1. APRIL 4, 2013
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THE FOCUSED ANNUAL FUND
Presented by:
Jacob McDougal
Director of Alumni Engagement
University of the Pacific
Presentation based on The Focused Company by Mark Gottfredson – Bain & Company
With analysis from Brian Kish of Campbell & Company

2. 2
GOT CHANGE?

3. 1. Does your annual fund strive to invest enough to win in all
of your fundraising channels/programs?
2. Does your channel portfolio offer enough options to appeal
to all types of constituents?
3. Is your annual fund designed to provide support for all of
your organization‟s processes and functions?
4. Are your IT systems and applications built to enable all of
your existing fundraising processes?
QUESTIONS TO THINK ABOUT?
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4. IS YOUR PROGRAM A FOCUSED ANNUAL FUND?
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FOCUSED ANNUAL FUND

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TREND: THE MISUNDERSTANDING OF
ANNUAL GIVING
Concerning Questions (the ones we usually hear)
 What is your cost per dollar raised?
 How much unrestricted only?
 How do we compare to other school‟s participation rate?
 What can you give them to get a gift?
 Where can you cut your budget?

6. 6
TREND: THE MISUNDERSTANDING OF
ANNUAL GIVING
Good Questions (Unfortunately not heard too often)
 What is the real purpose of annual giving?
 How is annual giving filling the pipeline?
 Are we maximizing each donor‟s giving capacity?
 Are we meeting our donors needs?
 Is each contact strengthening the relationship?
 Is our approach about „us‟ or is about „them‟?

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WHY IS IT A PROBLEM?
 Causes us to thank only short-term
 Puts our needs before the donor
 Does not follow the major gift model
 Leads to reduced budgets and lack of respect

8.  In ability to obtain timely or accurate data or reporting
mechanisms
 Reluctance to take on new segment strategies
 Pressure on developing accurate and effective case statement
 Too long or not enough lead time for projects
 Chaotic hoop-jumping or midnight oil-burning to meet project due
date
 Too much bureaucracy
 A “keep your head down” mentality
 Lack of initiative
 Reluctance to review what we do
 Defensive attitudes – questions and concerns perceived as
attacks
 Lack of clarity of roles
 Complex annual funds forget why their good
WHAT ARE YOUR CURRENT
CONSTRAINTS?
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9.  Average Annual Fund: Invests to win in every element of its
business operations.
 Direct Marketing / Telefundraising / Electronic and Web Solicitation /
Volunteer Solicitation / Prospect Research / Data Management /
Donor Relations
 Focused Annual Fund: Invests to identify and strengthen core
capabilities.
 What do we do really well?
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FOCUSED STRATEGY

10.  An Annual Fund with a focused strategy adds new delivery
vehicles or develops new strategies only when doing so
reinforces the core.
 Creates opportunities for simplification in virtually every area of
the business.
 It allows you to determine which delivery vehicles and channels
will most appeal to those constituents and which are
unnecessary.
 It encourages the development of a culture focused on quick,
effective, decision making and execution.
 Its growth model is tried, tested, and repeatable.
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FOCUSED STRATEGY

11.  Average Annual Fund: Has plenty of data about its
constituents but struggles to find insights it can act upon.
 Focused Annual Fund: Knows its core constituents sweet spots
and designs its delivery vehicles and channels around those
constituents needs.
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FOCUSED ON CONSTITUENTS

12.  A focused annual fund staff understand which constituents are
at the center of their business.
 They create systems of continuous feedback, so that they can
constantly adapt their offerings and processes to meet the needs
of these core constituents.
 They can also take the next step which is to eliminate whatever
portions of the offering do not address the needs of these
groups.
 They can simplify processes to make constituent interactions
easier and faster.
 Create IT systems that facilitate those interactions and organize
their front line in a way that best meets constituent needs.
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FOCUSED ON CONSTITUENTS

13.  Average Annual Fund: Provides options (and creates sufficient
delivery vehicles) to appeal to everyone. Comparative program
and processes without complete understanding of impact.
 Focused Annual Fund: Gives its core constituents exactly what
matters most to them. Is equally disciplined in releasing new
delivery vehicles and channels and in trimming those that
constituents no longer value. Constituent response guides
innovation.
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FOCUSED ON DELIVERY
VEHICLE/CHANNELS

