A negative feedback loop is commonly referred to as a “vicious cycle.” One bad thing leads to another, which leads to another. The downward cycle is particularly vicious because things trend downward with increasing frequency and increasing intensity. Most have had the experience of sitting in a public meeting when the speaker’s microphone begins to screech. He ear-splitting howl quickly gets louder and louder until someone shuts down the system. That’s an example of an audio feedback loop.
Feedback loops can be either positive or negative, causing things to quickly go from bad to worse or from good to great. Feedback loops can be applied to almost any kind of system—social, political, or economic—including nonprofit fund development systems.
Over the last few years, a typical feedback loop at nonprofits is one that has led to the abandonment of quality donor communications, particularly person-to-person visits and conversations with donors. One thing has led to another, which has led to another, which turned into a vicious cycle.
Feedback loops can be either positive or negative, causing things to quickly go from bad to worse or from good to great.
I once asked a nonprofit executive at an institution we were consulting, “How many donors do you visit each month?” He replied, “Two or three of our top donors every month.” What particularly got my attention was that he announced his effort proudly as if it was a significant accomplishment. Obviously, we had a different idea about what constituted good donor communications. Unfortunately, his strategy wasn’t working very well in terms of donor communications or fund development. What was even more interesting to me was how he had arrived at his conclusions about organizational fundraising. His approach was characterized by the following:
1) Visiting and having conversations with a shrinking number of major donors
2) Emphasizing only the need for current gifts
3) A very low donor retention rate
4) An increasing reliance on email and social media for donor communications
In other words, his organization had abandoned most in-person donor communications. As he described his strategy, I was thinking: a great guy and a pretty good leader but one who has unfortunately been caught in the downward spiral of a negative feedback loop.
Over time, the effectiveness of your overall fundraising efforts will be determined primarily by how precisely you define success in each donor visit or conversation. Below are two example major gift officers being evaluated by the Vice President of Development. The first is a new employee just learning the Vice President’s process of Precision Q & A. The second is a major gift officer with a clear definition of what constitutes a successful solicitation. He’s a top performer who has gone through this evaluation process countless times.
VICE PRESIDENT: What were your objectives for this visit?
NEW FUNDRAISER: To make a good impression on the donor and tell him about the organization.
VICE PRESIDENT: How would define “good impression?”
NEW FUNDRAISER: It’s establishing a connection and explaining the great work of our organization.
VICE PRESIDENT: Any other objectives?
NEW FUNDRAISER: I was basically gathering information about what he did and his company.
VICE PRESIDENT: Was there some kind of response or action you were proposing?
NEW FUNDRAISER: Like I said, I was just relationship building.
VICE PRESIDENT: In your opinion, was it a successful visit?
NEW FUNDRAISER: Oh, it was a great visit!
VICE PRESIDENT: How so?
NEW FUNDRAISER: The donor said he was very impressed with our organization and that I had made a compelling case for the needs we are addressing.
VICE PRESIDENT: So, what will happen next with this donor?
NEW FUNDRAISER: We’re putting him on our mailing list, and I’ll give him a call in a couple of months to set up another visit.
VICE PRESIDENT: Did he ask to be put on that list?
NEW FUNDRAISER: Not exactly, but we do that with all new referrals.
VICE PRESIDENT: Looking back on your meeting, the donor didn’t agree to an action that moved the donation forward.
NEW FUNDRAISER: No, but I was able to tell him a lot about the organization, and I’m sure the visit contributed to building a good relationship. That’s why I think it was successful.
Here’s a similar Q & A with the organization’s top fundraiser:
VICE PRESIDENT: What were your objectives for this visit?
TOP FUNDRAISER: I wanted to get some movement on a specific appeal because another organization he supports is going to launch a capital campaign next year.
VICE PRESIDENT: What kind of movement?
TOP FUNDRAISER: If we’re going to take the time to schedule and meet with this donor, we have to make some kind of proposal he can respond to—something that would move the ball down the field.
VICE PRESIDENT: So what kind of response would (as you say) “move the ball down the field?”
TOP FUNDRAISER: With this donor, I proposed a site visit and, as a fall back, I intended to propose a donation of items or services from his company to our charity auction.
VICE PRESIDENT: Did you consider it a successful donor visit?
TOP FUNDRAISER: Well, yes and no. We were unable to schedule a visit, but I did get a donation commitment for the silent auction.
VICE PRESIDENT: Did he follow though on the donation?
TOP FUNDRAISER: Yes, he did. Actually, his contribution to the auction was more than I had expected.
VICE PRESIDENT: So that moves the ball down the field?
TOP FUNDRAISER: Yes it does. But I’m continuing to work on getting him in for a site visit as a continuation.
There are several fundraising principles that appear in these fictional follow-up evaluations. First of all, the top fundraiser and the Vice President had a common understanding of what constituted a successful visit. This particular conversation was with a new referral who had expressed interest in the organization. There are, however, several kinds of donor touches we make regularly—accountability visits, appreciation visits, advice visits, solicitation visits, etc. Each encounter has its own predetermined objective and definition of success.
Over time, the effectiveness of your overall fundraising efforts will be determined primarily by how precisely you define success in each donor visit or conversation.
Secondly, both organizational executives understood that positive movement was the objective. Continuations without positive movement are NOT considered successful visits. It doesn’t mean you won’t continue to follow up with them or keep them on your mailing list, but without positive movement or some kind of future giving signal, the contact becomes a lower priority. There was no mention in the new employee’s evaluation that he ever suggested or was looking for any kind of positive movement.
Thirdly, the reason face-to-face donor conversations are important is that it’s the only way to evaluate giving or volunteer signals according to predetermined definitions of success.
THE VICTIOUS CYCLE
As I said earlier, I felt that my client’s organization had been caught in a downward spiral of a negative feedback loop that was leading them to abandon person-to-person donor communications. The vicious cycle proceeded though the following stages:
1) Without clearly defined standards of success and consistent evaluations, donor visits lacked clear purpose and prioritization.
2) Consequently, personal conversations (donor visits) became less effective and therefore less important.
3) Eventually, they all but abandoned it as a donor relations strategy.
In the real world of organizational system, vicious cycles are rarely as simple as the feedback loops on a sound system. There’s usually a mixture of positive and negative dynamics competing for dominance within any organization. However, the trend toward decommissioning in-person donor communications is a clear and present danger for the future of nonprofit fund development.
Eddie Thompson, Ed. D., FCEP
Founder and CEO, Thompson & Associates
Copyright 2018, R. Edward Thompson