Episode 26: Maximizing Success with a Smaller Portfolio Size

Welcome to another edition of “Around with Randall”. Your weekly 10 to 12-minute podcast and making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett. 

Thanks for your time here today on “Around with Randall”. Today's subject is something that I have been playing with in my mind for the past probably 6-8 weeks. It has been based on some interesting numbers that I ran across in a couple of places that have drawn me to rethink how I look at prospect management, portfolio size, and preparation prep for a gift officer when we talk about it in a fiscal year.

The first place, and I had heard this from a couple of different clients so it may have been formulated somewhere else. But the first place that I saw that had this conversation was at Northwestern University. What they did is they did a pretty large assessment of their organization and their advancement team and found that their portfolio sizes were too big and let me talk about what that means. They were aiming in general at somewhere between 115 and 125 names per gift officer in their portfolio, which is something in our industry is pretty common, but much like I see myself, somebody started asking questions around the math. Is this the right number? Is there a better number? And what would be the data that would prove one way or the other? So, what they chose to look at was everyone's portfolio and to figure out how many people in that portfolio were actively cultivated towards solicitation on an annual basis. And what they found was the average number year over year was about 40. That there were as many as 80 people who were not cultivated highly enough to justify being and staying in that portfolio. 

Well, that led to a couple of other questions and discussions about, well then, what do we do with these people? And how do we create metrics for the gift officers? And what is this going to mean in terms of the ability for donor size or donor pool for the organization and needs? What they came to realize is that when they reduced the portfolio size of their gift officers based on this data.  I'm using very generic terms, but where there was about 40 asks a year, and then there would be maybe an additional 40 people that would be in the portfolio for heavy level stewardship, or maybe they were being held onto for a year because of some specific reason, maybe they're going be asked in the future. There were good reasons to hold onto them, but they had to be justified reasons. What they found out was in this process is that if they reduced the portfolio size, gifts became more plentiful and you might be asking, well, how much more plentiful?  They had 170% increase in the number of asks and they increased the number of major gifts by over 200%. They had a 600% increase in the number of dollars or the amount that was raised. By the way, this was from the same fundraising group, same fundraisers in a two-year span. Their portfolio size for active engagement for solicitation was between 30 and 40 and that as many as 75 people in each portfolio needed to be eliminated.

Which brings up the concept of this idea of blessing and releasing. Gift officers in my experience tend to hold on to people because they're afraid that they're not going to have a pipeline. They're not going to have anybody else to go chat with. What we're going to talk about here in a second is there's a way to get through that. So, Northwestern does this study and then I run across work done by EAB, which is a consultant group in data. They work across a lot of different platforms regarding data and one of which is philanthropy. They did a survey of 400 gift officers and asked how much money are they raising? How long have they been with that organization and in philanthropy overall, primarily they were mostly educational fundraising organizations and fundraising personnel. How many people are in their portfolio? What they found, and the chart is staggering, is the most successful by far fundraisers had portfolios of about 80 people. There was a very, very easy trend to see that the larger your portfolio, after about a hundred, the less likely you were to raise significant dollars. It's a staggering chart of an immense amount of data. 

When you take the EAB study of the 400 gift officers, and then you cross-reference that with Northwestern’s individual study, it really begins to highlight the fact that we're stretching gift officer's attention too far and too much. In that if they have too many people in their portfolio, the term I have always used is “paralysis by analysis”. They don't know what to do, but if you shrink it and you focus people on their specific prospects that they're going to ask this year, they get more attention, more asks, more opportunity and better opportunity to be successful both for the organization and for the individual gift officer. What I also find staggering is that in both studies, and I mentioned this for Northwestern, but the EAB study as well with those 400 gift officers, for the most part, there wasn't any turnover. Tenure, that length of time that a gift officer had been employed or working as a professional fundraiser or at that organization or institution, wasn't a factor. It didn't make a difference. It was portfolio size. So, with this data and the thoughts that go along with maybe getting to some hardcore conversations about portfolio size, what is the tactical?

The first thing I would argue is, or posit is, that one of the things that can be done across the platform or the office or the system from a prospect management perspective is setting some guidelines for gift officers. People in your portfolio should be the people you're going to ask this year. Plus, any special exceptions that one can make: heavy level stewardship; we're going to ask them next year; they're in the middle of a pledge; or if I don't have regular communication with them, they're not going to make their pledge payment. It's obviously a multi-level, a multi-year gift at a major gift portfolio level, but they've got to be justified. So, that's the first thing. 

The second thing is maybe a conversation around if you're not having contact with a major gift prospect or a prospect every six months automatically, we're going to pull them from the portfolio. What kind of prospect are they if you're not having some communication with them, at least once every six months? Now, there are always exceptions. Somebody is on an around the world cruise, or they're on an African Safari or something of that nature. Those things happen, not often, but they happen. If you can give a good reason, then keep them. Is there a formal plan in the CRM? If there's not a formal plan, depending on your CRM and opportunity, but there's moves management, there's steps that we're going to do over the next 3-6 months. Then if there's not a plan, unless there's a reason, we're going to pull them. Organizations are going to have to have hard conversations about how to create better efficiencies within the fundraising elements. One way to do this is to pull people that gift officers aren't communicating with, aren't recording, aren't building relationships with, aren't moving towards this solicitation. Pull them out so they can concentrate on the ones that they do and maybe reallocate them to someone else.

