Penny wise and pound foolish

Proportion
Categories: Blog

At my local market there is a car park with two dozen free parking spaces. The rest of the car park costs the princely sum of a dollar to park whilst you buy your fresh produce. I’ve noticed that cars idle, waiting for a free spot when there are plenty of empty spaces elsewhere. Last weekend I did my entire shop and came back to see the same car, which hadn’t moved- waiting for a free space. It happened to be a Range Rover, driven by someone with expensive designer sunglasses, so they’re not struggling for the parking fee. They’ve certainly wasted more in petrol- and created more air pollution- by choosing not to spend that dollar on a parking space.

The English have a term for this: ‘penny wise and pound foolish’. You pay more attention to saving the pennies and completely miss the bigger cost and the new opportunity. American friends might tell us not to ‘sweat the small stuff’. But non-profits spend a lot of time watching the pennies. If you’re a small non-profit run by volunteers, then you’re very conscious of your cashflow. You’re all trying to do the most with limited resources and be good stewards of donor funds. But you need to invest to grow.

Here’s what you’re missing when you focus on hoarding the pennies.

People value

The average salary for an experienced partnership manager is around $100-120k plus benefits. When you invest in their ongoing learning and skills development you can expect them to bring in 10x the cost of their salary on average. So why are learning and development budgets so tight? I know there’s been a surge in need from the community during COVID times. You all want to meet those needs and grow your programs. But lack of investment in your people leads to stress, frustration and burnout. You wouldn’t run your car without putting in the oil and water and giving it a regular service. Don’t forget that your people need some love and care every 10,000km too.

Partner value

The lesson of 2020 is that retention matters. The latest JB were report shows that corporate giving rose by 30% despite a fall in company profits. The non-profits that had invested in nurturing their corporate partners saw extraordinary results. Brotherhood of St Laurence benefitted from a $1mln donation from ANZ, who had been a program partner for many years. Lack of investment in your partnership people leads to rapid turnover and a break in relationship continuity. It’s harder to build a strong and meaningful corporate partnership when your people change so often.

You need to invest time to build the best partnership and you need to ensure that your partnership skills are the best they can be. The landscape has changed dramatically in the last 18 months. As corporates look for fewer, more strategically aligned community partners, you have to make the most of every opportunity. Don’t miss the shot because you didn’t get the right help or didn’t build the right skills.

Fundraising value

Corporate partnerships provide an opening to new channels, audiences and donors. When Target Australia recently sought a new community partner, they had more than $250,000 on the table. They also have 13,000 staff, over 250 stores and a loyal following of millions of customers through their online and store channels.

Compare this to the cost of donor acquisition through more traditional means. Face to face fundraising costs an average of $500 per acquisition and the rate of attrition in year one can be higher than 30%. You’re unlikely to break even until at least year two. Direct mail costs upwards of $50,000 to buy new email lists and you’re lucky to get a return of 1-1.5% on a standard mailout.

Investing in finding the right corporate partner can dramatically expand your donor base. Plus you’re getting a warm introduction through the partner relationship. WaterAid partners with Origin Energy and has been able to insert donation slips and calls to action in the bills that go to Origin’s 4 million customers. How much would it cost you to acquire a mailing list like that?

In difficult times we can all revert to some defensive behaviour. We save our pennies and hoard toilet paper. But shrinking to greatness is not a viable strategy. If you want to grow meaningful corporate partnerships, then you need to invest. Don’t waste your time and resources circling the car park for hours. Other people have loaded up with the goodies and are off to the next opportunity. Spend the dollar and make your organisation isn’t left behind

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