Fundraisers Think Like a Plant Manager
If you think your major gifts office has nothing in common with a manufacturing plant, think again. Operations management techniques can teach us plenty about running a successful major gifts program. Major gift officers who want to maximize the efficiency and output of their moves management systems should adopt the principles that plant executives use to manage production flow on the factory floor. Still not convinced? Let’s put on a hard hat, don some safety glasses, and tour a typical assembly line.
Process Flow in the Manufacturing Shop…and in the Development Shop
On a factory assembly line, raw material becomes work-in-process (WIP) and WIP is transformed into finished goods. Maintaining a continuous flow of raw material and WIP, and turning WIP into shipped goods or short-term inventory, keep a plant’s efficiency and profitability at maximum levels.
If you are responsible for a portfolio of major gift prospects, you must direct the flow of your moves management system in a similarly efficient, cost-effective manner. This means continually conducting research to identify new prospects, finding new ways to cultivate prospects, soliciting them, closing the gift, and encouraging donors to make additional and ever more significant gifts in the future.
Prospect Research: The “Raw Material” of Fundraising
Just as suppliers are responsible for delivering the appropriate amount of raw material to the assembly line, you must never, ever stop performing research to uncover new prospects.
There are two reasons why research is so important to the major gifts effort:
1. Current contributors, like products, can become “obsolete.” History is chock full of products that once captured the world’s attention but are all but forgotten today. Similarly, your significant benefactors can become “obsolete” by dying, moving from the area, experiencing a life change that causes them to redefine their philanthropic objectives, or diminishing their giving because of a lack of personal financial resources.
2. Organizations can lose market share to other non-profits. Every day, we are barraged with “new and improved” products. We look forward to the benefits these products provide – until a better solution comes along to compete for our attention and our pocketbooks.
In other words, there is a tendency among non-profits to dedicate so much time to the “goose that lays the golden egg” that nobody bothers to gather more geese. Research is the first step in moving a prospect along the moves management assembly line. Without this essential raw material, the line cannot progress very far.
Cultivating Prospects: A “Work-in-Process”
In factory parlance, work-in-process (WIP) is raw material that has had some machining but is not yet a finished, saleable product. To the frustration of plant managers around the globe, many production lines are rife with WIP. So are fundraising offices. Don’t believe me? Take a look at your current major gifts prospect list. How many of your prospects have been in the “cultivation” stage for several months or years? Worse, how many prospects do not yet have an actionable cultivation strategy?
In a factory, plant managers turn costly WIP into profitable finished goods by ensuring that the assembly line moves smoothly. This principle of “throughput” means that there must be sufficient raw material, a smooth flow from process to process, and plenty of quality control inputs as the WIP becomes finished goods or inventory. For major gift officers, “throughput” means developing multi-step cultivation strategies for each prospect. Your strategy should therefore integrate the rules of the assembly line:
1. Determine how your prospect will flow through the moves management system by developing a multi-step strategy of cultivation activities;
2. Ensure that there are sufficient human resources to carry out the cultivation activities;
3. Identify one person as the “moves manager” and authorize that person to keep careful watch over the quality of the cultivation effort; and
4. Meet frequently to review your progress in moving the prospect to the solicitation stage. Do not be afraid to change the strategy if necessary.
Solicitation and Gift Closure: Will your prospect become a donor or just more inventory?
The objective of the assembly process is to deliver a finished product with zero defects to the end of the line. In keeping with our manufacturing analogy, a successful gift request is equivalent to a finished and boxed product delivered directly to the paying customer. A gift awaiting closure is equivalent to a finished product sitting on the inventory shelf.
Now don’t get me wrong. There is nothing wrong with leaving the prospect “on the shelf” if it is only for a short time. To move the prospect from short-term inventory to sales, you must ensure that your moves management strategy contains sufficient steps to close the gift. Finally, with all the tenacity of a plant manager, you must make certain that each step is followed until the process is complete and the solicitation produces a contribution or a rejection.
Gift Stewardship: Fundraising’s answer to recycling
Just as a plant manager recognizes that the final product may be redesigned with improved features at some point in time, major and planned giving officers know that a significant gift today is the prelude to larger commitments tomorrow. As such, you must be a good steward, finding new ways to keep your donors engaged in your work. After all, repeat customers are your most profitable customers. So keep “recycling” your donors. If you do, they will return again and again with more and bigger contributions.
