It's All About Expectations - A Petrus Development Show Episode on Fundraiser Metrics

Andrew Robison, Petrus president, and Rhen Hoehn, Petrus's director of marketing, are together again on this week's episode of the Petrus Development Show!  They spend their time discussing how to set development staff expectations for a new fiscal year.  It's another nuts and bolts show about a specific fundraising topic, and it's not one to be missed!

Show Notes:

 Organization leaders often struggle to determine reasonable expectations and incentives for their development staff.  If that sounds familiar, Andrew and Rhen can help!

In this episode, Andrew and Rhen answer the following questions:

• What are reasonable expectations for new development staff in their first year?  What specific numbers could you consider as goals?
  
  
• Should new fundraisers be able to raise their own salary in their first year?
  
  
• When you have an established development officer, how do you go about setting metrics for a new fiscal year?
  
  
• Can you offer staff a commission on money raised?  (Short answer: NO!) 

As Andrew and Rhen discuss, Petrus happily offers a sample incentive plan that you can use with fundraisers in your office.  If you'd like to receive this resource, please click here for more information.    

INTERVIEW TRANSCRIPT

00:30.21
aggierobison
Well, howdy everybody. Welcome back to the Petrus Development Show. My name is Rhen Hoehn with Petrus Development, and joining me today is Andrew Robison, owner and president of Petrus. How's it going, Andrew?

00:46.87
AROB
Howdy, Rhen. It's going great.

00:48.67
aggierobison
As we're moving into summer, I think we're feeling that we just had our last frost two nights ago, so we can finally plant the garden. The latest we've ever had frost is June 11th, so we can never replant until the second week of June, but we got the seedlings.

01:02.46
AROB
Hmm, we live in very different worlds. Ah yes, sir. Yes, it is.

01:06.90
aggierobison
I know. I imagine it's a little warmer down there. Yeah, and the kids are out of school, moving into... I know you said your daughter Nora is in a camp, a summer camp type of situation going on.

01:16.23
AROB
Yeah, she's doing summer enrichment, so she does acting, she does pet care, she does hip hop, and she does cheerleading, which none of those - while the pet care was an obvious one - but all the rest of them kind of surprised me, but she picked them. And now I'm trying to get... it's just for elementary kids, and so Luke, my 5-year-old... I got to get used to saying 5-year-old. Um, he is too young for it. But I'm really trying to get him into this camp at my wrestling/boxing gym. And I keep trying to get him hyped about wrestling and karate, and he keeps saying, "No, I exercise already, dad." It's like, "What do you do for exercise?" He said, "I run." So this morning I was trying again, and I said, "You want to do karate?" He says, "No." I said, "It's good exercise." He said, "Oh, I do exercise, dad." And he goes, "Whoo!" He runs around the house. This is at 6:45 in the morning, and he comes back. "See, I exercise," said. "Okay, oh, that's good. That's good. Karate is different exercise." So maybe we'll try that too. He says, "I don't think so." So we'll see.

02:17.37
aggierobison
Ah.

02:29.68
aggierobison
Um, awesome. My, yeah, there you go. My boys both are in Taekwondo, and they just earned their yellow belts. So they're on their third belt now, very exciting. But our 8-year-old started playing the cello this year.

02:29.82
AROB
To be determined on whether I can get him in that. Hey, look at you, moving in. That's great.

02:42.62
AROB
Nice.

02:44.99
aggierobison
It was the instrument he chose through a school program, and there's a big, a big cello player called Houser who's coming to us, and that's actually our big summer trip this week. We're going to go see Houser play. So that's ah, pretty exciting. He does a lot of classical cello, and then intermission, he'll come back out, and it's like a wild dance party, Latin American music. 

02:51.47
AROB
Nice.

03:04.00
aggierobison
We've watched lots of videos of it, and then Ambrose, my other son, likes to pretend he's flying like Houser, standing there and dancing while he plays. So it's good. It's a good event, but that's our big summer event this year, so that'll be a fun time.

03:04.17
AROB
Ah, nice.

03:11.20
AROB
That's awesome. That sounds good.

