drastic decisions based on a single year of data, especially this one.

Successful programs can and should always adapt, adjust and improve. But to take that same successful program and decide, based on FY09, that a complete overhaul is necessary might just make a bad situation worse. I’ve heard it’s a good idea not to throw the baby out with the bath water. This is a pretty good time to heed that advice.

Have a happy and successful new year! Let’s hope this one isn’t quite as eventful as the last.

You Wouldn’t Run A Business This Way. Here’s Why Dartmouth Does.

Genius. I don’t describe YouTube videos with that word very often, but a recent video produced by Dartmouth deserves that accolade. I’m just disappointed I didn’t think of this concept first! This short explanation of the Dartmouth business model does an amazing job of educating the viewer about a variety of issues, not the least of which is why their support is important and valuable. It’s sneaky that way.

There are some things in life that are inefficient, ridiculously overpriced, and/or somehow seem (and maybe are) worth the inflated price tag. You’ll have hard time convincing me that a $100,000 luxury automobile is really better than my Hyundai at delivering me to and from work every day. But plenty of energy has gone into convincing a lot folks out there that the luxury, prestige, and other intangibles are worth the extra cash. They happily commute five miles across town on heated leather seats listening to Green Day on their 58-speaker stereo.

I think Dartmouth has done just that in less than three minutes. If I had a Dartmouth degree and watched this video, I’d be proud of my alma mater. The whole idea that a university is inherently inefficient in some areas would finally make sense to me. And I might just send them a check to spend in a wacky, but not frivolous, manner.

View the Dartmouth Video Here

I’ve spent quite a bit of time deciding if I wanted to enter the world of blogs. Between my full-time job, part-time consulting and a very active family (I have two young children) the last thing I need is another responsibility. And yet here I am. I’m a geek at heart, so perhaps the lure of yet another technology-driven forum is too powerful to overcome. Or maybe it’s just because I have stuff to say, and this is a place I can say it.

To be honest, I don’t know if anyone will read this and if they don’t I can live with that. It’s more of an exercise in ‘thinking out loud’ as I find it helpful to put pen to paper (or fingers to keys) when thinking about various topics. It helps me digest my thoughts, decide if I agree with myself, and further clarify the issues. It will be interesting to see if anyone does read the blog, if they have additional comments or questions, and how often I will blog.

I have made the following commitment to myself and the blog:

1. I will write at least one original entry each week for a period of one year. If it’s going well and I enjoy the process, I’ll continue until it becomes too much work and not enough fun;

2. Between my entries, I will occasionally post links to stories, information or other blogs that I feel are interesting and worthy of discussion. I may or may not agree with what has been written, and I may or may not comment on these external readings;

3. At least 90% of the blog will be related to the fundraising profession. It may be nearly 100%, but I’m not making any promises. It’s my blog, it’s free, and I’ll post whatever I want! Sometimes I may just need to rant about a subject that isn’t related to the profession, and I admit to having some outside hobbies that might come into play occasionally. If the readers aren’t interested in those posts, they can simply skip forward to whatever comes next;

4. If anyone is crazy enough to read what I’ve written and make comments or ask questions, I will read and respond to as many as I can, and take all points and dissenting opinions as an opportunity to learn from others and share information to the best of my abilities;

5. I consider fundraising to be a serious business, but don’t want to write just another stuffy blog. I think work is fun, this profession is fun, and I like to have fun with it. If you don’t enjoy a bit of irreverent humor, this may not be the blog for you. There are plenty of great blogs and resources out there to enjoy, so I decided if I’m going to write, I should at least have some fun with it occasionally. If you want something else, I might recommend my book ‘Conducting a Successful Annual Giving Campaign’ which is published by Jossey-Bass and available on Amazon.com. It is a great introduction to annual giving, but not exactly an exciting read. And for the record, I make exactly zero dollars for every copy sold;

6. I will continue to remind everyone that while gainfully employed, my blog and the content of my blog are my opinions and experiences – they do not necessarily reflect the thoughts or opinions of my employer. I hope that bit of legalese will satisfy the ‘electronic communications and blogging’ language in our code of conduct;

7. Finally, I have promised myself that I won’t obsess about proofreading. I know myself well enough that if I do, a 15-minute blog entry will become a 2-hour ordeal. I’ll write, re-write, edit, re-edit, and eventually start over several times. I just don’t have that kind of time. If you see a typo, just know that I do know how to use spell-check – I was probably in a hurry.

Now on to the obligatory ‘Meet The Blogger’ portion of the first entry. . . .

My name is Jeff Lindauer, I have the pleasure of serving Indiana University as Associate Vice President for Development at the Indiana University Foundation. I’m an Indiana grad with a degree in Public Administration, and also am adjunct faculty at the University. Occasionally I teach a fundraising class which really pays almost nothing but I like that whole ‘adjunct faculty’ thing – has a nice ring to it.

I have a wife (Angie), almost-five-year-old daughter (Chelsie) and just-turned-two son (Josh). Not to mention a dog who sheds too much and a cat who really doesn’t like anyone. I really need to introduce the dog to some shears soon. As for the cat. . . . .

I am a true Hoosier, having grown up in the southern part of the state. I decided IU was in my future at a very young age, came to Bloomington as a freshman and decided it was a great place to live. I think it may be true that ANY college campus is a great place to live, especially as an undergrad with no morning classes.

That’s enough about me. I’d guess you’ll learn more about me if you continue to read the blog. I don’t want to provide too much up front, then there would be no incentive to continue.

Until next time. . .