Today on PRSPCT-L–the fantastic, freewheeling chatroom of the fundraising research world–a seasoned “listerine” posed some important questions for everyone in fundraising.  The subject: Doing more with less.

She wrote, “I’m wondering if any of you have had to drop your subscriptions due to budget cuts. Is anyone making use of only free resources?  Do you feel that most information you used to pay for is available free — even if free information-gathering is more time-consuming  — or if the quality of the information you can provide is lessened due to loss of paid resources?”

On one level, this seems a simple matter.  Times are tough.  Cut some costs, work hard and make do.  But is it really a question of whether or not to use Google vs. Lexis Nexis?  Let’s take a look.

Clearly, an increasing volume of data is now free and easily accessible.  At the same time, it’s difficult to know if the data in free and fee-based products is really the same since details are not readily available online and the people behind the sites are almost impossible to reach.

Here’s an insider perspective: A few years ago, I worked at a company that keyed data from a public source and resold it in different “flavors” to various online providers.  On one free redistributor’s site, the data was broad but not deep.  In other word’s, it had lots of detail but it only went back two years while paying customers had fourteen years of data!  Also, the search functionality and formatting differed considerably.  If you looked up a person’s stockholdings in one “cheap” source, you would be greeted with pages upon pages of transactions.  In the other, “premium” source, all the transactions were compiled into a few handy, clear and easily understandable dollar figures, saving as much as 30 minutes to an hour of calculations.

Those kinds of differences exist across many products in fundraising research.  However, many in fundraising tend to think of these very different data sets in broadly generic terms.  This would be like perceiving both morphine and aspirin as merely “painkillers”–in a sense, that’s true, but that characterization doesn’t properly distinguish between two entirely different substances that generate very different results.

Then there’s the issue of expense.  But that’s not as clear cut as it first appears, either.  After all, it’s not the research resource that’s the big expense, it’s the person using it!  For example, a researcher earning $35,000 plus benefits costs an institution about $0.47/minute, not including supervision, resources, space allocation and professional development, among other things.  That may not sound like much but it adds up quickly.  Both in the cost of having the researcher do something and, more importantly, the additional cost of NOT doing something potentially more important.  Using free but less efficient products actually exacerbates this problem, driving up internal costs and reducing fundraising opportunities overall.

A case in point is address updating.  Nonprofits need to update addresses because not doing so would both waste money on printing, postage and time and limit potential revenue.  This is well understood and the reason why so many organizations use services like AlumniFinder to recover “lost” constituents.  But many also spend their own time looking up these records one at a time online assuming that is the least expensive way to get the job done.

It’s not.

Every time a fundraiser or researcher looks something up, even on a free resource, there is a cost associated with that work.  A five-minute Google search: Between $4 and $7.  Research ten addresses a week over the year: Up to $3,600 a year!  And if prospecting is put aside, even for a moment here and a minute there to “save” money by using less efficient “free” resources, the cumulative annual effect is hundreds of thousands or even millions of dollars in lost or delayed fundraising revenue.  On the other hand, running addresses through in a batch with AlumniFinder means that all the work is done quickly, consistently and inexpensively, saving hours and hours of time for prospecting, rating and strategy setting.  Spend a little up front, save a lot–and potentially make a lot more–on the back end.

If understanding prospects and donors is truly central to development, we’ve got to continually invest in the tools to our success.  First, we need researchers to conduct research and not fundraisers as fundraisers need to be out developing relationships and soliciting support.  Second, we need to spend money on proper research resources that drive knowledge and efficiency.   Because when it comes to time, we can’t afford to be penny wise and pound foolish.

10,000 arts organizations will die this year!

That is the dire warning of a report by Bob Lynch of Americans for the Arts in a report from USA Today which was covered in depth on the great blog of Beth Kanter.  So is it true?  It appears so.  But only if you believe that arts organizations must be at the mercy of the economic crisis rather than rising to meet the challenge.

I began my career at the National Endowment for the Arts and remember how critical our grants were to organizations and individual artists, not only for the money they provided but also because of the government’s seal of approval. Grants were determined not by local arts agencies but by peer panel review. Every dollar was a reflection of what leading talents thought was important to support, whether it was the tried and true or the challenging and new, and other donors knew it. Questions on the organizational applications addressed audience size, underserved populations, overall budget and sources of support, all important to evaluating which organization provided the greatest value and where the grant might have the greatest impact.

To my recollection, however, we did not ask specific questions about individual financial support. I learned how important this characteristic of organizational independence and sustainability was after I left the Endowment and began consulting on major gifts.

