OK, we introduced our “What’s next” series, which drove many conversations with old and new contacts in the non-profit sector, and it was clear in several meetings that the first thing to talk about is CPDR – Cost per Dollar Raised – Every discussion with non-profit partners rolled up somehow to how much money it was taking to get a dollar from the donors. We know that donors who feel their money is going to the cause rather than overhead are more inclined to donate.
What keeps you up at night? (CPDR) What’s the most important metric? (CPDR) How do you attract bigger donors? (CPDR) What does the general donor look at in deciding to donate to your non-profit vs. another similar organization? (CPDR) — See the pattern? — Sounds a lot like traditional for profit business. How do you make more profit for the same investment? How do you increase the Return on working capital (ROWC)?
So, were there any magic bullets? No. Sorry no one provided me with a miracle solution to the key challenges in business, either for profit or not. However I heard some things that started to sound similar to solutions in the for profit world. Do more, with less, process faster, get the work done for less cost, eliminate expenses, keep staff lean, and drive more automation to eliminate the need for paid bodies, and so on. Directors and CFO roles in several non-profit organizations mentioned a key factor that their for profit counterparts have said for decades; While the staff is the reason businesses succeed or fail and are the key asset of any good business, staff is also the only 1:1 dollar savings available. If you don’t spend a dollar for staff, you keep a dollar.
What can be done to keep headcount costs low? Volunteers? Yes, but how does one use them in a way that is productive, repeatable and doesn’t cost a fortune to clean up later? Entry level staff? Maybe, but you get what you pay for. Systems? Absolutely, solid processes with good training can utilize volunteers and less experienced staff far more effectively. Systems and processes are often overlooked in their effectiveness to decrease or keep costs down.
OK, we know the goal is to decrease the cost per dollar raised (or maintain it while increasing the volume of dollars raised), and systems and processes can help us achieve that. What’s next? Now we need a plan. First, make sure there is a clear understanding of the factors you want to control. Identify the key performance indicators (KPI) to track. Some examples are: Number of transactions per employee, Part quantity, T shirts, books, event registrations, etc. The KPI’s are as varied as the types of businesses and non-profit groups out there. These metrics give us an idea of how productive our team is, and being able to increase productivity without growing the team is a benefit to our CPDR metric. Knowing the productivity of the team we can see how much volume the team can handle, thereby indicating when to hire more people. Additionally, by identifying and tracking KPI’s we can set a baseline, and using this baseline it’s possible to identify the success or failure of the systems and processes that are put in place. Tracking the impact of changes will help to identify when to purchase systems, how to judge their effectiveness, when to hire, etc.
In summary, what’s next this month, is to start tracking. Start tracking your CPDR, start tracking a metric related to what you do, so you know when and what to change. Use the metrics available to determine the next steps. One person averages 100 transactions a day, increasing transactions means creating a process for the same person to do more transactions, or bringing more people on to handle more volume. Review the process and look at systems, track changes you make and new transaction count then reset your baseline. Contact me if you have questions! Justin@caidynamics.com I can help!