Performing Arts –– Why is Marketing More Important than Fundraising?

Working with performing arts clients, I frequently observe a competitive tension between the marketing and development departments. Instead of an esprit de corps, I see yin and yang. If these two departments can’t play in the sandbox together, it will eventually show up at the board level–and even more disastrously, at the donor and patron level.

So what’s causing the rift? It’s largely due to the finite resources available in these

organizations, coupled with the sizeable growth goals each department is tasked to achieve. The problem with this “us versus them” attitude is that it hurts the organization, deeply, and it’s absolutely avoidable.

Many institutions choose the wrong course. To avoid the pain, they place marketing as the alpha and development second in command, sacrificing contributed revenue opportunities and strategies for a perceived increase in ticket sales. This eventually chokes off both efforts. But how can the relationship be synergistic when the goals for each department are so aggressive?

Step one: understand and accept the balance between the two departments and create a productive environment that helps both thrive.

The ticket buyer is not the primary customer; the other department is the primary customer. You’re both in the “acquire, retain, upgrade” business, right? The development office should keep in mind the large majority of donors are also ticket buyers, and should therefore greatly respect the marketing process.

Step two: acknowledge that marketing’s success is also development’s success.

Marketing has to be focused in the proper area – namely, subscriber growth.  If the marketing department successfully creates a pathway for patrons – from single ticket buyer, to a multi-ticket buyer, to a subscriber, then they are creating patrons. Patrons, who are not only good for frequent concert attendance, but also good for making philanthropic contributions. Once converted to a donor, we know that the value of a patron increases, as does their lifetime value. 

Step three: acknowledge that development’s success is also marketing’s success.

So, when do we convert a subscriber into a donor? While conventional wisdom says three years, RSC rejects that premise; we find it most effective to convert them almost immediately. Since a new subscriber has not fully defined their role, it becomes paramount to get an entry-level gift right away. This allows your organization to tell its story from the very beginning of the patron relationship and to reinforce it over time. By starting early, you’re able to share your mission and worth, and turn what would otherwise be purely an ‘entertainment option’ into a highly-valued, prized organization, worthy of support. 

If marketing and development want a harmonious relationship, they must look at each other as their single largest customer. Then, together, they can accomplish their larger mission: serving their community.

RSC can help integrate your organization’s development and marketing planning strategies to build a successful fundraising program. If you would like to learn more about how RSC successfully helps arts and cultural organizations reach their fundraising goals, call us at 317.300.4443 or visit our website.

Every Annual Fund Dollar – One Face but Two Names

I’ve helped dozens of performing arts organizations with annual fund campaigns. Sometimes my services are called upon when the goal’s already been established, and that makes me rightfully nervous. My first question is: how did you establish the goal? Sometimes I hear this methodology: we’ve figured out the gap and that’s our annual fund goal. Or, “last year we raised 6% over the prior year, so we’re aiming for 9% this year.” And

then there’s my favorite, “the CEO set the goal” goal.

Setting goals through arithmetic alone is a bad idea. Here’s the annual fund creed you need to post in big letters across the development department: One Face but Two Names.

Put another way, you’ve got to look at the ratio of prospects to donors when setting the

How many prospects do you have?

annual fund goal. Simply determine how many donors you’ll need to achieve your goal, then multiply that number by two – think of it as one face but two names. If the goal is $2M, for example, you’ll need $4M worth of prospects. These can be renewals, upgrades, or new donors. It sounds easy and pragmatic, but organizations often stray from this critical metric when they can’t balance the budget – and end up basing the goal on what they need instead what can realistically be achieved.

