Part III – Measuring Success The Buffett Way

As promised in an earlier blog on Warren Buffett, this is the third entry in a series designed to question how development professionals (and others such as CEOs and Boards) should evaluate development effectiveness.

If Warren Buffett were to assess the effectiveness of our development programs, what measures might he use?

Below is my third answer to this question.  My first answer was Donor Retention Percentage and my second answer was Unrestricted Gift Margin.

Answer #3:  Face-to-Face Solicitation Effectiveness.  Warren Buffett is said to be interested in buying businesses that have “favorable long-term prospects.”  In “The Essential Buffett:  Timeless Principles for the New Economy,” author Robert G. Hagstrom quotes Buffett:  “What I like,” he confides, “is economic strength in an area where I understand it and where I think it will last” (p. 83).

When I think about the area of development work that is easy to understand and will last I land on an enduring truism of our work:  The number 1 reason people don’t give is because they haven’t been asked.

And it isn’t just any way of asking that is the key.  I believe face-to-face (mostly major gift) asks are the key.  It is in these situations where principal and major gifts are made thus leading to the largest gifts received by most organizations.  Therefore, I believe Buffett would analyze how successful a development operation is at making face-t0-face asks.  Face-to-face solicitation effectiveness as a concept is easy to understand and its important role in development will last.

But how might he go about assessing face-to-face solicitation effectiveness?  I suggest two approaches, which when taken together, give us a good picture of overall effectiveness.

First, we should look at the number of solicitations completed divided by the total number of development staff members.  I’ll call this the Face-to-Face Solicitation Ratio.  This ratio gives us a sense of how many face-to-face asks per total number of staff members a development shop is making.  Indirectly, it provides evidence of how efficiently the shop is staffed.  A low number suggests either that development officers are not asking enough or that the shop employs too many non-asking development staff members.  The higher the number the better here.

The second number I believe Buffett would want to see is the percentage of successful asks – the Successful Solicitation Percentage.  This number would equal the number of face-to-face, documented solicitations which resulted in a gift of some amount (not necessarily the ask amount) divided by the total number of solicitations made.

The Successful Solicitation Percentage shows evidence of the skill and savviness of the development professionals involved.  If face-to-face asks are being made too soon or for too much or without the proper cultivation the Successful Solicitation Percentage will suffer.

Do you regularly track and calculate these measures of effectiveness?  If not, why not?  As development leaders we should be able to quickly, easily, and in compelling fashion point to our program’s effectiveness.  These numbers, along with Donor Retention Percentage and Unrestricted Gift Margin help us do just that.

0 Comments

Leave a Reply

Using Gravatars in the comments - get your own and be recognized!

XHTML: These are some of the tags you can use: <a href=""> <b> <blockquote> <code> <em> <i> <strike> <strong>