Show me the money!

By | Cool Analysis, Philanthropy, Room40 News

Yes!  We will show you the money!  The Map of Opportunity: A Practical Guide to Philanthropy in the U.S. is for sale!  Get your very own copy for $495 (individual) or $995 (organization).  Click here to buy it now.

The Map of Opportunity reveals:

  • The distribution of philanthropy across the U.S.
  • How much money is in each of the Top 50 markets
  • Practical advice for raising more money

The Map of Opportunity is an 180-page report presenting never-before-seen data on philanthropy in the U.S.  You will see how philanthropy is distributed across the U.S.  You will get detailed information about philanthropy in the Top 50 markets, from NY, NY to Providence, RI, including:

  • How much philanthropy is from Foundations, Corporations and Individuals in each market
  • How philanthropy is distributed across the counties in each market
  • The top 10 Foundations, Corporations and Zip Codes for individual giving in each market

The Map of Opportunity pairs this critical data with easy to follow how-to guides to help your organization use the data to raise more money.  We show you how to:

  • Create a shared understanding of your philanthropic market(s) within your organization
  • Assess the long-term potential of your market(s) and others
  • Set revenue target(s) for the coming year

Get your copy today.  You won’t be disappointed.

The Map of Opportunity:  Philanthropy in the 381 Metropolitan Statistical Areas in the U.S.

Yours in data and insights,

Anna, Ben, George, and Harleen
The Room40 Group

[Psst…  not convinced yet?  Check out a free download of the Executive Summary and a couple pages of each section.  Take a peek and then buy the other 160 pages with confidence.]

Who is the Room40 Group?
A consulting and advisory group, we work with the leadership of nonprofits to help their organizations improve, grow and change.  We created the Room40 Group to help nonprofits combine data and learning from peers in pursuit of better decisions, faster.

“Where is the Money?”

By | Cool Analysis, Philanthropy, Room40 News

“The need for our services feels endless. We must find the dollars to do more, but WHERE’s the money??”

We asked ourselves this question time and again as nonprofit executives.  It was so pressing – and so hard to answer – that we decided to dedicate ourselves to the data collection and analysis that would help us answer it.  After 2+ years of collecting, analyzing, sharing, testing, head-scratching and validating, we have some data and insights to share.  Data and insights that, we believe, will help nonprofits answer the question: “where can we raise more money?”

In May, we will release these insights as The Map of Opportunity: A practical Guide to Philanthropy in the U.S.  The Map, for the first time, reveals the distribution of the $333B in philanthropy in the U.S., showing the 381 metro areas from which 90% of it originates.  (Just look at all that space without dots — that’s the other 10%.  Yikes.)

The Map of Opportunity:  Philanthropy in the 381 Metropolitan Statistical Areas in the U.S.

The Map is a practical guide to using the data to generate insights and take action, answering these critical questions:

  1. How much philanthropy is in my market?
  2. How much can I raise in my market over time?
  3. What revenue target should I set for next year?

The Map includes data on individual, corporate and foundation giving by county for the top 50 philanthropic markets in the U.S.

Sample Market Overview: Boston, Massachusetts

Three “Insight to Action” sections show you how to put the data to use:

  • Orient Leadership to Markets: Learn how to use The Map to create a shared understanding within your leadership team of the markets in which you raise money – a prerequisite for making better decisions faster.
  • Assess the Potential of Your Markets (and others):  One-third of what you raise can be explained by where you are.  We show you how to combine The Map with peer data to assess the potential of a market.
  • Set Your Annual Revenue Targets:  Now we get tactical and show you how to combine what you’ve learned about market potential with what you know about your internal pipeline, competence and capacity to help you set revenue targets for the next year.

Of course, there is no silver bullet; The Map alone won’t solve all our problems. However, it CAN inform and improve decision-making, helping you raise more money.

Keep an eye out for the big release in the coming weeks.  For $495, you can have your very own copy.  If you want to be sure not to miss it, drop us a line and we’ll put you on the pre-release list for an extra special note when it’s up for sale.  We’re excited to share it with you!

All the best,

Anna, Ben, George and Harleen
The Room40 Group

Good things come in 3s!