• Start the planning process at the beginning of the fiscal year. Thoughtful planning, not active desperation, is the reconciliation to the arithmetic problem. Putting your organization through the rigors of a sound process allows you to adjust your strategy and establish budgets and goals based on what the planning process says, not what the institution needs. 
• Engage volunteers to help supply new prospects. After rating your prospects, categorizing them in the right giving club, factoring in donor attrition, and identifying which ones you can upgrade (just don’t count them twice), can help you determine early on whether you need more names. Then, enlist the help of well-trained volunteers; they’re a valuable resource for helping you find more potential contributors.
• Adjust your strategy as appropriate. Maybe it’s a bigger challenge grant, modifying your timing, or changing your message. Just make sure your strategies are always aligned to achieving your goals, and you’ll be well on your way to executing a fiscally responsible annual fund campaign.

If you would like to engage RSC to learn how to evaluate and set up a successful Annual Fund to meet your fundraising goals, call us today at 317.300.4443 or visit our website.

The Conundrum: Annual Fund or Endowment? Which is More Important?

It’s not a trick question.

RSC regularly receives calls from prospective performing arts clients who are interested in pursuing an endowment campaign. With the long-term cash flow needs, who can blame them?  However, too often the desire for an endowment campaign is based on other revenue areas failing – or at least not keeping pace with the institution’s needs – and are not exactly the ideal environment to launch a successful major gift effort.  So, in most cases, our answer is the same -- don’t launch an endowment campaign if ticket sales and annual giving are trending in the wrong direction. Why do we so often make this suggestion?  It’s simple...

Endowment campaigns don’t define an organization – rather, they are a reflection of that organization.

The number of subscribers / members and annual donors are two key indicators to judge the health of an arts organization.  If they are both trending upward, the stage is being set for major gift advancement.

But what if the patronage is in decline – isn’t that when an arts organization needs a major gifts campaign the most? Of course, but there’s little leverage to cast vision, or inspire and draw major donors near.  Once your campaign becomes primarily ‘needs’ based, inspired leverage is lost.

So, broadening the base, while not necessarily more important, certainly takes first priority.  But growing the base isn’t easy and you have a limited pool from which to draw.

Arts institutions don’t have the same luxury as, say, higher education in terms of number of available prospects. Depending on size, a college can access thousands of ready-made prospects, adding to the base year after year.  Eventually, this group expands to perhaps hundreds of thousands of alumni from across the country (or world) with affinity for that institution. Conversely, most arts organizations have a very narrow demographic that represents a miniscule segment of the metro area. Due to their scarcity, these donors are expected to give to annual, membership and endowment campaigns, make planned gifts, attend special events, purchase tickets, and so forth. 

Endowment campaigns start off with the largest donors who give substantial gifts, which dictate the overall amount you can expect to raise. The remainder of the campaign is made up of many smaller gifts but keep in mind with large or small donors, these are the same people who also support your Annual Fund.

If you are asking for a hefty gift in the endowment campaign but that person’s Annul Fund gift is also essential, you need a thoughtful, approach to the ask. Again, because of volume, colleges and universities can run endowment and annual campaigns exclusive of each other without needing the same level of coordination. So the object for an arts organization is to broaden and stabilize the Annual Campaign as much as possible and then carefully integrate and balance a major gifts campaign.

So really, broadening your annual donor base and increasing gift frequency becomes the bedrock for all giving initiatives.

Look at it this way -- setting up the proper Annual Fund is like the daily physical training necessary to participate in a full marathon. This daily work has incremental benefits that are essential to complete the marathon. The endowment campaign is the big race and the Annual Fund is the conditioning that is necessary to run that race.

The first step to winning the race is to assess your current Annual Fund. Are the trends up or are they down? If down, it’s imperative to generate a three-year plan to reverse that trend. After you have three years of successful growth in the broad base, board, sponsorships and other corporate giving, you are well poised for endowment activity.

The second step is to commit to building lasting, quality relationships. There is no shortcut for the investment of time and energy needed to tell your story repeatedly, and to, over time, bring others into it.

If you would like to engage RSC to learn how to evaluate and set up a successful Annual Fund to meet your fundraising goals, call us today at 317.300.4443 or visit our website.