03:17.83
aggierobison
Hmm, it gets me thinking about the fiscal year because for a lot of organizations, I know not everybody, but a lot of organizations start their fiscal year on July 1st. So we're coming up on that, and it means it's time to start planning for the year ahead. So today, we wanted to talk about development staff expectations as you start setting those expectations for the coming year. You want to do that now before that year starts. So say you're the director of an organization. Let's start with you; maybe you just hired your first development staff member. What should you set your expectations for them in this, the first year, this first, maybe full fiscal year coming up? Ah, what kind of expectations should you set for them? What kind of expectations should you have for yourself, maybe in that first year too? And just what numbers should you be looking at setting as goals for them in this year?

04:01.92
AROB
Sure, so there are two different scenarios. One is a new development officer in an established development program, right? So in that situation, the new development officer's goals should be to continue doing...

04:09.31
aggierobison
I guess.

04:18.33
AROB
The work that has been started and evaluating, assessing what has worked, going back and looking at data, and really getting out as much as possible to see the donors. So for new development officers in an established program, it's really about consistency, continuing that, and getting out and seeing donors. New development officers in a new development program, that's a very different scenario because they don't have a history of fundraising. They don't have a history that they can look back on. There might be some historical activities. I remember when you came into your job as the first development officer in a new development program. You had a little bit of an advantage because they had been doing a mailer once a year for 20 years, right?

05:02.00
aggierobison
Exactly. Yep, so I had a list of warm leads, basically people who'd given in the past.

05:08.68
AROB
Yeah, so your job really in that first year was to assess whether that was working, look for ways to improve that, but then layer on additional annual fund strategies, and get you and Father Ben, your boss at the time, out to see the donors who had been supporting historically, right? So, for a new development officer in a new program, it might sound like, you know, you're starting from scratch. When in a lot of ways you are, in terms of building your systems, but that doesn't mean you're starting from scratch that you've never had any donors to your organization. It's possible, right? Brand new organizations.

05:26.33
aggierobison
Exactly.

05:45.30
AROB
But in most cases, you have some people, and you know what? We, what you might consider, are those people is that they've been sending money without any real cultivation, without any real, you know, intentional stewardship efforts. And so you show up, you start saying, "Thank you." You start inviting them into the program to learn a little bit more, build that linkage, that interest in the program. And then, you know, you could see significant growth in your fundraising efforts just through that type of strategy.

06:16.58
aggierobison
Yeah, exactly. Ah, then there's a whole lot of database work that goes on in that first year in a new program. I will vouch for that in my experience, a whole lot of database work. So, so one, I guess, common concern or worry, now let's say...

06:18.54
AROB
A lot of database, yeah, yeah.

06:30.85
aggierobison
That comes up when you're looking at the situation of the brand new fundraiser in their first year on the job, should they be able to raise their own salary basically that first year? What's the expectation there?

06:41.29
AROB
Yeah, good question. This, we get this a lot because, you know, if you're an executive director or you're a chaplain or you're a principal, when you hire your first development officer, you don't want to lose money on that effort, right? And we know, and I can't think of a fundraiser in the world that's going to argue the fact that...

06:50.76
aggierobison
Okay, right.

06:58.79
AROB
That is an investment that will pay off over time, but early on, you're investing and hoping that that generates revenue. So the rule of thumb that I tell new clients or new organizations that are considering this is, in that first year, we want that fundraiser to raise his or her salary. So think 1x their salary, right? And I know salaries, benefits, right? Those are, you know, there's a range of what that could be. But generally speaking, the 1x salary is a typical goal in the first year. In the second year, it can be 2 to 3x their salary.

07:30.11
aggierobison
Umm.

07:36.25
AROB
And the third year, and I've been doing fundraising for quite a while, and this has played out in every situation that I've worked in and every client that I've worked with. In that third year, that's really the money year. So in that third year, you could see an increase from 1 to 2x in the first two years, to 5 to 10x their salary moving forward, even starting in year three. So it's an investment in the beginning, but it will pay off pretty quickly if you stick with it. That's correct.

07:57.78
aggierobison
And that's talking about a full-time development staff member, right? I think it does get complicated when you talk about somebody who's doing maybe their half-time campus minister and the half-time fundraiser when you have to split those duties. It gets real hard to keep up, and it just gets complicated there. Hey?

