Over the weekend I realized that I had just launched right into this series on ratings assuming that they are a given in every fundraising office. That everyone is already clear on the types of ratings that are out there and how they are used in a relationship management system for fundraising.
But maybe you don’t use them in your office. Maybe you need to be convinced that you need to use them. Or maybe you’re convince-able, but just aren’t sure how to get started. Or quite possibly you are currently using ratings, but want some fresh ideas on how to use them better.
So let me take a brief intermission to step back and give an overview of what ratings are and what they mean in the context of fundraising.
Let me start by saying that I realize not all organizations are the same in terms of size, type, or level of complexity needed to organize a well-run relationship management system. But my feelings on the topic are well-documented: ratings are not just an infrastructure to make us feel comfortable. Ratings force us to keep our eyes where they should be in a rising tide of information.
If you happen to have a copy of Prospect Research for Fundraisers handy, please turn to page 90. There you will find some of the best practical reasons why ratings will help you manage prospects better. There are even case studies with examples of how real fundraisers are using ratings to help them raise more money.
If you don’t have a copy yet, the CliffsNotes version comes down to this:
- Relationships with donors are too important to mess up.
- Ratings are a way to keep track of the most important relationships we have, and to keep them going smoothly.
- Ratings help us stay focused on the prospects that have the most capacity to give and the most love for our cause, and they help us make sure we ask donors for the right gift amount at the right time.
- Ratings are the pillars and struts that hold up our relationship management system. They give us a structure to move forward.
But what are they?
Ratings in a relationship management system are usually comprised of three elements concerning our donor:
- Their Capacity to give: In the best possible world, if this donor chose to give a gift at their philanthropic capacity, what could it be?
- Their Affinity/Inclination to give: How much passion do we believe that the donor feels for the cause? How involved/supportive have they been in the past? How well have we as an organization stewarded the relationship so that they feel increasingly inclined to invest?
- Their Readiness to give: When is the right time to ask the donor for a gift? Where are they in the cultivation pipeline?
Together, these three ratings give us a way to rank and prioritize our work, discover who we should be paying more attention to, and forecast what our fundraising income will be for the year.
Let’s look at each one in a little more detail. How should they be presented?
However you derive your capacity ratings, as a code I like to use real numbers to represent them. That way everyone is clear on what everyone else is talking about.
For example, if I think that Mr. Jones has the capacity to make a $25,000 gift, his rating would be 25 or 25,000 or 25k. A million dollar rating would be coded as 1m, or 1,000,000.
It doesn’t matter if you write out the zeroes (although quite frankly they take up extra room on the spreadsheet that you could be using for something else) – just be consistent and use real numbers. Why?
I have seen ratings systems where capacity is listed as A, B and so forth. I have two issues with that:
- If you talk about someone having a capacity of “A” or “B”, everybody’s heading for their cheat-sheets to figure out what that code translates to. Especially the new people – the ones that you are hoping will get up to speed ASAP. Why slow people down?
- In the early stages of your nonprofit’s fundraising efforts, let’s say that you decide that a gift of $10,000 is the highest possible gift you will ever get, so $10k donors are rated an A. Five years later, you get your first gift of $100,000. Now what do you do? A+? AA?
Capacity ratings are generally determined after deeper prospect research is done to identify assets and discover a donor’s philanthropic history.
An affinity or inclination rating (these words tend to be used interchangeably) combines the art and science of fundraising. It may be derived from looking at a donor’s past involvement using explicit data sources (like event attendance, donations, volunteer activities, student involvement, etc.) as well as implicit information (like information learned through face-to-face interactions with staff and volunteers).
I promise to talk more about inclination ratings in my blog article next week, but for the moment let me just say that a simple, single-digit number also works best for this rating. I have a bit of a controversial idea that I want to put out to you, and I’m looking forward to your comments about it next week.
Affinity ratings are generally determined as a collaboration of what has been found through research, data discovery and front-line fundraiser’s observations and experienced opinions.
I love readiness codes. They’re simple, and not only can they give a quick snapshot of how soon a donor will be asked for a gift, they can also be a powerful tool to project income for the year. Examples of a readiness code might be:
A – Ask in the next 3-6 months
B – Ask in the next 6-12 months
C – Ask in the next 12-24 months
Let’s say you are tracking 10 donors, each with the capacity to give $10,000. Their affinity with your organization is as high as possible, and they will be asked to give in the next 3-6 months. From this you can calculate net income from fundraising in the next 6 months as $100,000. Will you meet your goal? Ratings can help you plan.
Readiness ratings are generally determined by the prospect manager assigned to work with the donor, in collaboration with their supervisor, prospect management team or organization’s executive leadership, depending on the organization’s size.
I generally recommend against having too many rating codes in your relationship management system or things can get really confusing, but there are two others that I don’t mind seeing. One is Prospect Status and the other is Next Gift Amount. More about those in a future post in this series.
Next week I really will talk about affinity ratings – promise! In the meantime, do you have thoughts you’d like to share about ratings?