By | Growth strategy, Room40 News

Did we say good things? GREAT things. Check it out: rings in a circus; wheels on a tricycle; feet off the ground (and rising) De La Soul is; blind mice; Stooges; members in Destiny’s Child; ingredients in a BLT… we could go on.

Truly, three is a magic number. So in that spirit here’s a little update on the 3 awesome things that have been happening in Room40.

Growth strategy, baby!

We’ve been working with two amazing organizations:  ioby and Braven.

ioby (in our backyards) is a crowd-resourcing platform that provides neighbors with the tools and support they need to create positive change in their neighborhoods.  (Think: opposite of NIMBY.)  We are helping ioby’s leadership develop a strategy, financial model and growth plan to support 5000 projects a year.  Check them out!

For too long, being the first in your family to go to college also meant you weren’t as likely as your peers to get a good job. Braven is changing this – and attracting a lot of attention in the process!  We are working with Braven’s powerhouse team identifying the best growth strategy for them.

We’re always keen to learn about great organizations looking for help planning their growth or adjusting to having grown.  No surprise, some of our favorite projects have been for friends of friends.  So, don’t be shy: you are an excellent matchmaker.  Introduce us to your favorite nonprofit, we’ll do the rest!

Your on-going quest to find the $$!
(aka, “Can’t we get better at this fundraising business?!”)

We are *this close* to introducing our latest labor of love:  a map and practical guide to all the philanthropy in the U.S., broken down by individual, corporate, foundation with detailed stats for the top 50 metro areas.  And what to do about it.  Yeah, get your head around that:  how much $$ is in Boston, vs. San Fran, vs. NYC (and 47 others…) and how it can help you make better decisions, faster about revenue strategy and annual targets.  This is the data and “how to” that we were sharing via LinkedIn posts last fall.  It’s grown up to be a real (big) thing: data and “how to” you can’t live without.  If you want to get on the “pre-release” list, drop us a line.
Is it just you three?

Actually, no.  We loved being 3, but it couldn’t last forever.  We have a fabulous new Associate Harleen.  She comes to us from Boston College, having just spent a year in the Jesuit Volunteer Corps in LA.  She has a passion for nonprofits, a great sense of humor and incredible tolerance for 40-somethings who think they are wicked smaht, pretty cool and exceptionally funny.  Yup – we found our unicorn.  And we’re looking for more! Know some people who would be a great fit for Room40? We’re all ears.

So, those are our 3… what are yours??  Drop us a line and let us know.  And don’t forget to introduce us to your old college roommate who is on that Board that is looking for a consultant to do a strategic plan.   We’ll tell them you’re still as smart and funny as you were back then.  Promise.

– The Room40 Team:  Anna, Ben, George and Harleen

Had enough revenue Russian Roulette?

By | Cool Analysis, Philanthropy

A New Perspective on Philanthropy and Fundraising
Post #4: Had Enough Revenue Russian Roulette?
Setting Revenue Targets in a Complex World

Oh boy, it’s that time of year: You’re working with your staff to set revenue targets. A third of your folks are setting targets that feel too high, a third too low, and the rest are in the middle… but no one agrees on which third is which! You do your best by looking at past history (10% higher make sense?), current pipeline (80% of target ok?), and team (they look burnt out, reduce by 5%?) but it can feel like voodoo and chicken entrails.

I may be exaggerating a little, but I think only a little. First, let’s acknowledge that setting revenue targets is hard. You often have a mix of public and private dollars from different sources and dynamics; even when we focus on philanthropy we’ve seen local markets are not equal in terms of size, there are lots of local idiosyncrasies and nuances; and your teams likely vary in tenure, ability, and capacity.

This means you are constantly trying to triangulate philanthropic potential (what’s possible), fundraising competency (how strong is the team), and capacity (how big is the team), all of which can swing performance significantly. As a result, making decisions on how much you can raise, and where feels at best like expensive trial and error, and at worst like Russian Roulette: spin the chamber, pull the trigger, pray.

So let’s talk about how we can start to reduce that uncertainty and danger, starting with philanthropic potential. We will continue with our fictional “Nonprofit A” to explore how we might put this data to work… though purely for my entertainment we shall redesignate said fictional example “The George Chu Center for Folks Who Can’t Decide Good and Wanna Get Better Data Too”*, or GCC for short.

