LAPA News & Views

February 2007

Welcome to a special Performance Report Edition of "LAPA News & Views," a quarterly newsletter from LAPA—Laurence A. Pagnoni & Associates, Inc., providing indispensable tips on nonprofit fundraising.

IN THIS ISSUE:

A NOTE FROM LAURENCE: LAPA’s 2006 Performance
2006 PERFORMANCE REPORT
INDUSTRY BENCHMARKS ON FUNDRAISING PERFORMANCE

To prevent News & Views from getting swept up by spam-starved, overzealous email filters, please add our address, LAPA@lb.bcentral.com, to your electronic address book. Thank you!

A NOTE FROM LAURENCE
Results for our Clients from 2006
By Laurence A. Pagnoni

Performance Report {noun}
Definitions:
1. A history or record of performance or accomplishment.
2. An evaluation of performance.

Dear Friends and Colleagues:

I am pleased to share a performance report on LAPA’s results for our clients in 2006. Allow me to explain.

LAPA celebrated its 10th anniversary in 2005 by engaging an independent evaluator to assess our effectiveness. We wanted at that time to have an objective assessment of our results over the firm’s first decade. You can see that report by clicking here: http://www.lp-associates.com/fall2005.htm. We are now updating that assessment with a performance report on last year’s (2006) results delivered to our clients, and we intend to track the results on an annual basis, for each year to come.

LAPA was created to revolutionize fundraising for small to midsize nonprofits. Most nonprofit organizations are small to midsize. According to the National Center for Charitable Statistics, 72% of public charities have revenues of less than $500,000. Sixty-one percent have revenues of less than $250,000. Additionally, most nonprofits under-fund their development program and this creates an opportunity loss: revenue available to them is not secured. The loss sustained by not having an aggressive fundraising program is proportionally greater for midsize organizations. Typically, on the heels of a growth spurt like securing a significant government contract, midsize organizations struggle to meet payroll, administrative, and program expenses, despite a track record of sterling outcomes.

We recommend that small to midsize nonprofits consider outsourcing fundraising in order to decrease their development costs while increasing return. For less than the cost of one or two in-house development professionals with specialized knowledge in limited areas, LAPA clients enjoy the benefit of a cross-trained team conversant in many aspects of our field. LAPA’s 10-year report card demonstrated the efficacy of outsourcing and, consequently, the degree to which we fulfill our mission. Our 2006 findings demonstrate similar results:

2006 PERFORMANCE REPORT

Private Foundations and Corporate Giving

On average, in 2006 LAPA clients earned $3.60 for every dollar they spent on our services. Clients either doubled or tripled the return on their investment in LAPA services. One top-performing client earned close to five times what it paid in consulting fees.
For 80% of its clients, LAPA exceeded revenue benchmarks set forth in its contracted scope of work by an average of 50%.
In 2006, LAPA submitted requests for funding to private foundation and corporate giving programs totaling $7,088,388.
Close to 20% of total revenue was from first-time grants. Clients received funding from 1 out of every 3 new funders approached by LAPA.
Forty-seven percent of funding secured in 2006 was earmarked for general operating expenses.

Government Grant Services

In 2006, LAPA secured close to $4 million in funding from government agencies on behalf of its clients.
72% of proposals submitted in 2006 were funded.
Clients brought in on average $27 in funding for every dollar spent on LAPA’s government grantwriting services.

Individuals, Major Gifts, and Capital Campaigns

Much of LAPA’s work in 2006 focused on individual giving campaigns, major gift solicitation, and campaign feasibility (capital, reserve, and comprehensive), the results of which will be presented in our 2007 report.

Overall, LAPA secured approximately $5,800,000 from private
and government sources on behalf of its clients in 2006.

Not Just About the Return on Investment

While providing an important perspective, these statistics do not represent the full scope of our services. In addition to increasing revenues, LAPA seeks to remove the institutional barriers that prevent a nonprofit from generating vastly more revenue. We, therefore, foster the kind of relationships with our clients that enable them to build crucial knowledge and skills. That is to say, we have a high commitment to organizational development as well as to fundraising, and we provide appropriate guidance as a client’s capacity expands. It was particularly gratifying to us to hear one of the respondents to our 10-year survey say that LAPA “understands the interconnectedness of things and how one intervention may affect another.” The client was alluding to an actual result achieved together based on an enhanced understanding of how the nonprofit world operates. That is the hallmark of a LAPA engagement.

INDUSTRY BENCHMARKS

To compare LAPA outcomes against industry standards, we provide the following benchmarks of performance:

Nonprofit organizations should spend no more than 35% of contributions on development. (Better Business Bureau.) The cost to LAPA clients for our comprehensive services is close to 20% of the return on their investment.
Among nonprofits that raise more than they spend on fundraising, three out of four spend 30% or less of the returns on development. (Joseph J. Cordes & Patrick M. Rooney, “Fundraising Costs” in Dennis R. Young (Editor) Effective Economic Decision-Making by Nonprofit Organizations, The Foundation Center, 2004.)
1,500 nonprofits surveyed spent an average of 24% of their total public support on fundraising. (Patrick M. Rooney, et al, “Research About Fundraising and Administrative Costs,” Giving USA Update, Issue 2, 2003.)
769 nonprofits surveyed spent an average of 23% of their total public support on fundraising. (2007 BBB NY Online Giving Guide and the Joint BBB/Baruch College Research Project.)
Small nonprofits (those with budgets of $200K or less) spend on development an average of 33% of their total public support. Fundraising costs of small organizations increase with age to an average of 37% of total public support after 30 or more years of operation. (Patrick M. Rooney, et al, “Research About Fundraising and Administrative Costs,” Giving USA Update, Issue 2, 2003.)

Also note that:

In private dollars, most development departments of small and midsize organizations raise just enough each year to cover the cost of their fundraising program, jeopardizing their ability to keep pace with growing programs and services.
Turnover among development staff is high for small and midsize organizations, with average stays lasting 18-months—an insufficient time to leverage the talent and learning curve for long-term fundraising gains.

Don’t know your development program’s return on investment? Would you like to find out? If you do know, is your return sufficient for your need? A development audit may be in order. Contact Ed Winters of the LAPA staff to learn the details of the development audit process.

Click here to contact Laurence A. Pagnoni, MA, MPA.

To reach a LAPA associate, click on the name below:

Sheldon Bart, MA
Enid Harlow, MA
Blanche Norman, MA
Dwayne Sampson, BA
Melissa Shurkin, MMHS
Edward Winters, MBA

You may reprint these articles for educational purposes, but please include an attribution to the author and our Web site.


	Laurence A. Pagnoni & Associates New York, NY 10001	Phone: (212) 932-9008 Fax: (212) 868-4808 Web site: http://www.lp-associates.com Click here to contact by e-mail.