If You Can't Measure It, You Can't Manage It.: High Performance Metrics: Incentivizing Major Gift Officers

High Performance Metrics:
Incentivizing Major Gift Officers
If you cant measure it, you cant manage it.

This Incentive Compensation Plan is designed to motivate and reward the Major Gift
Officer staff of XXX.
In preparation for the development of this plan, Corporate DevelopMint sought

information from a wide variety of hospitals, universities and colleges, Association of
Healthcare Philanthropys research director, and published materials. Note that our
investigations included institutions as prestigious as The Cleveland Clinic, Duke
University, and Vanderbilt University. The intent was to cast a wide net in preparation
for the development of this plan.
Our research has revealed that:
1. Incentive compensations for MGOs are still very uncommon for the majority of
nonprofit organizations. (Incentive compensation for administrative leadership of
foundations is, however, much more common.)
2. Those plans that do exist are either simplistic or offer incentives that are
available only for stellar performance. (In both cases, performance is not being
significantly enhanced.)
3. The majority of plans focus almost exclusively on gifts secured. While that
measure is, of course, extremely important, narrowly focusing only on dollars
raised both ignores the components of the process and increases the chance that
incentive pay will be seen as ethically questionable.
Accordingly, the plan outlined here includes measures that address MGO performance
from a much broader perspective. Each of the key components of the donor
engagement process is measured, producing what we believe will be a more
performance-enhancing incentive system. The plan is constructed around best
practices for donor cultivation, proposal volume, and gift closure on the part of each
major gift officer. It is our belief that if each step in the donor cultivation process is
managed effectively, the process will prompt deeper donor engagement and financial
investment.
Note also that much of this plan is based on the incentive practices of higher education
institutions. Higher education provides an excellent best practices source and model,
both because advancement offices normally include multiple gift officers and because
fundraising efforts focus on several independent entities (schools) simultaneously.
Interestingly, our research additionally confirmed that very few hospital foundations
have formalized incentive programs and those that do are organized around very basic
(and we believe insufficiently defined) performance metrics. Finally, higher education
plans have demonstrated good impact, while successfully managing the ethical
concerns that at times are expressed in response to incentive compensation in
fundraising. We believe that, with faithful implementation and disciplined, frequent
tracking of progress, a plan that incorporates the appropriate elements of the higher
education framework will be successful for fundraising professionals in other nonprofit
sectors as well.
1
Basic Principles of the Plan:
1. Overall fundraising goals should be set by an oversight board (community

volunteers) for the fundraising program, with guidance from a senior fundraising
administrative officer and input from staff and MGOs.
2. Objective measures for MGO performance should measure each step of the
fundraising process, not simply final fundraising results.
3. Performance should be measured monthly and evaluated quarterly. Incentive

pay for individual performance should be disbursed quarterly, not annually.
Incentive pay for team performance should be disbursed annually.
4. Implementation of this plan assumes accurate record keeping by MGOs and a

fully functional data retrieval system. During the implementation phase of this
plan, considerable work will have to be devoted to developing a system to collect
the data on a monthly basis (available then for quarterly evaluation). Corporate
DevelopMint believes that it is critical to have a system that will produce
accurate and meaningful results. Once the system is developed, retrieval should
become routine each quarter.
5. This performance evaluation plan is based on a quarterly scale that allows for up
to 110 total incentive points each quarter. The amount of incentive
compensation is then based on quarterly totals earned.
6. To address the issue of gradually weakening performance when early quarter

performance has been exceptional (annual prospect development and
fundraising goals met early in year), there is also an exceptional total
performance incentive added to the plan.
Steps and Objective Measures
Preparatory Steps for each MGO:
1. Negotiate with the MGO his or her yearly fundraising goal, based on overall
organizational fundraising goals, board expectations, and the MGOs project
area.
2. Develop an MGO-specific gift pyramid based on that goal.
3. Establish a prospect pyramid/table for the year, with previously identified