GCC operates in and raises money from five metropolitan areas including New York, Chicago, San Francisco, Boston, and Durham. The five sites range in age from one year old (Chicago) to ten years old (Boston). We are in the midst of our planning for next year, and also revising our five year plans. Here’s how we did it.

Understanding market size is a really helpful start — it explains about one-third of what you’ll raise if you recall from our third post — but it is also necessary to look at what folks are actually raising within each market. To do so, we gathered philanthropic data from a set of peer organizations who raise money from, and for use within each of GCC’s metropolitan areas.

By plotting these points for each market, we were able to create a distribution of philanthropic revenue by market. In Figure 1 you can see this distribution for each of GCC’s markets. Each blue dot represents philanthropic revenue of a peer nonprofit; the red dot is GCC; and the “box” is the middle two quartiles; the line in the middle is the median; and the “whiskers” a measure of standard deviation.

Figure 1: Distribution of Philanthropy by Organization for GCC’s Market

 

A rough gauge of potential is the median, or “typical” for the peer group. If you are above or below that line, that would indicate higher or lower performance, respectively, all else equal (note, obviously not all else is equal as these organizations range in size, capacity, strategy, mission, etc., but we find this to be a solid starting point).

Now, as always, this data is useful to inform judgement, but not good enough to replace it. So we need to overlay the story. For example, we might find that Chicago, which looks like a gross underperformer, is in fact in year 1 of operation. Perhaps San Francisco had an unfilled Executive Director position for half the year so performance below the median actually represents heroic efforts by the team. Maybe Boston was highly focused on building out public funding streams and divided their focus accordingly. Durham turns out to be a largely a programmatic outpost with minimal development staff. Context always matters!

Caveats aside, if we add up the red dots, we’ll find GCC is raising about $10.3M across all five markets. If we use the median or typical as a proxy for potential, we can add up these up and see GCC can raise up to $14.7M in these same markets. Perhaps an initial ballpark estimate for our five year revenue goals? Maybe a starting point for next year’s goal as we can see where we might increase a lot (Chicago?), or not at all (Durham?).

Hopefully you said “yes”, and then added “but we need to refine our ballpark estimate a lot before I feel comfortable committing my team to these as five year goals.” I hope you also said “knowing what is possible over time is a helpful, but our immediate need is to set targets for next year… this helps a little but don’t we need to take it further?”

Yes, the answer is yes. But I’m in the midst of an “Agents of Shield” binge, so we’ll save some for later. Stay tuned next week, same Bat Time same Bat Channel, for our next post where we will zero in on GCC’s annual and five year revenue goals!
* Inspired by The Derek Zoolander Center For Kids Who Can’t Read Good And Wanna Learn To Do Other Stuff Good.

Yes, market size really does matter!

By | Cool Analysis, Philanthropy

Peer Performance Insights: A New Perspective on Philanthropy and Fundraising
Post #3: Understand Your Markets, Part Deux:
Yes, Market Size Really Does #@$#@ Matter

In our first post we told you why we believe we need a new perspective on philanthropy and fundraising. In the second post we showed you that philanthropy is local, and all markets are not equal. “So what?”, you said. “Does it really matter?”, you said.

“Yes, Market Size Really Does #@$#@ Matter,” we say. Here’s why:

One-third of what you raise is determined by where you are, or where you plan to go.

Think about that for a moment…  one-third for market size ALONE. We aren’t (yet) looking at other market factors such as demographics, socioeconomics, culture, ratio of Red Sox to Yankees fans, and the implications of deflategate on local philanthropic giving. Nor are we (yet) looking at important organizational factors like, I don’t know, your mission, strategy, how many fundraisers you have, or how good they are! That’s a little crazy, no?

Crazy but true and we’ll show you how we arrived here… but a few notes before we do:

  • We are about to seriously geek out a bit, so brace yourself. If you love scatter plots and regressions, get ready to have some fun. If you are a normal human being and just want the bottom line before the Walking Dead comes on, bear with us… this is important. If you are busy and/or overconfident in our abilities, skip the steps and go to the “so what”.
  • For those of you who are serious geeks, know we recognize we are using incomplete, imperfect data of variable quality and comparability; and we are playing a little fast and loose with the laws of statistics. Below we make the case this is ok – we are helping folks make the best possible decisions based on available data, not proving the existence of the Higgs boson, but welcome your feedback and thoughts to the contrary!