So, the organization-wide leadership perspective, set some rules from an individual perspective. Planning becomes really important. We use a gift chart in capital campaigns all the time. That, you know, at this level, we have one gift, with three asks. Here are the three names of the people, we're going to put them in there at the highest level. I've never understood, and many years ago did this in my own office. Why aren't we doing gift charts for every gift officer every year? I built, a spreadsheet on this that you change one number, the goal, and all the levels change so that you have the opportunity as a gift officer to put in who are your most likely prospects for the next year within a gift range. Once you put those names in, you should be aiming at about 40 asks. What we know is the 90/5 principle works, 5% of the people are going to give 90% of the money. Those are the people we should be concentrating on.

Once we do that and it's distributed over those gift levels. So, three names at this level, three names at this level, six names at this level from 25 to 50, 50 to 75, 75 to 100, whatever the range is, we then can put in parentheses or identify it, but I like it in the parentheses, in that chart, how many visits we need with each one to make an ask. That should be based on the plan that we've built in the CRM. We can use some general rules of thumb. One visit means you've basically soft asked them. You just need to go formally ask and put the proposal in front of them. Two visits required probably means something that you’re at the end of cultivation. You're ready to soft ask and to formally propose an opportunity for them to support the organization. Three would mean you're in the middle of cultivation. You need three visits. So, you've got one or two cultivation leading into that soft ask and ask. Four means that you've at least qualified them. And now you're moving into the cultivation stage. Five would indicate that if we need five visits, we haven't even qualified them yet. We got to figure out what we're doing. If you do that with your known prospects, that gives you the opportunity to know what your visits look like. 

The other thing it does when you fill this chart out is almost every gift officer I've ever worked with can't fill the chart out completely. Well, that also tells us what our pipeline should be. Remember all those names that we were going to bless and release because they weren't on the solicitation list. Should they be? Do we need a clinician engagement program in health or an alumni association, a referral process, or a board referral process to get us a few names that are going to probably have need five visits? Even though we don't know the names we could fill in those spots. Those holes become very evident. For some gift officers, they need a lot of pipeline. For some gift officers, they may need just a few. One year, they need a lot but the next year they need a lot less. If you do this on an annual basis, you can right-size someone's portfolio. So, the tactical piece is start with that gift chart, put in names, figure out visits and see the holes.

And then the last piece is this idea of blessing and releasing. I would advise that our prospect management team, database team, operations team shouldn't do this just on their own. It should be done in partnership with the gift officer. It should be a conversation. Here are the people you haven't seen in six months or had any communication with or there's no action in the last six years. What are we doing with them? Or, gosh, we'd like to get you down to the right number of asks. Blessing and releasing is a good thing, both in your portfolio and in the idea of pipeline development, if people don't qualify because it allows you as a gift officer to put your focus back on that 95% of the dollars that are only coming from 5% of the people. The best gift officers I've ever worked with, they know that their top 6 to 12 gifts maximum are going to determine their year. Yes, they're going to ask others for $10 or $25,000, depending on the minimum, major gift level. Yes, they're going to build relationships, but the success is built on those top-level people. It may open up opportunities for other gift officers to be assigned people that a gift officer couldn't get to because they had too many good prospects. It also based on the study at Northwestern will elevate opportunities that you currently have to much higher levels, which means success at the end of the day. So, the tactical is a planning and application. For the office, it's setting some rules for the gift officer. It's starting with that basic gift chart -- putting in names, figuring out how many visits, using kind of a scale of how many visits per person to get to an ask (five to one probably), depending on where they are in the moves management process, and then looking to eliminate people from that portfolio. Gift officers can then concentrate on the people that are going to make the biggest difference for the organization and for the success of the gift officer that year.

Some interesting numbers coming out of Northwestern and EAB, I want to thank them for sharing those publicly. I've really spent some time thinking about what this means and have developed two spreadsheets that really allow gift officers to build this with just a couple of inputs that allows them to see how they can develop their year.

I want to remind you about the website, www.hallettphilanthropy.com. You can go there for the blogs, 90-second reads, very quick, posting two or three a week on various things I read in different newspapers and publications around the world that might be of some interest to you. 

If you like this podcast, please leave a review and subscribe. As I mentioned last time, we are now up on YouTube, on the Hallett Philanthropy channel with every podcast. Now you can do it virtually. Not sure I think it's a great idea, but it's the idea we're going with. So, there's a couple of ways that you can watch either from the website or on YouTube, or you can download on your podcast, Doncaster, Apple, Spotify, wherever you get your particular podcasts, subscribe, like and leave a review.

Lastly, if you want to communicate with me, please do so. We've had a couple of people who have emailed some subject matter, which I thought was terrific. We're building upon those, which we'll get to hear in the next few podcasts. Also, a couple of people have said that you are off or you missed something. If you think I'm off or missed something, that's reeks@hallettphilanthropy.com. Or if you have a subject matter or something to comment on in terms of what we could do in the future, podcast@hallettphilanthropy.com. 

Let me conclude, as I do each week on each podcast, this is the best profession you could ever be a part of, to know that you get to help people in an organization make a difference in your community. I hope you feel good when you go to bed every night and look forward to your day every morning. I can't imagine anything more worthwhile. We need nonprofits to be great. There are holes in our communities where people need assistance, education, social services, healthcare, and basic services. You can't even imagine how much need there is out there. I hope you feel like you're making a difference for people who are wondering what happened to them, because they need someone to help them. And that gets me to my all-time favorite saying, “Some people make things happen. Some people watch things happen. Then there are those who wondered what happened.” I hope you feel like you are someone who's making something happen for those people who are just wondering what happened. Appreciate your time today, and always here on “Around with Randall”. We'll be back to you next time and don't forget, make it a great day!