prospects placed in the prospect table. (At each gift level, five prospects are
to be identified for each gift needed.) MGOs will be responsible for the
identification and acquisition of new prospects required to complete the
MGOs prospect gift table.
4. All pyramid-related goals (prospects, gift proposals submitted, gift

commitments secured) are then to be divided into quarterly goals. The
Quarterly Goals can either be one fourth of the total or can be seasonably
2
adjusted to reflect probable end of year giving, at the discretion of the
fundraising programs senior administrative officer.
Performance Measures
Achievement Area I: Goal: Prospect Identification: 10

possible points
Measure: Percentage of target number of new prospects to be added for
the quarter. (Target is 25% of 150 or 38 prospects each quarter. 150
prospects are defined as the annual target through the multiplying of the
top 30 vacant slots in the MGOs gift pyramid times five prospects.
Example: if 18 prospects are added in a quarter, that represents 47% of
quarterly target.)
Scoring: Percentage added = percentage of points received.
Achievement Area II: Prospect Cultivation: 10 points

Measure: Percentage of target of significant cultivation contacts* with
current top 30 prospects during quarter. Target is 30 total contacts per
quarter (at least one per top prospect). Note that purely social contacts
in which no strategic movement occurs are not to be counted.
Scoring: Percentage completed = percentage of points received.
*A significant cultivation contact is usually face-to-face, but can be on the

telephone or even by email if the following three criteria are met:
1. The donors level of interest is measurably increased (MGO should

provide observed evidence of increased interest in contact notes
entered).
2. The MGO secures key strategic information, i.e. a previously

unknown relationship with a volunteer, an issue with the system that
can be solved, or interest in a new initiative or area of the
organizations work.
3. The MGO secures a future contact, appointment, or agreed-upon

action that moves toward either an ask for a new gift or closure of a
pending gift.
Step III: Prospect Solicitation: 20 Points

Measure: Percentage of targeted fundraising total for quarter
submitted in proposals during that quarter. Target goal is to be
calculated based on MGOs gift table. (Example = if target is $200,000
for quarter and proposals totaling $100,000 are submitted, percentage
is 50 %.)
Scoring: Percentage of target = percentage of points received.
Step IV: Gift Closing: 30 Points total

Measure # 1: Participation Percentage (% of proposals resulting in
a gift of at least $10,000)
Measure # 2: Gift to Proposal Ratio (Total dollars
contributed/pledged divided by total dollars proposed)
Scoring:
3
o Measure # 1 should equal at least 75% (expressed as .75). If at
least .75, award 15 points. Lower than .75 receives no credit.
o Measure # 2 scoring is more complex.
Ratio of .40 and lower = no points (reflects poor cultivation
and/or poor planning)
Ratio of .41 to .50 = 5 points
Ratio of .76 and higher = 5 points (Very high ratios indicate
stretch proposals are not being submitted).
Step V: Stewardship: 10 points

Measure: Percentage of documented contacts (any venue) with all
qualifying donors during last 3 months (quarter). Qualifying donors are
those who have, during the previous 12 months, made a pledge
payment on gift of at least $10,000, new gift commitment or new gift of
at least $10,000. (Example: if MGO has 25 such donors available in
quarter, 25 contacts is target.)
Scoring: Percentage of target number of contacts = percentage
of points received.
Step VI: Measure of total gifts secured: 30 points

Measure: Percentage of quarterly dollar goal from MGOs Gift Table.
Scoring: Percentage of target goal received = percentage of
points received.
If quarterly goal is exceeded, a bonus of 15 points is awarded.
Quarterly Incentive Pay
Total possible points each quarter = 110 (plus 15 bonus points)

