Thursday, April 5, 2012

BIG’s Blog: High Turnover in Major Donor Fundraising Jobs

I had never heard of Penelope Burk or her company, Cygnus Applied Research, before reading Raymond Flandez’ article entitled The Cost of High Turnover in Fundraising Jobs in the April 4th edition of Philanthropy Today. In all fairness, she has probably never heard of me either . . . such is the breadth of the nonprofit support industry.

Mr. Flandez was reporting on Ms. Burk’s recent presentation at the Association of Fundraising Professionals conference in Vancouver. Ms. Burk was presenting the results of a recently completed research project entitled “Donor-Centered Leadership,” which is due out this fall.

The theme of Ms. Burk’s presentation and the first sentence in Mr. Flandez’ article was, “The high turnover rate of fundraisers is costing charities money. Lots of money.”

Ms. Burk lays out the key problem as “The average amount of time a fundraiser stays at his or her job: 16 months. The direct and indirect costs of finding a replacement: $127, 650.”

Although I have not read the whole report (as it has not yet been released), I congratulate Ms. Burk for addressing what is a hugely important issue within philanthropic fundraising as well as Mr. Flandez from Philanthropy Today for reporting on it.

However, if the reported observations and recommendations attributed to Ms. Burk by Mr. Flandez in the article are accurate, in my judgment as a person who has lead many successful sales teams, the value of this well intentioned research project is Dead On Arrival.

The Problem: “Demand for good fundraisers is so high that it is vastly outstripping the supply. Most good fundraisers are on the job just three to six months before they get recruited for a new role. Only one out of three fundraisers experiences even a day without a job,” says Ms. Burk.

The Solution: “It would cost just $46,650 to keep a good fundraiser happy by providing better salaries and other benefits, such as additional vacation time.”

Ms. Burk then lays out in greater detail her core argument for why these charitable gift officers move: “When fundraisers leave their jobs after a short time, it’s often to get a better salary. More than one-third cited that reason . . . while the next most likely motivation was to secure a more senior role. Not surprisingly, salary is the top reason charities often can’t get the fundraisers they want. About 58 percent of chief executives said a low salary often caused them to lose their top candidate in a job search. Only 21 percent of chief executives said they were in a position to offer salaries they considered competitive.”

Then Ms. Burk lays out her three recommendations for keeping fundraisers on the job:

1. Promote internal talent. Adopt a succession plan to train employees to rise to the next level in the organization. “Your best hire already works for you,” Ms. Burk says.

2. Set aside training opportunities. Cutting money for professional development, as many organizations did during the economic downturn, will probably affect fundraisers’ performance. “The training budget is the one thing you should never allow to be cut,” she says.

3. Help ease workers’ schedules. According to Ms. Burk’s study, fundraisers most want help balancing the pressure of career and family duties. About 52 percent of fundraisers said they want the option to work from home, 51 percent want flexible hours, and 42 percent want additional vacation time.

My overall reaction and comment can be summarized in one word . . . Seriously?

First of all, her top-line solution to her stated problem of fundraisers moving on is better salary and benefits to the tune of $46,650. But then her recommendations, as reported by Philanthropy Today, are “promote internal talent,” “don’t skimp on training,” and “help ease workers’ schedules.”

Am I the only one who doesn’t connect the dots between Ms. Burk’s solution of paying better salaries and her three recommendations which don’t address salary?

Ms. Burk no doubt knows research, and from what I can garner from some of the information on her website about the forthcoming research survey, my take is a lot of her comments may be directed at the generational shift of fundraisers as the Baby Boomer cohorts retire. But it is also very clear Ms. Burk has never actually managed a sales team . . . and make no mistake about it . . . charitable fundraisers are salespeople.

With few exceptions, virtually all of the nonprofit chief executives have little or no experience managing a sales process. Though I am seeing some change in attitude and practice in some of the major fundraising organizations, for the vast majority of major gift fundraising, this single fact alone speaks to the chronic turnover of charitable fundraisers.

Also, left unmentioned in the article is the real “elephant in the room,” which is charitable fundraisers not hitting their fundraising goals. How is it possible to do a credible research project on fundraising and miss the single biggest issue?

How is it possible to interview 8,000 chief executives and not surface this issue? Then, of course, there is interviewing the 1,700 sales people (charitable gift officers) without any analysis or comparison of who is hitting their fundraising goals versus who isn’t.  This merely provides the fundraisers who are failing the platform with the opportunity to blame their shortcomings on their organizations. Hey Penelope, how many were going to get canned because they weren’t hitting their quotas? Ooops, is talking about not hitting quotas out of bounds?

Is it just me, or does this whole research project seem slanted to the failings of the nonprofit organizations and not on the obvious failings of the vast majority of fundraisers themselves?

Charitable fundraising organizations do need to learn to manage their charitable gift officers in the same way that IBM manages their sales force. It is NO different. It takes about six months for someone coming into the nonprofit culture to learn that the “failed” charitable gift officers change jobs about every 18 months. Think I am kidding? Go back and review the resumes of the people you hired who suddenly left when you were about to fire them.

Good sales people and charitable gift officers are competitive. Yes, that is one of the traits you need to look for in a new hire. There are actually personality traits that all successful sales people have in common, whether it’s philanthropy or selling computers. If you don’t understand this, read Strength-based Leadership by Rath and Conchie.

Competition is about winning. And winning is about the prize. And the prize in the life of sales people, a.k.a. charitable gift officer fundraisers, is money as well as recognition.

If you also have a direct mail fundraising program, you clearly understand the concept of “cost to raise a dollar.” And the cost to raise a dollar varies from charity to charity but once it is established, you build that into your budget as a “known” percentage. Why would you think that major gift fundraising would be any different? IBM knows exactly what their cost of sales is. You should know exactly what your cost of major gifts is.

The sooner you understand this and change your approach, the sooner your major gift fundraising takes off.

The rest of Ms. Burk’s recommendations are, frankly, hooey and feel-good pabulum for an audience of failed charitable gift officer fundraisers.

Promote internal talent. First of all, that’s a possible solution to a completely unrelated issue. No, figure out how to remunerate those charitable gift officers who continuously exceed their quotas! If they can’t hit their quotas . . . fire them. Just because you are a successful gift officer doesn’t mean you have the skills or talent to manage or run the organization.  

Set aside training opportunities. Yes and No. Yes, bring in outside sales training experts to work on fundraising techniques. But do this in-house! Don’t let good charitable gift officers attend nonprofit conferences. Nonprofit conferences are nothing more than a venue for other nonprofit organizations to woo away your best fundraisers.

Help ease workers’ schedules. Ms. Burk says about 52 percent of fundraisers want the option to work from home. I say send them all home! Fully 75 percent of a fundraiser’s time should be contacting or being in front of potential donors. Track fundraisers’ daily call reports and don’t hesitate to personally follow up with prospects the fundraiser claims to have contacted. Get fundraisers “out of the office!” As to the 42 percent that want additional vacation time . . . my suggestion . . . make additional vacation time part of the prize for exceeding their quotas and give “permanent” vacations to those fundraisers who can’t make quota.

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