Tuesday, March 27, 2012

BIG’s Blog: More Lessons from Billy Beane for Fundraisers

I promise this will be my last blog reference to Moneyball. Well, at least for this week.

What can fundraising leaders who desperately need to transform from dependence on declining direct mail learn from Billy Beane, general manager of the Oakland A’s and the subject of Moneyball, the bestselling book and recent Oscar-winning movie?

Of course the story for Billy Beane and the Oakland A’s was their use of data and analytics to meet their goals. For fundraisers, while not minimizing the use of analytics in their fundraising efforts, the bigger goal is to figure out how to shift an organization that has practiced fundraising the same way for decades, to one that can develop a growing and sustainable fundraising plan.

Billy Beane offers five lessons.

1. You don’t have to be good at math.

For Billy Beane, using analytics was out of his level of experience. In fact, in talking about his experience, Beane has famously said, “I suck at math.” He was fortunate to have Paul DePodesta with a Harvard degree in economics as his assistant GM. But “math” for Development leadership translates into “strategic planning.” Development leadership can bring in outside help for  the process of developing a new strategic plan, but just like the A’s would not have adopted their winning approach without Beane to champion the idea, so too, developing a new strategic plan for Development will not happen without Development leadership as the champion.

2. It’s not the size of your budget that matters.

Baseball is not fair. It’s a zero-sum game. Only one team can win the World Series. And some teams have a lot more money to spend to get there. The Oakland A’s have one of the lowest payrolls in baseball. They simply can’t afford high-priced talent. But that doesn’t mean they can’t compete.

We have, as clients, some of the largest fundraising groups in faith-based fundraising and some of the smallest and many in between. The fundraising groups with the most to lose are the largest today. If they continue to practice the same old declining methods of fundraising (read direct mail), they will not be the largest in ten years and in fact, they may be gone.

Charity Water didn’t exist in 2003. Today they raise well over $10 million a year and they don’t mail out a single piece of mail.

Small and mid-sized faith-based fundraising groups should be all over developing a new strategic plan built on the Internet!

3. Get everyone on board with your strategy.

At first Beane had a hard time getting buy-in for his new strategy. Many of his scouts refused to believe that mere math could outperform years of experience and intuition. And many of his players (and managers) questioned the tactical implications of decision-making based upon data and analytics.

For long-tenured direct mail fundraisers it is hard to believe that an organization like Charity Water, started in 2004, can already be generating more revenue back to their mission than their organization which has been raising funds for 50+ years. Shifting the focus and budget from direct mail to using the Internet as the base platform for fundraising is an easier sell today since direct mail margins continue to erode. But it still requires a thoughtful process of strategic planning to gain buy-in.

4. Over time, math wins out.

At first it didn’t seem as if Beane’s strategy would be successful. After shedding some high-profile players and bringing on relative unknowns who could “just get on base,” Beane’s club didn’t start off on a winning note. He stuck with it though, and sure enough, the percentages started playing out and the A’s went on to win an American League record 20 games in a row.

After you develop your new Internet-based strategy and begin to execute your new fundraising plan, you will be tempted to over-correct if your initial strategy doesn’t immediately deliver the intended results. Stick with it. One sure motivator will be watching your direct mail profits continue to decline. Direct mail lists and margins are declining while everyday millions of new potential donors get on the Internet for the first time.

5. Evolve or die.

Baseball is full of followers and there is big money involved. After seeing Beane’s strategy successfully play out, many teams adopted the model and brought quant jocks into the front office. The Yankees now have more than 20 full-time data analysts. So now Billy Beane has to find other Key Performance Indicators (KPIs) that can beat their initial KPI of On Base Percentage.

The first hurdle is developing a new strategic plan and implementing it. But then you wake up one day and all other fundraisers are following your lead. Don’t worry. You and Billy Beane have that in common. You can both compete after you have adopted a new winning strategy.

But Billy Beane is ahead of you. His organization has already adopted a new winning strategy.

When is your fundraising organization going to adopt its new strategy?

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A shout out to Penry Price and Aaron Goldman for their contribution and ideas for these past two blogs.

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