99 points and above = 100% of possible quarterly incentive bonus
88-89 points = 80% of possible quarterly incentive bonus
77-87 points = 70% of possible quarterly incentive bonus
Below 77 points = no bonus
TOTAL POSSIBLE BONUS PER QUARTER: 2.25% current annual compensation
(10% total possible bonus per year)
Individual Annual Performance Pay
In the event that the MGO meets or exceeds fundraising goals in three of the four
quarters, an additional 2% is awarded at the conclusion of the fourth quarter.
Annual Team Performance Bonus
Up to 4% can also be paid to each MGO if the overall fundraising Major Gift goals are
exceeded by the fundraising team. Note that the exact percentage paid to each MGO
will be determined by the senior fundraising administrative officer, based on that MGOs
overall contributions to the success of the team.
Incentive-based Annual Pay Raise
4
Corporate DevelopMint further recommends that Incentive Pay be extended to the base
pay raise provided to each MGO for the next year.
Base pay increases are tied to the goal points earned for the previous four quarters.
With 110 possible points each quarter, 440 total points may be earned for the four
quarters.
Raises are then calculated using the following system:
75% of 440 and higher = full raise

65 74% of 440 = 75% of full raise
55 - 64% of 440 = 65%
45 54% of 440 = 55%
35 44% of 440 = 45%
34% and lower of 440 = 20% of yearly raise
Additional Considerations
Donor Transfer Bonus

Triggering Event: An MGO initiates a transfer of a donor (or donor
couple) to another MGO when it is determined the donors area of interest
in more appropriate to other MGOs assigned area or entity.
Measure: If reassigned donor makes a gift during any of the following
two quarters, original MGO also receives scoring credit for gift received.
Campaign Retention Bonus:

MGOS who retain employment with the organization through successful
completion of a major capital campaign will receive an additional bonus of 5% of
salary in the year the campaign is completed.
Incentive Plan Qualification Standards
In order to qualify for the bonus plan, each MGO must:
Be an employee in good standing at date of payout

No open Formal Warning memos on file
No resignation submitted
In the event of major economic changes, catastrophic events, or any other

circumstances not contemplated by the organization, the senior fundraising
administrative officer reserves the right to alter, amend or terminate the plan and any
awards without pro-ration or awards.
Property of:
5
843.853.9999
www.corporatedevelopmint.com

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High Performance Metrics:

Incentivizing Major Gift Officers

If you cant measure it, you cant manage it.

In preparation for the development of this plan, Corporate DevelopMint sought

Our research has revealed that:

1. Overall fundraising goals should be set by an oversight board (community

3. Performance should be measured monthly and evaluated quarterly. Incentive

4. Implementation of this plan assumes accurate record keeping by MGOs and a

6. To address the issue of gradually weakening performance when early quarter

Steps and Objective Measures

Preparatory Steps for each MGO:

2. Develop an MGO-specific gift pyramid based on that goal.

3. Establish a prospect pyramid/table for the year, with previously identified

4. All pyramid-related goals (prospects, gift proposals submitted, gift

Achievement Area I: Goal: Prospect Identification: 10

Achievement Area II: Prospect Cultivation: 10 points

*A significant cultivation contact is usually face-to-face, but can be on the

1. The donors level of interest is measurably increased (MGO should

2. The MGO secures key strategic information, i.e. a previously

3. The MGO secures a future contact, appointment, or agreed-upon

Step III: Prospect Solicitation: 20 Points

Step IV: Gift Closing: 30 Points total

Step V: Stewardship: 10 points

Step VI: Measure of total gifts secured: 30 points

Quarterly Incentive Pay

Total possible points each quarter = 110 (plus 15 bonus points)

Individual Annual Performance Pay

Annual Team Performance Bonus

Incentive-based Annual Pay Raise

Raises are then calculated using the following system:

75% of 440 and higher = full raise

Donor Transfer Bonus

Campaign Retention Bonus:

Incentive Plan Qualification Standards

In order to qualify for the bonus plan, each MGO must:

Be an employee in good standing at date of payout

In the event of major economic changes, catastrophic events, or any other

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