Why Outsourcing Management Is Key to Your Success

Jeff Schreifels 

You know, in our coaching work with fundraisers, one of the biggest pain points that comes up is that they’re poorly managed. When fundraisers aren’t provided with consistent input, encouragement, and accountability, it’s harder for them to stay on track, and their donor relationships really suffer. So when should you consider a co-management solution with an outside partner? Well, on today’s episode, Richard and I are talking about the advantages of outsourcing management for major gifts, mid-level, or planned giving programs, and those that work those programs. We hope this gives you a better idea of how our co-management approach could work for your organization.

Recorded 

Welcome to the Nothing But Major Gifts podcast from Veritus Group, featuring Richard Perry and Jeff Schreifels. Twice a month, we bring you the latest and best thinking about major gift fundraising, so you can develop authentic relationships with your major donors. Here are your hosts, Richard and Jeff.

Jeff Schreifels 

Welcome to the podcast today. I’m Jeff Schreifels. And I’ve got Richard Perry here with me. You know, over the years, we’ve talked about the importance of management in your fundraising program. But bad management is a key reason that fundraisers leave and donors stop giving, or they don’t give to their potential.

Richard Perry 

Yeah, you know, Jeff, so often we see that people are being moved into management roles without training or support that they need. And being a great manager requires a certain approach and certain skills, you know, key skills. And most of those can be developed. But sometimes, you need to also look to outside support to help you effectively manage your fundraising programs.

Jeff Schreifels 

And you know, this is something we easily accept when it comes to other fundraising disciplines, like direct response or capital campaigns or even event planning. I mean, I guess, you know, what was it 40, 50 years now, Richard, direct response was all done in house, and then, you know, agencies started popping up about doing this. And now you don’t even think twice about finding an outside agency to help you do all your direct response, capital campaigns, a lot of event planning, you know, there are great organizations out there with expertise who can manage that aspect of your fundraising program, and then take planning and management of those programs off your plate, right? But the idea of outsourcing management of mid-level, major gifts, and planned giving programs and their officers, is a much newer idea in our sector. So that’s what we’re going to be discussing today. So let’s get started. Richard, can you share what the idea of outsourcing management or co-management is?

Richard Perry 

Well, co-management is where outsiders like ourselves help manage, along with the insider, a group of mid-level officers, major gift officers, planned giving officers. And what it does is, let me just talk about a little philosophy here. The whole idea of bringing an outsider in is to not only reduce the amount of labor that’s done inside, but also to bring experience in. If you bring really experienced people and best practices and their inputs that add real, and sometimes, you know, difficult to find value, to the non-profit’s current staff. Right. So that’s one thing. And here’s another thing on the economic side, they can often provide the service at a cost that’s less than the non-profit could do inside their own organization. So I mean, it’s a far easier and more flexible labor solution. So very simply, it’s easier to to change out someone like us, a vendor, and find a new one, than it is to replace a current employee. I mean, just think about how complicated it is to release an employee from the contract.

Richard Perry

So, those are some reasons that this whole co-management thing really works and the underlying philosophy. Now we use the word or the phrase co-management to mean this: the manager is providing the organization and, you know, human resource inputs to the life and practice of the frontline fundraiser. And then Veritus is providing the technical aspects like, you know, strategy, moves management, goal setting, qualifying donors, plan creation, weekly accountability to execute the donors’ personalized plans, I mean, all of that stuff. So that’s, that’s kind of the rationale behind why we do this and and what it all means.

Jeff Schreifels 

So we’ve been doing this a long time now. And so what are the obstacles we see that managers often face when they’re trying to get some, you know, get funding for this?

Richard Perry 

Well, I mean, one obstacle that relates to the managers themselves and sometimes people outside is that is, is either the manager, him or herself, or the manager of the manager, says to themselves, why don’t you do this job? I mean, come on, why do we need an outsider? And that’s sort of like saying, Well, why don’t you do all the direct mail stuff? Why don’t you do all the event planning? Or why don’t you do all the capital? I mean, it’s that same thing. So that’s the big obstacle. Sometimes the cost is an obstacle. And what we’ve shown over and over again, Jeff, is that the cost for us to provide that service is far less than the amount of money that’s actually saved, or retained by better management of donors who actually give more. Yeah, and their value retention goes up. So I mean, it’s cost-neutral, in fact it’s cost-beneficial to have us involved.

Jeff Schreifels 

I know. And then, you know, these non-profits, we see this all the time, they don’t really value management, right? Because they either put someone and they look around and like, oh, they seem pretty good, we’ll make them a manager, or they put their best frontline fundraiser on as a manager. And that’s a disaster, because those people all have portfolios as well, but they expect them to do the portfolio and then manage all these fundraisers.

Richard Perry 

It’s a huge mistake. I mean, this whole business of putting your best salesperson or your best major gift officer or mid-level officer, as the manager actually reduces revenue. Yeah. Because you can’t manage and do the donor management thing at the same time, right. And usually, in our experience, a person who’s really good at at donor management is really not good at people management. Because the donor management thing is basically getting results through your own efforts, whereas the people management thing is getting results through others, through the people that you’re managing. And that’s, those two skill sets usually don’t coexist.