I was surprised when I learned how many organizations felt uneasy about generating revenue outside ticket sales and institutional support. Most vivid in my mind is a conversation with a nationally recognized alternative presenter in New England who told me, “if I have $5,000 to spend, I’d rather spend it on writing a proposal to a foundation than identifying my wealthy supporters.” Then the stunning admission: “I really don’t want to talk with those people anyway.”

Now, I wouldn’t apply this one person’s aversion to “rich people” to all arts organizations. It would be safe to assume that the vast majority of organizational leaders are well aware of the immense and sincere contributions made by individual donors from the time of the Medicis to the millions given for creative writing at Wesleyan just weeks ago.

At the same time, I’m unconvinced that there is great comfort at smaller organizations with reaching out to affluent supporters individually and sharing power at the leadership level. And this, I believe, is precisely what could help ensure survival in times like these.  But we’ve got to change the mindset to do it.

Just this week, one of the fundraising listserves had a lively exchange on the subject of how to manage constituent data. While universities try to argue for individual records on each constituent, some organizations group them together in families, almost as if it is the household purchasing tickets, attending functions, etc. On one level, this was a technical discussion (“what will our software allow us to do?”). But on another level, this is symptomatic of the desire to direct market to a physical address rather than to actively engage in a real partnership with successful individuals outside the arts in order to build and sustain arts organizations.

I believe a major gifts orientation can be especially useful now because it is wealthy individuals who have best weathered the financial storm. And while most people might be generous of heart by nature, it is clear that organizations which have made a commitment to building a major gifts program, which includes staffing and resources, raise more money from individuals.

While Bob Lynch may be right about the danger arts organizations are in today, I do think those same organizations have at least a partial remedy at their disposal: A network of individual supporters waiting for someone to knock on their door and say, “how can we work together to save and advance this thing we both love so well?”

Less than six weeks into the new year.  Just days after the Chronicle of Philanthropy predicted a down year for big gifts.  The first $100 million + charitable gift has been recorded.

As noted in the Big Gifts blog, Philip T. and Susan M. Ragon have pledged $100 million to a consortia of leading Boston institutions to develop an effective vaccine against AIDS.

This is not just a big gift.  It is a BHAG gift.  It carries with it, as authors Collins and Porras might say, a Big Hairy Audacious Goal.  This is an era when a candidate ran and won with an audacity of hope and donors are now similarly willing to take on the seemingly impossible.

The question now is if these are the last brave donors willing to focus all available resources on a seemingly intractable problem and dare to fix it?

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It has been quiet on the Frost on Fundraising blog for a few days.  No, it wasn’t a case of pneumonia after returning from the inauguration.  I have been busy launching a group of free websites that address some of the perpetual information needs in fundraising.  Let me explain…

I belong to a large number of lists for fundraisers, prospect researchers, grantmakers and others in philanthropy.  Most are wonderful.  I must admit, however, that I am puzzled by about half the posts on the lists.  They go something like this:

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As the last bands marched past the White House reviewing stand, exhausted revellers made their way around abandoned barricades to metro stations, prepared for a long ride home.  TV journalists were still filing stories up around Union Station, the Capitol in the background glowing like tungsten, clean and white hot in the dark.  T-shirt and button sellers were hawking at discounts of 50% to dwindling crowds, then resignedly shoving their wares into bags and disappearing into the dark.

Just as many went down the escalators to trains bound for home, a second shift was arriving in high heels and party dresses for the official inaugural balls, where the first couple took the stage to the night’s theme song, “At Last.”

It was 22 degrees Farenheit.  Never was Washington so warm.

Just six hours earlier, when jubilation was in greater supply than romance, President Barack Obama made an address that challenged the public to a new level of responsibility.  Not unlike his campaign themes, he talked about the “price and promise of citizenship.”  He was talking to us, although he did not call us by name.

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There may be close to a half million blogs in the world today.  But few focus squarely on the issues that bring us together every day as fundraisers.

We need to know where the money is, especially in the midst of today’s crisis economy.  We need to know how to get our jobs done more efficiently and effectively since there are few of us and the needs are many.  We need to see and share the best practices for getting our organizations–and, yes, ourselves!–to the next level.

Oh, and we could use a laugh once in a while, too!

On this blog, I’ll be posting news and other items that don’t often make it into the pages of the Chronicle and rarely bubble to the surface of the New York Times or a Google search result but are nonetheless essential reading for people who want to know what’s what.  I will also rave and rant a bit about some of the issues that concern us as the primary spokespeople for our various causes and missions.

If this is worth reading, it won’t always be popular.  I hope to advance a few ideas that are on the edges.  And I’ll look forward to hearing from you when I’m right…and when I’m wrong.

Let’s get started…