What is the real cost of an hour of Development Officer time?

In this post we introduced the idea of how expensive it is for the development shop when fundraiser time is diverted from front line activities. We’ll spend some time today breaking out the potential costs of development officer time spent both with prospects and in the office.

Understanding the real cost of fundraiser time is important for two primary reasons:

  1.  To understand that, when fundraisers visit with a prospect 9, 10, or 20 times the cost of securing that gift goes up significantly with each visit.
  2. To realize that, while it is easy to expect DOs to step up in short staffed offices, diverting a fundraiser’s attention from his portfolio can be enormously expensive in opportunity cost.

cost DOs

Next week I will post an infographic breaking out two scenarios further to show how dramatically the structure, goals, and support staff can effect the real cost of fundraiser time. Keep your eyes peeled.

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5 thoughts on “What is the real cost of an hour of Development Officer time?

  1. Chelsey, I very much appreciate the research question you are trying to raise, and I look forward to reading your follow-up post. However, I’m not sure you are using the concept of “opportunity cost” correctly. Opportunity cost is the revenue not realized when one pursues a different course of action. Yes, when a fundraiser is not directly engaged in a fundraising activity, there is some chance that a gift would have been closed that wasn’t because the fundraiser was writing the dean’s newsletter column. However, we can’t conclusively say that the gift would not have come in at some other time. Thus, the opportunity cost of a fundraiser who is not spending time on fundraising is as follows: Opportunity Cost = probability of not securing a gift X (average gift revenue/hour X number of hours not spent fundraising).

    Your analysis is a direct rate-cost calculation. I don’t think it’s accurate (or helpful) to figure out a development officer’s hourly goal because gift realization is lumpy, especially for major gift officers.

    Your article is urging development officers and their superiors to factor in some sort of forgone revenue as a “cost” so that everyone understands how expensive non-fundraising time truly is. I couldn’t agree more.

    How about this as a management tool and fundraising heuristic?: Every month, the development officer calculates what percentage of her/his work time was spent doing required, non-development work. This percentage is then reduced from the monthly fundraising target for that development officer. At the end of the year, the supervisor looks at the actual amount raised versus the now-lowered goal and uses that to evaluate the fundraising performance and opportunities for merit pay/bonus, etc.

    • Thanks for this comment. I will branch out some more on this subject in my follow-up post. As far as the calculation of opportunity cost goes – the assumption that I made for the purpose of simplification was that the goal itself would be based on portfolio yield for the development officer and that a pipeline was sufficiently built with strong prospects (therefore accounting for probability of not securing the gift).

      I have actually seen this sort of process used as a management tool before. Last year we worked with a large public university to essentially ask DOs to track their time for 1 month, assess what areas of times spent elsewhere were excessive, and compare how time was spent to the actual gift income secured. It was a small sample size but it showed pretty remarkable correlation. It’s often surprising to managers as to how much time other tasks can take up. The exercise also proved helpful for the DOs themselves because it helped them be more mindful of their time and priorities as well as created support and evidence for them to better advocate for development time within units.

  2. Pingback: The Real Value of Fundraiser Time – A Breakout of Two Possible Scenarios | Targeting Fundraising Talent

  3. this kind of model perpetuates an old paradigm. He can actually distract management if not framed right. The investment every fundraising office needs to make each year to build a successful operation are in 3 activities. 1. Finding New Donors. 2. Asking People To Give, 3. Retaining the donors you have attracted.

    Have a single price takes every organizations eye off the ball. The old paradigm of looking at a single cost has contributed to the poor retention rates we currently experience.

  4. Pingback: Five Reasons why you should invest in strong development operations talent | Targeting Fundraising Talent

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