08:12.56
AROB
Absolutely, and I understand why organizations do a half-time or a part-time development officer or development staff to get started, budget reasons, right? But consider this: a part-time development officer gets you part-time results. And so it's going to be hard to gauge the success of that investment in the beginning because you're not going to be... They're not going to be putting in full effort into development because they have to split their effort. And so it's going to be really hard to gauge whether that investment is paying off, and so as much as you might want to do that, it is going to be hard to gauge, and you are going to see part-time results with a part-time development officer.

08:56.41
aggierobison
Exactly, there is a baseline number of hours every week, say, of updating the database, preparing the mailings, doing the stuff that has to be done week after week. And I feel like that, the easiest thing to put off when you do that is going out, meeting donors face-to-face. And so when that doesn't happen, when you don't have the time to make that happen, you just don't see the results come in as fast. So...

09:08.35
AROB
Absolutely.

09:14.44
AROB
Yeah, and if you hire somebody who has a background in, say, campus ministry or teaching or, you know, programmatic work in general, and then you say, "I think you, I think that we could train you to be a development officer," that certainly is possible. But when times get tough, they're going to inherently...

09:16.46
aggierobison
Ah, there's a better investment.

09:34.22
AROB
Always fall back on what they're comfortable with. And so when donors aren't picking up the phone or, you know, it's in between mailings, or they have to do something that they don't really want to, you know, it's a lot easier to go hang out with students or, you know, start working on curriculum. And so it is tough to balance that as an individual who's in that position, and so that's ultimately going to hamper your results from a fundraising standpoint.

09:57.94
aggierobison
Yeah, and I'll say from my experience, I studied engineering in college. So my comfortable place is spreadsheets. I use spreadsheets recreationally. I'd be in Excel all day long. But I knew, we're working, we had Petrus as our consultants at the time. You were my consultant.

10:14.64
aggierobison
Much of that time, I knew Andrew was coming up here, or basically every other month, to see me and check in on things and to go on donor visits with me. I had to go make some calls and get some donor visits, or I'm going to be in trouble when he gets here. And so that kept me accountable to actually go out and do those things. So sometimes we have to get out of our comfort zone, and that's what raised all the money. That's where all the big dollars came from - going out, meeting people. Sometimes those people we knew had big capacity, and sometimes it was a surprise. But in the end, that's where it all came from - those donor visits. So...

10:25.87
AROB
Umm, yeah.

10:42.22
AROB
Yeah, and looking back on the program where you worked, you know, it was... there was not a great expectation for... I remember Father Ben, you know, he said, "I just want an extra $100,000. Like, if I could do that, that'd be great." And now, and so that was initially the goal. Now they... you were part of it, and now you're no longer there, but they've done a successful $3,000,000 capital campaign. They've built up an endowment. They have a huge monthly giving program that brings in more money than the entire budget was when you started doing fundraising. So it has dramatically transformed that in, you know, in the grand scheme of things, not a long time - 17 years - but it started with, "Let's get started." You know, kudos to Father Ben for going all in and hiring you and not trying to, you know, handle part-time chaplaincy and part-time fundraising or, you know, any of that stuff. But, you know, it was an investment, and it has paid off.

11:36.57
aggierobison
Exactly, so let's talk now about, you have a development staff member who's been there for one year, two years, three years, and you kind of have seen where the results have been so far. How do you go about setting their goals and their metrics for the coming year? How much of an increase should you see, and what metrics should you be looking at increasing versus maybe it's just staying the same and hitting those numbers consistently?

11:56.79
AROB
Yeah, so that's a great question. There's a tool that I've been...that I've used for myself personally and that we've worked with with clients that are bringing on new development officers or development officers. They've kind of grown into their role, and so now they know they want to be there a long time, and it's an incentive plan. So I know that there's, you know, feelings either way about incentive plans. But essentially, what an incentive plan is, is that you identify what are the most important things, activity-wise, that a development officer should be focusing their time on. So what? And those most important things are visits, like you said, solicitations - you have to be asking people. Closed gifts or closed gifts. And then if there are other parts of their job responsibility in the annual fund space, then you can look at direct mail appeals, online gift appeals, matching collections, monthly gifts, growing the database - all of those different metrics that fall under the annual fund. But you develop, and I've again, I've used this. We have a, I think we're going to share a sample incentive plan, um, if you're listening to this episode, right? But an incentive plan, it incentivizes the development officer to focus their time on doing the right things. And that, you know, by calling it an incentive plan, we're talking about - there's a bonus attached to it, a financial incentive. But it doesn't have to be a financial incentive. It can be, you know, other incentives if that's, you know, an issue with your organization. But the point is, is that it gives you clear metrics for what to focus on, and that's visits, solicitations, closed gifts, and then everything under your annual fund bucket.