Let the geeking begin!

Step 1: First we take the data we showed in our last post – Philanthropic market size by metropolitan statistical area. See Figure 1 for a snapshot of the top 50 markets from big to small (note, we have this for all 381 metropolitan areas, but that makes for a tough graph to read). This data is going to become our X-axis in a moment, so hold it in your head.

 

Figure 1: Local Markets are Not Equal

Step 2: We collected philanthropic revenue data for a set of 13 multi-site organizations raising money in multiple metropolitan areas. Specifically, we obtained philanthropic revenue raised by each organization within each metropolitan area. For example, Nonprofit A raised $11.4 M across 8 metropolitan areas in the following amounts: $4.3 M in New York, $0.6 M in Chicago, so on and so forth. Keep this in your head as it will become our Y-Axis in a moment.

Step 3: The moment is here! We create a scatter plot with each of Nonprofit A’s sites becoming a “dot”. For example, Nonprofit A’s New York office would be ($27.4 B, $4.3 M), and their Chicago office would be ($10.9 B, $0.6 M), so on and so forth for the remaining six markets. This gives us Figure 2, a plot of Nonprofit A’s revenue by market for each of its 8 offices.

 

Figure 2: Philanthropic Revenue by Philanthropic Market for Nonprofit A (Observed)

 

Step 4: We performed a linear regression analysis to quantify the relationship between revenue and market size as you can see represented as the line in Figure 3. We’ve included two stats in the label, r-squared and p-value. The former, r-squared is a measure of “fit” between the observations (dots) and the predicted values (line) and indicates, for this example, market size “explains” 69% of the variation in revenue for Nonprofit A. The latter, p-value, is a measure of significance, and suffice it to say anything below 0.05 is solid, so we are fine at 0.01.

Here’s where I will again highlight the limits of this data and analysis… I wouldn’t call this capital “S” science. Data on philanthropy can be sketchy, compiled from various sources over various time periods, and we’ve made assumptions to fill in the gaps. Our approach is empirical in nature, but we also rely upon our judgment and experience to make some analytical leaps that might make some cringe.

For example, we need to be careful in how we think about correlation and causation. We know the world isn’t so simple as to say “big” automatically equals “raise more”. That said, this feels mostly true or at least highly related, matches our intuition, and that of a dozen or so nonprofit leaders with whom we’ve road tested our thinking. So, we make the case “Good Enough!”

 

Figure 3: Philanthropic Revenue by Philanthropic Market for Nonprofit A (Predicted)

 

Step 5: Rinse, wash, and repeat steps 1 through 4 for the other dozen organizations.

So What?

Once we’ve done this for our entire sample, we find the following:

  • All thirteen organizations have a significant correlation between revenue and market size
  • The correlation or r-squared for the sample ranges from 10% to 75% — a big range!
  • The mean and median r-squared of the sample are both ~33%

It is from this last bullet that we derive our rule of thumb:

One-third of what you raise is determined by where you are, or where you plan to go.

This insight can shine a powerful light on philanthropic potential and performance for markets in which you currently operate, and new markets to which you are considering expansion; particularly when you combine market data with benchmarking data from local peers.

We’ll start to explore the “how to” of using this data to make expansion and growth decisions for all your markets, and to set and assess revenue targets within individual markets in the next set of posts, coming next week, same Bat Time same Bat Channel.

A New Perspective on Philanthropy and Fundraising

By | Cool Analysis, Philanthropy

We have been hard at work developing groundbreaking analysis and insights on philanthropy and fundraising. We are authoring a series of Linkedin posts to walk you through our work to date, some of our initial insights, and how you can access this information, knowhow, and better practices should you so desire. We thought we would also deliver them directly to your inbox so you don’t miss out.

 

Oh, for the Love… There MUST be a Better Way

“Oh, for the love…” I can’t tell you the number of times in my I’ve said those words in

my nonprofit executive life. While they have been uttered for a variety of reasons, a consistent focus of my expletives was fundraising, expansion, growth, oh my!

