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The Ancient Art of Data Science

By | Cool Analysis, Featured

We think of data science as a modern discipline that came into prominence with the rise of the information age. The term ‘data science’ only goes back to the 1960s – but the practice of collecting information from which you can understand, interpret, and extrapolate real-world phenomena is as old as human societies. The Ancient Egyptians stored administrative data on papyrus; the Normans used the Doomsday book for census taking and tax purposes. But less commonly know is the Incan quipu.

An administrative quipu from 1400-1532. Photo: ©Jonathan Dorado, Brooklyn Museum

Imagine holding a necklace from which hangs a series of colorful, knotted strands. But it’s not for decoration – what you are holding is a database. In the right hands, it could tell you about the lives of the people who lived in the Incan Empire. They could record the census, taxes obligations, payments, dates of rituals- all stored in a 3-D system. More importantly, a series of cotton strings which could be wrapped up was much easier to transport across a far-flung mountainous empire than sheets of delicate paper.

The quipus (sometimes spelled khipu) are known as the talking knots. Made from cotton or other fibers, these color-coded strings are looped into knots, encoding data on a ‘place-value system.’ The main cord would branch off into sub-cords. The kind of knots would represent a specific decimal value, meaning that any number could be represented.

Want to learn to read knots? Here’s a video.

Reading quipus was a specialized position with the knowledge passed down through generations. That specialized knowledge was lost with the invasion and subjugation by the Spanish Empire, who squashed many cultural practices. But there are still plenty of hard-working scientists, historians, artists, and archeologists dedicated to finding and preserving these ancient databases.

Image of Cecilia Vicuña’s fascinating installation Quipu desaparecido (Disappeared Quipu). ©Brooklyn Museum, 2018

What can we learn from quipus?

  • At the Room40 Group, we believe that data does not equal information. It’s only in the right hands that the quipus began to ‘talk’ and tell us about the immense data they contained.
  • Visualizing and analyzing data can be an art as much as a science. This a great example of a world of data represented not just clearly, but beautifully.
  • Data can be represented by more than just pie charts. When you expand your perception of how data can be tracked and visualized, you open your mind to innovation.

Map of Students of Color in Higher Education

By | Cool Analysis, Growth strategy

Do you or your organization serve post-secondary students of color?

We can help you find your beneficiaries! We created a visualization of the concentration and distribution of college students of color for one of our clients. Here’s what we found:

Students of color concentration in the United States
  • The individual bubbles represent all colleges and universities in the US that grant at least a bachelor’s degree.
  • The bubble size shows the total enrollment of all students at the academic institution
  • The bubble color shows the percentage of students of color relative to all students with dark blue being closer to 0% and dark red closer to 100%.

A Quick Guide To Developing New Programs and Revenue

By | Cool Analysis, Growth strategy

Jumping from problem to solution to application is very tempting, but you know what they say about assumptions…

We developed this graphic to demonstrate how nonprofits can grow opportunities for new programs to help their beneficiaries or new sources of revenue. Using a multi-step cycle like this one is a great way to organize your project and bring your ideas to fruition.

Develop New Programs Nonprofit
  1. Opportunity Identification:

    Simply put, you’ve discovered a problem (and they aren’t too hard to find), and you’d like to do something about it.

  2. Idea Generation:

    Get creative and put down as many ideas for solutions as you can. Don’t get stuck on your first practical idea and stop there! Embrace wild, crazy, and out-there. You’ll pair them down later.

  3. Discovery & Investigate:

    Put your best ideas to the test. Research, ask questions and expose your designs to as many people as possible. Don’t get discouraged – ideas need to be road tested so you can go back and improve them.

  4. Prototype Development:

    Start putting your plans into the physical space. The goal isn’t the most perfect prototype but one that clearly explains your problem so you can better input. It can be made out of cardboard as long as people can picture what you’re talking about.

  5. Pilot Launch:

    By this point, you’ve cycled between steps 2-4 more than a few times (if you haven’t- get back in there!). It’s a big deal to get to launch your product or service to a broader audience but keep in your mind that you are still looking for the holes and cracks so you can continue to improve.

  6. Later Versions:

    You’ve got an idea, and it works! You can start to think about creating new versions or replicating your program somewhere else as long as you go back to the discovery stage. Don’t assume your idea will work everywhere.

Turns out you agree: Revenue strategy does matter

By | Cool Analysis, Growth strategy, Revenue Strategy

A stunning 88% of nonprofit leaders* say developing and implementing a revenue strategy would make a significant difference or a tremendous difference for their organization’s long-term success, but only 22% have one.

You’ve heard us say it before: revenue strategy is important.  Like your program strategy, it aligns your organization around a goal, the path to achieve it, and resources it will take to get there.  It sets you up to make the best use of scarce resources as you raise money to support your mission.  (If you’re wondering how program strategy and revenue strategy are different, check out this post.)

Creating a revenue strategy takes time and money – both of which are often in short supply.  So perhaps it’s not surprising so few organizations have one.  But if it’s so valuable, you would expect that organizations would take steps consistent with a revenue strategy, even if they don’t have the resources to develop a full strategy.  There are two metrics that can help organizations allocate their fundraising resources more effectively:

  • $ raised per fundraising FTE, a metric that sheds light on whether raising more money will require more people or more/better support and systems for the people you have
  • Return on investment of fundraising activities, a metric that helps allocate scarce resources among the many possible ways you could raise money

(If you want a refresher on what these are, check our webinar here.)

We asked if organizations are using these metrics and we were surprised by the results:

  • 12% calculate the dollars raised per fundraising FTE
  • 17% calculate the return on investment (ROI) of their fundraising activities

So, what’s going on here?  There’s an approach to organizing our efforts around fundraising that we believe will result in better long-term results, but most organizations aren’t doing it.  There are simple metrics that would move us a step closer to a revenue strategy (and a step closer to best use of resources) but we’re not using them, either.