14:23.24
aggierobison
Yeah, that's great. And like you said, we have a sample incentive plan that it's kind of a general one that we've used for some of our clients. It's very close to the one that I used in my development time, and I think you've used it in the past too. You can access that sample incentive plan, the spreadsheet for it, at Petrisdevelopment.com/145. This is episode 145 of the Petris Development Show, so to keep it easy to remember, go to Petrisdevelopment.com/145. That'll take you to the page to grab that incentive plan. And one thing I want to stress is to set the expectations for that incentive plan right now, before the fiscal year even starts, and think through each of those metrics and what do they mean exactly? Um, say you're the director of the ministry. You should be going with your development director on some number of visits every month, probably. That's probably a goal you want to set for them, is set up so 5 visits every month that includes the director of the ministry. But you need to talk through what does that mean? If you don't give them time in a given month, does that penalize their incentive plan or do you somehow write that off, right? Ah, so think through those things now, so that when you get to the end of the year and you go to talk through, "How did you do on your incentive plan?" Everything is very clear. Metrics are very easy to measure, and you know, it's yes or no, did they hit these points? And one last thing I want to mention, I know we talked about this on a recent podcast...

15:40.69
aggierobison
Ah, within fundraising, it is...it's against the code of ethics in fundraising to pay, say, a commission on dollars raised. You know, in sales you see that. You, you know, you sell a million dollars worth, you get, you know, whatever the number is, 6% of those sales come to you. In fundraising, that leads to some difficult situations with donors. So we want to avoid that completely. So the incentive plan that we'll share, and any of them that you see within fundraising, are going to be based on activity, and dollars raised might be a portion of that, but it's not the majority of it. It's the activities that lead to the dollars coming in down the road that are measured there.

16:11.28
AROB
Yeah, and really everything we're talking about are the lead measures, right? So we've talked about this on numerous episodes. Lead measures are the activities that you do that lead to results. Lag measures are the results. And so if you focus on the lead measures, including visits made, calls made, um, you know, appeals sent, ah, you know, growing your database numbers - if you focus on those lead measures, then your lag measures - dollars raised, new monthly donors, closed gifts, all of those are going to lag. And so an incentive plan should incentivize and should focus your fundraiser on the lead measures. One, ah, one cool little thing that that we've done, I've done with many, many clients, is that for a new development officer, let's say it's a small, a small office, um, and you know, one person, and they're just getting started with fundraising. And so they don't have the prospects to go out and ask for 6-figure, 7-figure gifts, but they have a lot of prospects that they can ask for 4-figure gifts and 5-figure gifts. And so, set the, um, ah, you can set the number of solicitations kind of aligned with the dollars that they're going to be asking for. So you might have, you know, "We want to make, in this year, we want to make 10 proposals for $5,000." And then as the years go on, you start sort of clicking that up. And so you might add, you know, in year two, if you have the prospects, then you say, "In this year, we're going to add, we'd like to identify 2 people that we can ask for $25,000." And then the next year, "We're going to ask 2 people for $100,000." And then the next year, "We're going to ask 2 people for $1,000,000." And so it's not that you're sort of generating new donors. It's that you're changing your mindset as the development officer and as the ministry, that as we grow our development office and our ministry, our program is worthy of large gifts and large support from individuals. And as we cultivate the individuals, then we should be thinking about how we can engage people at higher levels. And so that's a really powerful way to think about using your incentive plan and specifically those solicitations, and thinking about growth is that you kind of start clicking up that number of gifts at higher levels.

18:29.15
aggierobison
With that, we wanted to keep today's episode a little bit shorter, so we're going to end it there. I hope you found this helpful as you begin setting your development goals and metrics for the coming fiscal year. If your fiscal year starts in July, but you can use this information anytime, right? And again, visit Petrusdevelopment.com/145 to access our sample incentive plan that you can use for your purposes there. Yeah, thanks for joining us. We'll talk to you next time.

18:53.85
AROB
That's great, it was a fun episode, Rhen. Thanks for putting it together.