The Dreaded Bottleneck
Neither the assembly line nor the moves management effort works exactly according to plan. While manufacturing bottlenecks frustrate a factory, service bottlenecks are the menace of major gift offices. Both types of constraints are insidious and must be eradicated for the manufacturing and major gifts processes to move smoothly.
For example, bottlenecks in the factory environment are machines that run so inefficiently that they slow down the entire assembly process. WIP piles up before them, while manufacturing processes further down the line sit idle. In the service environment, people, not machines, are often the bottlenecks. Research that never gets completed, cultivation activities that never take place, and solicitation meetings that never end with a formal gift request are the result of human foibles. Prospects pile up on spreadsheets while the organization’s treasury sits idle.
How can you unclog bottlenecks in the moves management system? By heeding the advice of Eliahu Goldratt. Dr. Goldratt is an Israeli physicist and world-renowned operations expert who outlined his methodology for eliminating system constraints in two business novels, The Goal and Critical Chain. The following three steps apply his “theory of constraints” to the fundraising environment:
1. Find the bottleneck. You can find your service bottleneck by tracking your major gift prospects on a special spreadsheet. Design the spreadsheet so there is one row for each prospect and one column for each of the moves management steps (i.e., identification, qualification, cultivation, solicitation, closure, and stewardship). Now note where most of your prospects fall on the spreadsheet.
2. Unclog the bottleneck. If staff members or volunteers are too busy to take time for cultivation, help them reprioritize their schedules or delegate some of their responsibilities to others so they can participate in the cost-effective, high-return activity of major gift fundraising.
3. Watch out for hidden bottlenecks. Goldratt emphasizes in The Goal that additional bottlenecks are most certainly lurking around the corner. These hidden bottlenecks can be even more insidious than the initial constraints because they run silent and deep. Assume that a volunteer’s activities are reassigned so he or she has the time to take a major gift prospect on a tour of the agency. The tour still never takes place. It turns out that the volunteer is nervous about fundraising and admits that he or she does not feel knowledgeable enough to properly represent the non-profit. By taking the volunteer on a dry run of the tour and answering his or her questions along the way, the new bottleneck can be unclogged.
From Lean Production to Lean Fundraising
Let us make our fundraising office lean. By lean, I do not mean starting an aerobics class for major gifts officers. I propose adopting a technique that the Japanese created to make their manufacturing plants more efficient. In a lean production plant, whenever one step in the process causes the entire line to stop, all the employees leave their respective posts to solve the problem. Lean fundraising, therefore, is a way to eliminate bottlenecks and other quality defects in the moves management system by involving everyone in the system. You can integrate this by employing these four steps based on lean production:
1. Cross-train the development staff to step in when necessary. Every staff member must be ready at a moment’s notice to step in. Your chief development officer must ensure that every staffer, from the most junior to the most senior member of the team, knows how to process a stock gift, provide a comprehensive tour of the organization, wax eloquent about the organization’s mission and vision, and introduce the donor to other key decision-makers.
2. Allow staff plenty of flexibility in their daily activities. It is hard to call upon the staff to help with major gifts work if they can barely keep up with their own list of responsibilities. Your chief development officer must help staff members determine what tasks to delegate when called for major gift duty.
3. Recognize and reward staff who help move the line along. The chief development officer and you should recognize publicly any staff members who go above and beyond their respective job responsibilities to help the major gifts effort.
4. Make certain that when the development office wins, everyone wins. Being asked to help cultivate a major gift prospect might seem a hard pill to swallow for the annual giving officer if his or her program goal will not benefit directly from the activity. Your chief development officer must therefore communicate to all employees the importance of teamwork. There must be an office-wide incentive to help each other or it will be difficult to get cooperation.
The world is built on interdependency. As a non-profit manager, you must take time to study your for-profit counterparts for new ways to gain and keep competitive advantage. Your organization’s clientele deserves nothing less. Put on your hard hat and begin thinking like a plant manager. You may be pleasantly surprised at the results.
For More: CDS Fundraising
Bibliography
The Theory of Constraints:
Goldratt, Eliahu M: The Goal (Great Barrington, MA: North River Press, Inc., 1984)
Critical Chain (Great Barrington, MA: North River Press, Inc., 1997)
Lean Production:
Womack, James P.; Jones, Daniel T.; Roos, Daniel:
The Machine that Changed the World (New York, NY: HarperCollins Publishers, 1991)
Robert M. Marovich, CFRE, is a Chicago-based consultant who assists non-profits with a variety of advancement activities. Marovich is also founder and executive secretary of the Annual Giving Roundtable, an educational consortium of non-profit executives.