14.  Annual Funds regularly add new delivery vehicles, gift payment options,
programs and line extensions for reasons that usually seem good at the
time.
But the results often have unanticipated effects:
 It increases cycle time and hinders accurate forecasting.
 It makes donor stewardship more difficult and thus complicates the
constituent experience.
 Ironically, it may even put a dent in revenues, because constituents
with to many choices may walk away.
A company with a focused portfolio understands exactly what its core
constituents want, and it can accurately assess the additional costs of
each delivery vehicle and channel.
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FOCUSED ON DELIVERY
VEHICLE/CHANNELS

15.  Average Annual Fund: Designs its organizational structure to
support existing processes.
 Focused Annual Fund: Designs its organizational structure to
support critical decisions.
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FOCUSED ORGANIZATION

16. To make and execute important decisions well, quickly and
without undue effort, a focused annual fund must:
 Require a high degree of simplicity at three different levels:
 First, the overall organization needs a clear structure tied to the
company‟s strategy, without too many “nodes” or points of interaction
among functions and units.
 Second, each unit needs a minimum number of layers and
appropriate managerial spans, and the organization needs a simple
way of ensuring that the right people are in the right jobs.
 Third, the organizational culture – the way it handles meetings and
other interactions – has to facilitate good decision making and
execution.
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FOCUSED ORGANIZATION

17. Too often, the exact opposite happens:
 Nodes proliferate, bureaucracy grows and what we call swirl
takes over.
 Units in a company begin to add staff. Each unit‟s analyst
develop their own view of the “truth” regarding the organization.
 When a cross functional process kicks in, all these analysis have
to vet and validate one another‟s data – and then, typically, they
trade requests for still more data.
 Suddenly, people feel they can never keep up with all the work
and can never get anything done.
 Costs spiral upward. Decision speed slows.
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FOCUSED ORGANIZATION

18.  Average Annual Fund: Redesigns processes to maximize
functional efficiency. Aligns its IT systems to support existing
processes.
 Focused Annual Fund: Redesigns to maximize integrated
process efficiency. Aligns IT systems with business objectives.
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FOCUSED PROCESSES AND IT

19.  Business processes and IT systems link an annual fund‟s
strategy to its everyday operations. If the strategy, delivery
vehicle/channel‟s or organization are unduly complex,
processes will be unduly complex – and vice versa.
 The symptoms are usually easy to spot. People report that
they waste a lot of time. IT systems cement process
complexity in place, and so the two are closely linked.
 Companies trying to fix their processes often run up against
that time-honored response from IT: “That‟s a great idea, but
our systems won‟t support it.”
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FOCUSED PROCESSES AND IT

20. 1. Does your annual fund strive to invest enough to win in all
of your fundraising channels/programs?
2. Does your channel portfolio offer enough options to appeal
to all types of constituents?
3. Is your annual fund designed to provide support for all of
your organization‟s processes and functions?
4. Are your IT systems and applications built to enable all of
your existing fundraising processes?
QUESTIONS TO THINK ABOUT?
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21.  When annual funds attack complexity, they nearly always
begin with a specific pain point, an element of the operation
that seems to be costing too much or causing some kind of
delay.
 What they find, often, is that they don‟t want to stop there.
Bringing focus to one dimension of the organization typically
reveals sizable opportunities for simplification elsewhere.
 So rather than trying to answer “yes” to the questions we
posed at the beginning of this presentation, effective
managers will take a more fruitful approach. They will wake
up every day and ask themselves, “What can I do today to
simplify and focus my annual fund”.
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ANSWERS TO QUESTIONS

22. 1. Better before cheaper – in other words, compete on
differentiators other than cost per dollar raised. Its about the
donor, not the organization.
2. Revenue before cost – that is, prioritize increasing revenue
over reducing cost.
3. There are no other rules – so change anything you must to
follow rules 1 & 2.
Michael Raynor and Mumtaz Ahmed
3 Rules For Making A Company Truly Great
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WHAT TO CHANGE?

23. Your ideas, strategies, and techniques
that demonstrate you are a truly focused
annual fund!
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SHARING TIME