Jeff Schreifels 

Right. So the the amount of management they’re doing, if they have that situation, is very small, and which is the opposite of where we come in, you know, an outsider comes in, we’re only focused on that frontline fundraiser. That’s it.

Richard Perry 

That’s it. Yeah, exactly. Exactly.

Jeff Schreifels 

So what happens when co-management doesn’t exist in an organization? What do you see?

Richard Perry 

Well, I mean, what we’ve seen a lot of is that the fundraisers, the frontline fundraisers, so major gift officers and mid-level officers are actually managed to HR expectations, right? Not to the life and care of donors. Now that may sound like, well, like, we’re just making this stuff up. No, it actually is more organizationally and functionally and transactionally oriented than it is donor oriented. So that’s the first thing.

Richard Perry 

And then they’re not assisted, the frontline fundraiser is not assisted, at a level of detail on the value added function of caseload and donor management, which is very complex. I mean, you’re talking about qualifying donors. Like when we talk to folks about, well you need to qualify your donors. Somebody says, first of all, what’s that? Well, that’s basically dealing with the reality that only one out of every three donors that meets the metric that qualifies them for a major gift level, actually wants to relate. So you’ve got to find them. And all the details related to passions and interests, identifying passions and interests, doing all the planning, all that. Then the frequency of accountability measures is very low when these frontline fundraisers are managed, internally, very low rate, so therefore they’re not as effective.

Jeff Schreifels 

Well, then they use these crazy KPIs right, to try to manage because they’re not actually managing. So they say, Okay, you got to hit 25 or 30 face-to-face meetings. You got to do 40 phone calls. All these metrics. And the only reason they’re set up is because the manager doesn’t have the time to actually manage. And so they’re just counting on if they can click a button and say they’ve done these things, right, they’re probably doing these things.

Richard Perry 

Well, and that, or it’s or some gross number like, Okay, we’re gonna raise 15% more than last year and so are you getting that? Which is a totally irrelevant number to the life of a donor and to managing a caseload of donors.

Jeff Schreifels 

Right.

Richard Perry 

So where management doesn’t exist, you don’t have that accountability. You don’t have the right key performance indicators, KPIs. Results are actually higher in donor and value attrition More donors are going away, more donors are giving less, there’s lower caseload and donor performance. I mean, there’s a whole bunch of reasons that are real reasons why you need to have somebody managing the frontline fundraiser in the manner that Veritus does.

Jeff Schreifels 

Yes. So what does it look like when there IS a structure of co-management? You just explain what it doesn’t look like, now… ?

Richard Perry 

Here’s the big point, Jeff, and you and I both know this, okay. So most every time we analyze a donor file, you take the upper end of the donor file, there’s a 40 to 60% loss each year. That it’s just a loss. Which in some cases, with some bigger organizations, we’ve seen millions and millions of dollars lost. These are the same donors that give 40 to 60% less. When we manage those frontline fundraisers and their donors and help them manage the donors, that loss reduces down to between seven and 12%. So you move from 40 to 60% loss to seven to 12% loss. I mean, good night, and it’s a huge shift in revenue. And that’s why just the costs, the savings there actually covers all of our costs, plus a whole bunch of net revenue. Right? And why does this happen? Because there’s strong and frequent management and accountability, which creates focus and effectiveness and causes a higher production on the part of the frontline fundraiser. So that’s another benefit.

Richard Perry 

Another benefit is that there’s less staff burnout, why? Because the fundraisers actually doing their job, hitting targets and goals, happier in their job, not doing a bunch of non major gifts, and non-mid-level work.

Jeff Schreifels 

Yeah, they have someone coming alongside of them and encouraging them and helping them, you know, with problems. I mean, that’s not happening right now.

Richard Perry 

Yeah. I mean, it really makes a tremendous difference. I mean, our clients have seen in the last few years 20% growth in revenue, on average, in just the first year of working with us. So, and it’s not like there’s any great magic to it. It’s basically about management and focus. And so now someone listening right now could say, well, well, we could do that internally. Well, we’ve heard that. I mean, you remember the one organization where we came in, and it was 33 major gift officers doing $21 million a year. And we got got it up to $40 million. And then they said, Well, we can do it internally. We left and it went back down again, I think to like $31 ones, so we got a $10 million drop. I mean, and why? Because the frontline fundraiser isn’t managed properly. And that’s what makes a tremendous amount of difference. Because if they’re managed properly, the donor’s cared for as they should be, which means they stay with the organization. And they give more. I mean, that’s how it works.

Jeff Schreifels 

Exactly. So thank you, Richard, for joining me today on this episode. I hope this has helped you better understand the idea of co- management and the importance of it. And if you have any more questions about what co-management could look like for your organization, we would love to connect with you. This is what we do at Veritus. And the best way to start this process is by beginning our free donor file assessment process. And you can find more information about that assessment at the link in this episode description or by visiting our website at veritusgroup.net and head to our resources section. Thank you, and we’ll see you next time.

Richard Perry 

See ya. Thank you.

Recorded 

Thank you for joining us for the Nothing But Major Gifts podcast from Veritus Group. Richard and Jeff also write an ongoing blog that you can subscribe to for free at veritusgroup.net. Please join us again next time.