This month’s print edition of HBR makes mention of a new study supporting ‘the purpose-profit’ connection (p32). The study looks at the relationship between strong purpose and public company financial performance. I believe the insights apply to all organizations – That is, any organization with a strong purpose will see increased performance. The study finds there is a strong link between PURPOSE and PERFORMANCE (or, in my adjusted language, IMPACT). Researchers make a distinction in two types of high purpose organizations. The first is what it calls ‘high camaraderie’ where everyone simply has a sense that they are doing something great, TOGETHER. The second type of purpose is ‘high clarity’ from management. This is noted as the type where managers excel at translating purpose into action. The statistically significant performance bump was only found with organizations that have ‘purpose clarity.’
As a leader, think not just about PURPOSE, but ‘PURPOSE CLARITY.’ To help you with this, I would bridge some of the findings of the research with some of the For Impact teaching. Think about PURPOSE as an anchor for your STORY. And, by story, I don’t mean a narrative with a beginning-middle-end. I mean how you FRAME the organization. A GREAT STORY…
Some of the writing in the research study further supports thinking about placing PURPOSE inside of STORY. “The company’s primary purpose – the real one, which isn’t necessarily the one written in the official documents or etched in the wall plaques – [that] guides its actions and decisions.”
———————– Gartenberg, Claudine Madras and Prat, Andrea and Serafeim, George, Corporate Purpose and Financial Performance (June 30, 2016). Columbia Business School Research Paper No. 16-69. Available at SSRN: https://ssrn.com/abstract=2840005
Reposting one of our most popular nuggets from Tom about how to measure success and productivity in your Development Operation.
RETURN-ON-INVESTMENT: What every Investor wants from their investment and what every For Impact organization should want from its development/advancement/fundraising effort.
I feel this concept is completely absent or totally misunderstood from our sector – Something I want to help change.
With all due respect to the industry, I just don’t get it. An organization invests money and resources in their development/fundraising operation (whether it’s a one-person shop or 50 people in the college advancement division) but doesn’t measure that RETURN-ON-INVESTMENT. I’m not sure how else you would measure productivity or success without making ROI the #1 barometer.
ROI is very simple to calculate. It’s a numerator/denominator math problem:
Here’s how much money we Raised (the numerator).
Here’s how much money we spent/Total Expenses (denominator).
R – TE = NET, NET, NET CHECK/FUNDS to support IMPACT!
In the For Impact approach, the development function ‘write checks’ to the IMPACT.
R ÷ TE = ROI and COST OF FUNDRAISING.
For example, if you are a hospital foundation raising $2M a year in ‘fundraising Revenue and your total expenses are $1M then your ROI is 2X or 100%; and your cost of fundraising is 50%.
There are two ways to increase your ROI and decrease your cost of fundraising:
Increase the Numerator (Revenue)
Decrease the Denominator (Expenses)
In our For Impact world, our own benchmarks are as follows:
3X is minimum model/benchmark.
4X is great.
5X is something you should be very proud of.
If you’re running a Campaign within an existing development operation or as a separate initiative, I believe the cost of fundraising should be a nickel (five cents on the dollar.) That would give you a 20X ROI.
If you are a For Impact leader, senior staff, executive director or a board member, I hope the above gives you some sense of comparison.
Note: One last example of why ROI is a completely different level of thinking than simply “This is how much money we raised this year.” I can guarantee a small not-for-profit organization an additional $100,000 this year – Hire two ‘major gifts officers’ at $50,000 apiece. Send them to For Impact Boot Camp. I guarantee that they can go out and raise $100,000 in the next year (combined.)Same thing would be true with a larger organization at $1M. Hire five major gift officers at $200,000 each. I’m fairly confident if they followed any sales process they would each be able to raise $200,000 in the next year for a total of $1M.
You (or your new hire, board member, development director) need to find a way to get to Boot Camp. And here’s why:
It will change everything for you and your organization. The reason Boot Camp has such a huge impact on organizations is because we’re not just trying to make you a better charity or increase your annual fund by 10% – we’re teaching you how to be something completely different, to think bigger, and get bigger funding results.
It’s not a normal training. Boot Camp is chock-full of practical stuff. You’re building tools, developing strategy, and doing/thinking the entire time! Don’t expect two days of lecture and power points (you will be very disappointed). [Yes, you will have to do one practice visit and many ‘rehearsals’ at Boot Camp. A little trust on this one? It’s way better to learn here than with your best prospect.]
Results. You don’t want training; we know that. What you want is money, to get out of the rat race, to learn ‘the secret’. Boot Camp is designed to be both a stepping stone for transformation and a way to generate money for your organization in the next 100 days.
It works. We are out there every week and we will share lots of stories from the field to reinforce our points. Boot Camp drills (and drills) on fundamentals for your organization and for each individual who attends. Tom started Boot Camp as an alternative to ‘consulting’ and to create a tool with incredible value. He wanted to scale our impact by giving everyone an accelerated way to get different results, based on 30 years in-the-field.
It doesn’t cost any money. If you say it’s not in the budget, then you’re right. But if you want to think like an entrepreneur, then this is the place for you. Reallocate money and then use the ROI to provide budget relief wherever needed. UNDERWRITE this as a SOLUTION. Some suggestions from recent attendees:
Use money from a ‘marketing budget’.
Have someone ‘underwrite the training’ – as a guaranteed investment.
Put the training on a credit card and pay it off in 30 days with new gifts. (I love this one.)
Boot Camp is the best resource we can recommend. This solution helps everyone who attends.
We’ve extended our Early Bird pricing for April camp until this Thursday, April 2.