People will generally do what they are given incentives to do. Try to curtail the snake population by putting a bounty on the heads of snakes and soon people will start raising snakes for the purpose of collecting more bounties. Then, eliminate the bounty and people will release the multitudes of snakes, leading to the classic Samuel L Jackson gosh-darn-snakes-on-my-mother-lovin’-flying-contraption scenario. This was a real thing.
What we’ve talked about this week are examples of incentives at work. Direct marketers who are measured against a net budget loathe to give up “their donors” to major donor prospecting or try to drive them to events. Events folks want their walkers, bikers, gala goers, etc. to keep walking, biking, going to galas, and et cetering with no “interference” from those who might try to turn them into institutional donors. And major gift officers would prefer to have a clean field to solicit “their donors,” turning off the direct marketing that a hundred people choose to give to raise money from the one or two that come out of that portfolio.
We didn’t even mention the digital/non-digital divide, except to say that if your organization has a head of marketing and a head of digital marketing, one of these two people should not have a job or should be reporting to the other.
So how do you create incentives to share your toys with the other children? The answer lies in transfer pricing.
This is a concept in the for-profit world to allow for transactions between and among business units. Think of a large oil company, for example, as two different companies: one that finds oil and one that sells oil.* In order to see how each business unit is doing, the overall company has to figure out the price at which a good is transferred (hence the name transfer pricing) from the exploration folks to the marketing folks.
In essence, the company is buying a good from itself in order to determine its value. This is the source, as you might guess, of much debate because business unit success or failure is hinged on this number that gets negotiated out.
So the modest proposal for nonprofits is to establish transfer pricing among our various business units and people. If the major donor officer wants a lead from the direct marketing database, they run the numbers and determine how much they are willing to pay for a lead. Because this “money” goes into the direct marketing coffers, proper incentives are built up for the direct marketing folks to acquire and nurture potential major donors.
Similarly, direct marketers know to the ha’penny how much they pay for a potential acquisition candidate from an outside list. How much are they willing to pay for an event donor to the event organizer? Likewise, how much is the event runner willing to pay for a group of direct marketing donors who model out as likely walkers? We could see a much more orderly market in these donors, perhaps where 100 walkers are traded for 80 telemarketing donors plus a 7th round draft pick and a ream of copy paper.
And forget about doing e-appends simply because a multichannel donor does better for your organization than a single channel donor. Why would you do this when you charge the digital marketing manager per lead? After all, in this brave new world, they would now want to charge you per online donor you try to get to give their next gift offline.
The great thing about this is everyone gets to see either where market value truly is or who the truly great negotiators in your organization are. The market sets the price for the lead and you either pay it or you don’t. And if you don’t like the price, then you can try to acquire some other organization’s donors. After all, they may not have a cause connection to your organization, but it may be worth it to not have to try to pry potential major donors out of the iron grip of the person that runs your Charlotte fashion show event.
It’s only when donors are a commodity with a chattel price that we will understand how important they are to our organization or, more importantly, our various business units.
Because the only alternative – working together with your co-workers, realizing that your cause is a common good to which everyone should strive, and focusing on the donors’ wishes and what optimizes their experience and giving – seems really hard. Bring on the markets!
* My wife, who is brilliant and has a master’s in oil policy, would want me to say here that everything that I’m saying about the oil business here is vastly oversimplified. It is and there’s a reason for that: I don’t entirely know what I’m talking about. To the extent that I do, there are details like the multiple business units of an oil conglomerate and the different types of oil and such that don’t bear on telling a decent story. These details have been taken out back and shot.