Apples and Gorillas: Using Benchmarking Effectively

April 26, 2016

“Why don’t we raise as much as … (you can fill in the blank)”.  Most Directors of Development have faced this question.  It might be comparing your organisation to Oxford, Harvard, or some more local or regional rivalry.  With the Ross-CASE Survey coming out today, the key question is how you should use the survey effectively.

Firstly, the key point is that you SHOULD use the survey. Benchmarking can be incredibly effective, particularly in the field of education where academics are accustomed to making decisions based on verified evidence.  (Susie Hills recently wrote an article on the importance of benchmarking). Look at what the survey means for your organisation, and bring it to attention at your next Board meeting.  Make sure you accompany it with a narrative that explains your thinking. Don’t let your Senior Management Team make conclusions without a thorough explanation.  Many other sectors would dream of having the depth and richness of information given in this survey.

However, in undertaking your own analysis, an important point to bear in mind is that you aren’t quite comparing apples with apples. As a Ross Group colleague used to say, it is more like comparing apples with gorillas in some cases.  The survey is not necessarily a measure of the effectiveness of the fundraising office, although that is part of it.  It is a measure of the performance of the institution as a whole.  If you are a large institution with a big and effective medical school, you will bring in more philanthropy automatically than smaller players.  This is an obvious point, but one that is often lost and needs pointing out to Boards who are new to this area.

Secondly, every institution will count slightly different things.  The risk of this has been reduced considerably in recent years with more detailed questioning, but it certainly pertains to Campaign targets.  Most Campaigns count different things (in the UK and internationally), and again, Campaign Totals should not be confused with the effectiveness of the fundraising office.  Be sure that people are aware of that when looking at the Campaign targets of your peers.

So does that mean benchmarking is not worthwhile?  Certainly not.  The fact that every institution does things slightly differently does not mean no comparisons can be made.  There is a wealth of information that is incredibly useful: the cost of the fundraising office, the split between fundraising and alumni relations, where the biggest gifts are coming from, how long offices have been in existence, where £m gifts are going, and so on. Just make sure that people are focusing on more than funds raised or cash received.

In analyzing the results, you should obviously consider some comparators that are just like your institution, and some that are aspirational (but not wildly so).  Point out where your organisation is within your benchmarked group, and offer a clear analysis of why this is, and what needs to be done to move upwards.  The goal must always be to raise more money, but shouldn’t always be to reduce the cost or even the return on investment.

This last point is important.  Boards need to focus more on yield than ROI.  The total amount raised, within reason, is more important than sticking to a rigid view of what the ROI should be.  For example, if you spend £100k and raise £600k, that’s a nice ratio of £6 raised for every £1 spent.  However, if you are spending £1m and raising £4m, you have a worse ROI but have raised £3m rather than £500k.  Of course, comparisons are nearly always less extreme than that, but Yield v ROI is a useful point to focus minds.

Try to use three-year averages if you can.  Major gift fundraising is a lumpy business, and large gifts will skew measures.  If your general trend is upwards over three years, you should be on the right track.

Finally, make sure you run your conclusions through the people in your office who have a real grasp of statistics, correlation, and causation.  That may be you, but it may also be the person responsible for research, operations, or data.  Test your conclusions before you take them to the Board, where you are sure to be asked challenging questions.

Knowledge is power.  Never have we had more knowledge about Higher Education fundraising than this survey gives to us.  Use it wisely, and it will help you to increase investment, and crucially to increase philanthropy to your institution.

-Shaun Horan, Managing Director

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