As data-geeks, that’s a head-scratcher for us.  But we’re astute enough to know that we’re oddballs.  So, it leads us to ask: what conditions need to change for revenue strategy to get the time and attention it deserves?  What can we do as a sector to address this?  A few things:

  1. Awareness.  Like program strategy 20 years ago, revenue strategy isn’t commonly talked about, used, or understood.  It’s hard to find the time, money, and support for something that isn’t common.
  2. Evidence.  With so few organizations using them, there aren’t many stories to tell – yet.  And if you’re looking for irrefutable evidence, that’s even harder to find.  Our instincts and experience tell us its important, but we’re short on evidence and success stories.
  3. Support.  Until Foundations and Boards understand the value of revenue strategy and are willing to support an organization’s pursuit of one, nonprofits will be hard-pressed to find the time or dollars to do it themselves.  It’s just the harsh truth of nonprofits’ access to resources, and the power of the gatekeepers of those resources.
  4. Availability of expertise.  Throw a nickel and you’ll hit a dozen nonprofit consultants (including us!).  How many of those do revenue strategy?  Not many.  And what they mean by “revenue strategy” is different from one to the next.  So, even if you have the support of your Board and the funding to do it, it takes some effort to find someone to help with this, and your options may be limited.  (We’d be happy to help!)

We are thrilled to see agreement on the importance of revenue strategy.  We are saddened to see how few organizations are taking steps in that direction.  But where there is a gap, there is opportunity.  We’re committing ourselves to addressing these barriers to revenue strategies so that organizations make the most of their fundraising resources, enabling them to do more good in our world, sooner.

If we’ve piqued your interest, but you’re wondering “what is revenue strategy, anyway”, stay tuned.  That’s our next post.

Yours in pursuit of more revenue,

Anna, Ben, George and Harleen, aka The Room40 Group

* We hosted a webinar a couple weeks ago all about the importance of Revenue Strategy, what it is, and a couple of steps you can take to get started.  GuideStar was kind enough to host it for us.  We had over 250 attendees.  The stats in this post are from questions we asked during that webinar and in a follow-up survey.

Want a great strategic plan? Pay attention to the process.

By | Cool Analysis, Growth strategy

Greetings from Room40,

The other day, I was asked what makes a great strategic plan.  I had a one-word answer, “Process”.  Not process for the sake of process – we don’t have patience for that.  Process that engages stakeholders, creates space for data and analysis, allows for iteration and sets up for testing and refining.  It’s a slightly odd answer from a bunch of self-professed data-junkies who like better decisions faster.  Not a lot of room for “process” if you’re oriented that way.  And that’s exactly why it’s important and is central to our approach.

“So, data-junkies who value process, what is this approach you’re talking about?”  We’re so glad you asked.  Here it is.  As always, if we can help you and your organization improve, grow, and change, drop us a line.

 

Seven Habits of Highly Successful Strategic Planning Processes
(How about we just use SHHSSPP for short?)

 

1. Engage people.  There are no great strategies, just strategies well implemented.  One of the most critical steps in maximizing impact is getting your team on board by involving them in the process.  We balance input and perspectives from national and local leadership at the staff and board levels, front line to executive, program to back office.  We build this in from the beginning to get important input, educate and empower those involved, and create support for the plan as it is developed.

2. Write your narrative. We start the project by defining the narrative for the organization: Where are we today? Where do we want to be tomorrow? What is our vision of the future? This simple, short story will align your leadership on the front end and ground future conversations with staff and stakeholders on the important values and vision underpinning the organization’s next chapter.

3. Develop a hypothesis. Next, we help you develop a strong and testable hypothesis for how you will move from today to tomorrow. This will help us identify and prioritize the most critical decisions you need to make, and the specific data we collectively need to validate (or improve) the hypothesis.

4. Conduct analysis.  With the narrative and hypothesis to guide our efforts, we overlay quantitative and qualitative data, judgement and opinions to inform, validate and revise our thinking.  We conduct both internal analysis (programs, operations, financials) and external analysis (competitors, partners, geographic fit, funding options). Our Internal work builds on what you already know about your organization, supplemented with interviews and additional analysis. Our external work brings to the table new research, data and analysis about different the different opportunities and challenges that shape the context for your work.

5. Create scenarios.  The narrative, hypothesis and analysis come together to inform your organization’s decisions about its future.  To facilitate the decision-making, we believe in the power of developing several scenarios that offer distinct and competing views of what the organization will be doing in the future.  These scenarios will be intentionally provocative.  They elicit reactions that help us identify what will be embraced and challenging among the options. They open up a conversation about why.  It’s not unusual to like the reach of one scenario, the depth of another and the funding model of the third.  Some things are incompatible. Others can be integrated. In the end we can’t do everything and so we’ll have to choose.

6. Put together the plan. With the future vision decided, we develop a plan for how to get there informed by all we have learned about the organization and its external context.  This becomes the document that guides you internally and rallies your supporters externally.

7. Get ready for Implementation and change management.  Finding the “what”, or answer, is only the beginning. Arguably, the harder work begins with the “how”, or changes in behavior, staff, systems, and process… and that requires a clear articulation of the “why.” We can’t do that for you, but we draw on our executive experience leading similar efforts, our wins and our failures, to help you do it better.

Tah-dah!  Just like that.  Drop us a line if you have questions or stories to share.  We’d love to hear from you.

Yours in pursuit of HSSPP,

Anna, Ben, George and Harleen
aka Room40

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

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”.