Build a Better Performance Measurement System: Step 4
Fundraise
Building a better performance measurement system requires vision, a plan, a partner, and…the focus of this post…the ka ching ka ching! Tapping into philanthropic support for your project is not going to be easy, but it is possible.
Raising funds for your performance measurement system will provide you with the one-time, up front capital you likely need to bring your vision to life. I learned this first-hand talking with nonprofit leaders about their performance measurement systems. I was struck by their frustration and lack of joy as they shared with me how they collect data on their most vital services or their outcomes. Nonprofit leaders seem resigned to clunky, redundant, and mediocre methods of capturing, storing, and reporting on performance. When pressed why they are resigned to a suboptimal (even pain-inducing) system, it nearly always comes down to money. As The Notorious B.I.G. would say, “It’s all about the Benjamins, baby.”
It is an investment to build a better performance measurement system. If it were inexpensive, great data systems would be commonplace. It takes up-front capital to design a system to meet your needs, and usually requires considerable ongoing costs for licenses and plug-ins/apps. (Note: I’m not saying you need to spend a lot of money to build a good system, but there is usually an upfront cost to make the system work for you).
The fact is, inexpensive data systems are aimed at nonprofits with limited know-how and capacity. Some of these systems are minimally better than tracking information in Excel or a Google spreadsheet. When advising nonprofits with budgets of around $1M or less, I often encourage them to optimize “free” Microsoft or G-suite tools. Once they really understand the information they need to capture, analyze, and report, then it may make sense to invest in a CRM or performance measurement system to maximize operational efficiency or to address challenges related to growth. A lot of resources can be wasted on a performance measurement system if you do not know what you need (not want) at the outset.
Ok, back to fundraising…
Fundraising is your opportunity to remove money as the impediment to building the performance measurement system of your dreams. If you can show your CEO and Board that funders are willing to partner with you — actually give you money — to make this happen, the case for change can stand on its own.
In our case, we estimated that Phase 1 would cost $150,000 for designing, implementing, and rolling out a performance measurement system with Salesforce and Exponent Case Management. This was on top of the cost for licenses. Our fundraising target was $150,000. We reached $100,000 prior to our kickoff with Exponent Partners. And while we failed to reach our full campaign goal, we were committed to using our resources to bring this project to completion.
Although we failed to reach our campaign goal, I learned a lot along the way. Next time we will reach 100%! Here was our approach.
Create a Campaign
First, I met with our CEO and development team to create a campaign. The campaign was primarily focused on fundraising for Salesforce/ECM implementation, though we framed it as part of our roadmap for building a more effective, evidence-generating organization (per our Strategic Evidence Plan). Framing your performance measurement system as part of a broader vision for how your organization will increase its effectiveness will help funding prospects understand why this system is so important. These projects are never about the tool itself; rather what the tool will enable your organization to achieve 6, 12, 24 months down the line.
Through these conversations we identified about 10 initial funder targets to reach our goal of $150,000. For each target, I listed the following information to help us prioritize and track progress toward our campaign goal:
- Name of Prospect and Contact — We were primarily interested in attracting new donors and ensuring we did not “cannabolize” program funding. Attracting new funders to this project proved more difficult than anticipated.
- BGCP Lead —A staff person or Board member with the best relationship with the Prospect.
- Rationale — Why we thought the Prospect would be interested in funding our performance measurement system or broader Strategic Evidence Plan.
- Tier — Prioritization of Prospects so we could reach out in Rounds; in some cases, we didn’t want to reach out to a Prospect until we had exhausted other options.
- Probability — Likelihood that our request would be met based on past experience with the Prospect or our best guess.
- Estimated Grant Amount — Our best guess at the grant amount expected.
- Projected Amount — Probability x Estimated Grant Amount (thought of this thanks to my FSG consulting days!).
- Reached Out — Status of whether we reached out to the Prospect yet.
- Date of Meeting — Date of most recent meeting.
- Notes/Next Steps — Comments to provide an update on follow-up with funders and understand next steps.
What I Wish I Knew
With some (but limited) fundraising experience, I was optimistic that we could raise money for our performance measurement system. While our Campaign plan and Prospect list was robust, I underestimated the restricted nature of most philanthropic dollars and the time it would take to identify and build new funder relationships. If there are funders focused on helping nonprofits build performance measurement systems using state-of-the art technology used by leading corporations, I failed in finding them.
