Philanthropy Operations: What Is It, and Why Is It Important?

By Laurence A. Pagnoni, MPA

What the heck is Philanthropy Operations, and why is it important?  

The fundraising positions of Director of Development or Chief Development Officer are familiar, but what do Directors of Philanthropic Operations (DPOs or Ops. Dir.) do? And why is the function less well known? (Those of you in higher education may know the function as “Advancement Services.”) 

A focus on Philanthropic Operations becomes necessary as your development function grows and as you seek to deepen the quality of your advancement work. The position or function is less well known because so few nonprofits truly invest in their advancement infrastructures.  

The DPO or Ops. Dir. role can be hired in-house as a staff person, or it can be outsourced to a fundraising counsel or firm that specializes in such work, like LAPA. In either case, the philanthropic operations staff or consultants typically report to an organization’s Chief Development Officer.  

As your fundraising program grows, so will your need for high-level supervision, having the right systems in place, critical monitoring of meeting your revenue benchmarks, and fast corrections to make adaptations that improve your performance. That is central to the DPO’s work.  

Continuous quality improvement is the essence of philanthropic operational work. By the DPO title itself, we see that FUNDRAISING OPERATIONS, a wildly overlooked area of management, is its focus. 

When you add this function to your development team, there is a shift in the Chief Development Officer’s role. With a DPO in place, the Chief Development Officer has more time to focus on the highest levels of fundraising work—however you may define that. For example, the Chief Development Officer will have more time to proactively work on developing board members’ philanthropy leadership, engaging their networks, cultivating donors with the largest capacity to give, securing naming opportunity gifts, cultivating legacy gifts, and/or working on high-level community partnerships. 

The shift also aims at attaining more and better performance assessments of your development program. For example, is the donor data hygiene the best it can be? Is the monthly giving club growing? What’s the return on investment of each development effort? What should we stop doing, or what should we start doing to improve? By having a DPO, your nonprofit seeks answers to these critical performance questions.  

Adding an Ops. Dir. or outsourcing the function is an investment in your fundraising infrastructure aimed at creating depth in your fundraising processes and impacts. That’s why the philanthropic operational work should have specific growth goals relevant to each revenue stream. Importantly, the growth goals are not just focused on increased revenue but also on process improvements and quality controls. 

The Specifics 

The Director of Philanthropic Operations oversees the back-office functions to ensure that the revenue goals are being met. They need emotional intelligence to interact with the development team, and it’s best if they themselves have served in various development roles. That way, they can speak from experience. Here at LAPA Fundraising, we do this work with Equality Now, Brooklyn Defender Services, and the YWCA of New York. One of these clients had an existing fundraising team that needed guidance, training, and strategy. The other two had no existing private fundraising staff! 

The Ops. Dir. oversees the database CRM/reporting team, prospect research/management, gift administration, analytics, and fundraising training. At some nonprofits, they may also oversee annual giving, donor relations/stewardship, or campaign teams. However, an in-house Ops. Dir. typically doesn’t manage gift officers—but that is an option with outsourced services.  

The Ops. Dir. also works on finding new donors through advanced research, defining community campaigns, expanding the grants program (bigger awards, multiyear awards, new funders research), cultivating philanthropic partnerships, and truly growing special events. 

The DPO takes ownership of implementing the entire development function, including donor prospect research, cultivation, acquisition, and stewardship. Producing reports on Key Performance Indicators (KPIs) is a large part of the philanthropic operational work. Primary KPIs include rates or percentages that describe trends in your nonprofit’s fundraising performance over time. Some examples include donor retention rates, average donor growth, and average donation growth. KPIs often describe performance in terms of both shorter timeframes (i.e., one quarter) and longer ones (i.e., multiple years).  

The Ops. Dir. ensures that the development team is fully integrated into the organizational culture and that they have the tools and skills needed to reach their goals. This includes developing processes for team members and the department regarding donor engagement, follow-up, data collection, professional development, etc. It also means that the nonprofit leadership has to be serious about investing in fundraising and allocating an appropriate budget to grow the advancement work. 

Philanthropy operations must be closely coordinated with the CEO and CDO to create and manage the fundraising strategy and stewardship plans. In fact, the DPO often serves on the senior leadership team or is able to regularly consult with them. 

The position and function are more internal than external, but there are exceptions depending on the skills and talents of the fundraiser(s) and the nonprofit’s needs. 

Is this position or function new to you? Is your nonprofit ready for this level of infrastructure development?

We welcome your comments about this post on the LAPA blog.

 

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