Deciding where to go, what to do, and how to resource are fundamental duties of any nonprofit executive, yet as nonprofit executives, Ben, Anna and I always felt underwhelmed by the available data and struggled to make effective, timely decisions across our organizations and markets.  We decided there MUST be a Better Way…except when we looked around, there wasn’t.  There were analogues like Forrester Research, Corporate Executive Board, Advisory Board where we saw glimpses of what we wanted for the nonprofit sector, so we knew it was possible, but it didn’t exist… yet. It was up to us to make it happen.

And so that’s what we’re doing:  for the past two years, we’ve been developing Peer Performance Insights (PPI) on philanthropy and fundraising, a data-driven approach to answering the questions we struggled with:

  • How much philanthropy can I raise in my existing markets?
  • What if I expand to new markets? How do I evaluate my team’s fundraising targets across geographies?
  • How does my fundraising performance stack up against peers, and what can I learn and improve?

We’re excited to start sharing “the Better Way”: how the PPI helps answer these questions.

Philanthropy is Local, Local Markets are not Equal

Our first step in building the PPI was to size the philanthropic market for the 381 metropolitan statistical areas in the United States. We know, thanks to Giving USA, that $373B in corporate, foundation, individual philanthropy originates in the United States, but now we know from where!

Below in Figure #1 you can see a map of the United States and 381 “dots”, each representing a metropolitan statistical area. The size of the dot represents the size of the philanthropic dollars originating from those markets. Blue are the top 15 biggest (YUGE); adding in the orange brings us to the top 30 (way smaller); the green brings us to the top 50 (significantly smaller still), and the brown rounds out the remainder (chicken pox).

Insight #1: Philanthropy is local, and highly concentrated in a small number of large markets. Not earth shattering, I know, but stick with us. Plus, maps and dots are fun.

Figure 1: Philanthropy is Local

Figure #2 takes a closer look at those top 50 markets (blue, orange, green) in snazzy bar chart form. Here we can see even among the top 50 there is a strong concentration towards the left, and holy New York, Batman! This chart starts to explain why most of our national multisite nonprofits tend to cluster in the blue markets… high concentrations of need in urban areas coincident with high concentrations of wealth. This both makes a ton of sense, and makes me a little sad when you consider how much need exists in suburban and rural areas.

Insight #2: Not all philanthropy that originates in a market stays in a market – and how much stays depends on the size of the market.  For the largest markets, we estimate ⅔ stays in market, and ⅓ goes elsewhere. For the middle of the pack, about ¾ stays in and ¼ goes elsewhere, and as you get smaller the in-market dollars approach 100%. Who cares you ask? Well this has some interesting implications for how you might construct your ask, particularly if you are raising money for multiple geographies. Finally, note there are, of course, exceptions to these general rules of thumb… Hi Seattle and Mr. Gates!

Figure 2: Local Markets are not Equal

We’ll stop there for today. Hopefully we’ve captured your attention and interest. If I’m you, I’m thinking “cool charts”, but where’s the “so what?” How does this actually help me make any decisions?

No worries friend, we’ll get there. Stay tuned next week, same Bat Time same Bat Channel, for our next post “Yes, Market Size Really Does #@$#@ Matter”.

Does Boston have too many nonprofits?

By | Uncategorized

Yesterday’s Boston Globe ran a front-page article on an important and provocative question: “Does Boston have too many nonprofits?”  It sparked a lot of conversation is our office, as I imagine it has in yours.

The article starts by telling a story about OneGoal— a Chicago-based organization helping under-served high school students enroll in and complete college— and their recent decision to expand to Boston. The article then describes the decision by some local funders, schools and partners to work with them, and others not to. In the course of telling this particular story the article walks close to, and touches on, a number of questions that will be familiar to folks who have put their shoulder to this kind of wheel: Is the often fragmented and entrepreneurial state of the nonprofit sector a strength or a weakness? How should funders interested in greater impact best focus and direct their efforts? Are there better ways we should all be working together to tackle the deep and challenging inequalities in American education?

A first observation about all this: I love that the Boston Globe is asking these kinds of questions! At the Room40 Group we spend lots of time wrestling with this sort of stuff as we help our nonprofit clients grow, change and improve. It often feels like nonprofits only get promoted to the front page of the newspaper because of some real or perceived scandal. This week the Globe used above-the-fold, front-page real estate to ask a complicated question about how we can all have more impact. Perhaps I’m a glass-half-full guy but this feels like progress, of a sort.