I learned a lot through the process, however, that I will certainly keep in mind next time. First, be prepared for handoffs. The person you have the strongest relationship with might not be best positioned to fund a data system project. This is especially the case at large philanthropic organizations, where grant decisions are made within distinct programs. Your strongest relationship might be with an Education Program Officer, but the best fit for this grant might be the person who is responsible for Capacity Building grants. Be prepared to make new relationships and connections and ask for introductions to the right people, especially if the first response is “This is not a good fit for our funding priorities right now.”
Second, be prepared to operate on funder timelines and avoid end of year asks, if possible. We were preparing to start work with Exponent Partners in February, which meant we were approaching funders in October — December for funding. The foundations that we received funding from had a rolling grant cycle throughout the year. Every month or two their Board approved new grant requests. Larger philanthropic organizations had exhausted their allocated pool of funding by the Fall. This meant that many initial Prospects turned us down at the outset or suggested we circle back in the Spring. We needed to raise capital before we started the work. In hindsight, we could have started the campaign sooner or better understood the grant cycle of the Prospects we were hoping to partner with.
Third, get your board involved. This will be obvious when your data system project has a price tag upwards of $500,000. Heck, a cost of $1M or even more is not uncommon for complex organizations at a regional or national scale. Having support from the Board for your performance measurement system provides credibility and accountability that Prospects respect. It shows that you know deploying any data system or tool involves the cooperation and buy-in of the whole organization, and that there will be accountability from the Board to ensure success in both the short and long term.
Fourth, with measurable priorities established in Step 2, tell your Prospects the expected outcomes of your performance measurement system. We did this generally before the system was launched, and in hindsight could have been more specific. Since most funders are not familiar with the benefits of a highly effective performance measurement system (few funders have one themselves and often rely on stand-alone evaluations of grantee efforts to measure outcomes) it might not be clear why such an investment is needed. Put a timeline and success measures in your pitch documents so funders know at the outset the value your performance measurement system will bring to the organization.
Lastly, enlist support! It’s hard to get turned down. It’s even harder when you’re ignored. Keep going. Just imagine you’re the Little Engine That Could. I knew this was essential for our organization, and I was passionate to raise the funds we needed to make it a reality. It sometimes seemed like an uphill battle, especially when let down by funders I thought would step up. I was thrilled when two funders agreed to fund the majority of our upfront costs. But, once our project was underway it became much harder for me to put any of my time toward fundraising. My job was making sure that we knocked this project out of the park. I felt like my job — my career — depended on it. And this is why you can’t do this on your own. If a primary function of your job is not fundraising, make sure you bring your development team along. Give them a reason to want to fundraise for this, as well. Having a great performance measurement system does not only help our programs be more effective — it helps us tell donors what amazing, incredible work is happening every day in ways they cannot see! When you realize this, it is hard to imagine a development team not backing this type of project 110%!
Closing Your Round
So, what would I look for next time I need to raise money for a data project? There were some patterns in the Prospects who showed interest and ultimately gave us support. Here’s what I will be looking for next time:
- Existing relationships — Our funders who funded this project knew our mission, our track record, and had a history of supporting our organization. Contrary to cannabolizing funding from these Prospects, our partners saw this investment as sustaining our organization as we grow and take the leap toward building greater evidence of effectiveness.
- Capacity-building focus — Data system investments are an excellent match for grants aimed at building nonprofit capacity. Be aware that program officers may be more comfortable funding strategic planning and finance than data systems. While I wish “evaluation” capacity building was not a separate thing…it is. You’ll need to make your case for why this investment and why now.
- One-time givers — While few nonprofit leaders are fans of the one-and-done donor, they have their place in the funding ecosystem. Performance measurement system projects (or any that require significant up front capital) is a great match for this type of Prospect. Take advantage of dollars that come with few strings attached to get your performance measurement system up and running. Once up and running, consider how to build cash flow for licenses and other annual fees into ongoing funding streams. We write it into future grants that require results reporting or outcomes measurement. After all, how else do funders think you will be able to monitor and track that information?
Once you have received funding, show appreciation. We kept our funders in the loop as we hit key project milestones. Many were aware of the challenges of data system efforts and were pleased to hear that we were making progress and on track to launch on time.
After a month of using Salesforce/ECM we had a sense of whether we had hit our initial goals. We created a two-page project completion update and sent that to our funding partners. Many were grateful and impressed with what we had accomplished. Our success is their success, too, right?