A second observation: The Globe article acknowledges that lots of nonprofits in Boston are already working on making college accessible, and graduation a reality, for individuals that have the deck stacked against them. In response to the statistic that forty similarly-minded organizations are currently partnering with Boston Public Schools one local foundation executive comments: “The market [is] pretty saturated.” But both the article and this statement confuse the means with the ends. Nonprofits trying to move the needle on college attainment work in two “markets”: one for charitable funding; the other of students receiving services. Are either of these “markets” saturated? In other words, are there no students left in Boston who could use the services of OneGoal or its peers? And if we believe an unmet need is there: how much potential money is needed and could be raised to address it? In this particular article the Globe neither asks nor answers either question.

It’s a pity, because these two questions are central to the matter of where and how nonprofits try and increase their impact. The interviews quoted in this Globe article raise the specter of redundancy and ask if we should do more to avoid it. But if the nonprofits the Globe cites are collectively reaching less than 100% of the students who need their services isn’t the need under-met, rather than over-met? Indeed, redundancy may have benefits. Some of the organizations cited in the Globe article focus their resources on access, or getting kids into college. Others focus on retention, or keeping them there through graduation. Are kids in need better served only getting one or the other?

If the Globe wishes to argue for focusing and consolidating resources on nonprofits that are having the most impact, it should make that case. But this article doesn’t argue for bringing effective and proven programs to all kids in need; it only asks whether we should reduce the number of organizations doing the work.

At the Room40 Group we routinely help nonprofits quantify and compare across geographies the size of the unmet need they wish to address. We have also built a proprietary database of all the private philanthropy in the United States so we can size the potential charitable support for different causes in different places. Nonprofits can have significantly more impact if they make good decisions about where to grow and how to pay for it. Making these decisions with confidence requires asking the right questions, and then answering them with the right analysis.

Because we’re consultants, we sometimes like to show things in 2×2 matrices. It’s a stereotype, I know; please don’t hold it against us. The one illustrating this post we’ve used to help clients think about how the amount of ‘potential funding’ and ‘unmet need’ influences where they grow.

When considering OneGoal— and the other Boston nonprofits highlighted by this Globe article— the Globe and local funders could ask: How big is the unmet need(s) they are individually and collectively trying to address? What will it take and how much potential funding is required to address it? The answer to these questions would suggest how much more needs to be done, and how we might think about achieving it. The question the Globe asks—in effect: How many organizations do we need to do everything well?— is best answered in this context.

That’s our view.  What’s yours?

 

Full transparency: The leadership of the Room40 Group knows many of the individuals and organizations referenced by this article, either personally, professionally, or both. Several are current or former clients. George Chu, my co-founder and partner, is a former Board member of Bottom Line.

Introducing the new Room40 Group!

By | Room40 News

Greetings from Room40, also known as Ben, George and Anna!

Room40 was founded not too long ago to help nonprofit organizations improve, grow and change. Ben and George, as nonprofit executives and former strategy consultants, experienced firsthand how the right analysis, knowhow, and better practices led to better decisions, faster.  Room40 was created to help nonprofits do just that.

Room40’s first 18 months has proven that lots of you agree! We have worked with over a dozen growing organizations across the country – many you would recognize – giving them a boost that makes it a little easier to change the world.  We also developed a new service unique in the nonprofit sector—Peer Performance Insights —that gives nonprofit leaders access to critical data about philanthropy.

Today we’re taking another big step forward!  Anna Fincke is joining The Room40 Group as a Partner.  Anna comes to Room40 with many years’ Executive and Board leadership experience.  Most recently, she was Vice President of Work Exchange Programs at CIEE, a nonprofit in Portland, Maine.  In this capacity, she led a $20M operating division bringing 30,000 young people to the U.S. each year for cultural exchange programs in a highly regulated and quickly changing environment.

We’ve known Anna a long time—the three of us all started in strategy consulting together many years ago.  We couldn’t be more ecstatic to get this particular band back together.

At Room40, we leverage our experience, our network, and data to help nonprofit leaders make better decisions faster based on lessons learned from others’ success.  Check out our website to learn more about what we do and how we can help your organization.

All the best,

Ben, George and Anna

The Room40 Group
Better decisions, faster.

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