Business Area Analysis for Business Area Analysis for The Philharmonic OrchestraThe Philharmonic Orchestra

Date: September 2, 1999

Introduction:

The purpose of this document is to capture the results of the analysis of a business area. This information is a critical prerequisite to the establishment of a strategy for a business area that defines requirements and articulates the means for implementing a business solution that meets those requirements.

The Business Area Analysis Document consists of the following sections: Business Overview Project Definition Objectives Context Process Data/Subject Areas Terminology

Location: Mervis Hall, Room 101

Participants:

Name Department Role

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Business Overview:

The annual campaign division of Development Department of the Philharmonic Orchestra is responsible for raising all of the funds to support the orchestra. This department raises approximately $10 million a year to support the operations and education units of the Philharmonic. There are thirteen staff members who work on the annual campaign in the following business areas:

Annual Gifts:

This area is responsible for the telemarketing and mailing solicitations, as well as the "Patrons of the Philharmonic" program. This division consists of five staff members, including the Philharmonic's database team, and raises approximately $1.5 million annually.

Major Gifts:

Major gifts is responsible for all individual donations over $10,000. There is one staff member who solicits these individuals and is their Philharmonic contact who helps them with ticket requests and any other special needs. This area raises approximately $2 million annually.

Corporate Sponsors:

There are currently 25 corporations who sponsor the Philharmonic Orchestra. The typical sponsorship package is between $250,000-$500,000. This division consists of two staff members and raises $4 million annually.

Special Events:

The Philharmonic holds two Galas annually. 700-1200 patrons pay between $500-$2,500 per ticket for each event and in return get to attend a star-studded concert, followed by dinner and dancing. This sub-division consists of two staff members and the events currently net $1 million after expenses. Special events is the area that attracts the most attention for the Philharmonic due to celebrity and media attendance.

Grants:

There is one staff member in the grant division who is responsible for applying for all government and foundation grants. The money raised from this division solely supports the education department of the Philharmonic. The grants currently raise $1 million annually.

The problem currently facing this organization is the sudden resignation of the Philharmonic's Executive Director last month. The director was involved with every aspect of the organization and there were no formal organizational processes set in place. This lack of standardized processes has left many projects at a "standstill" because the staff members do not know where to pick up where the director left off. As a result, it has become the goal of the development department to regiment their processes in order to improve their efficiency and productivity.

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For the purpose of this document, we are concentrating on the Annual and Major gifts business area because it was the most affected by the Executive Director's departure.

Annual and Major Gifts

As stated before, this area is responsible for telemarketing and mailing solicitations for the Development Department, as well as the "Patrons of the Philharmonic" program. The telemarketing and direct mail programs target current subscribers and members of the community not actively participating in Philharmonic events. The latter party consists of people throughout the city who fit the organization's desired demographic (i.e., upper-middle to upper class and located within 50 miles of the concert hall).

The "Patrons of the Philharmonic" is a program comprised of current donors. The program has many donation levels and furnishes donor rewards, such as allowing the patron to attend orchestra rehearsals and lunch with various guest artists to thank them for their donations.

The staff in this business area is very busy running the aforementioned programs. They are often busy with the tedious details involved in the individual program operations and processes. Oftentimes these antiquated processes prohibit the group from concentrating on the core mission of this office--to raise money to support the Philharmonic. The following are the major processes that the Annual and Major Gifts area are involved in:

1. Gift-recording process:

Each time a monetary gift is received by the Philharmonic, it is first manually recorded in a gift log. This gift log is a paper notebook that is maintained by the database assistant. After the assistant records the gift, the check is copied and distributed to the database coordinator, database manager, annual gifts manager and major gifts manager. The gift is then hand-delivered to the accounting department for deposit in the Philharmonic's bank account. A hard copy of the check is then manually placed in the donor's file. The database coordinator and manager then record the gift into the donor database (Raisers Edge, a Microsoft Access®-based application) and distribute copies of the gift report to the members of the development department.

This process is very paper oriented. Before the Executive director left, he considered the option of making the development department a paperless office.

2. Mail solicitation process:

Bi-annually, a 600,000-piece mailing is sent to current Philharmonic subscribers, donors and individuals within the desired demographic. The majority of these names are purchased from local mailing houses. The purpose of these mailings is to raise money and awareness for the organization. Over the past three years, these mailings have attained a "bad address" return-rate of approximately 5%. This high return-rate was primarily due to poor database management. Due to severe time constraints on this staff, the Annual and Major Gifts area is not able to maintain and update its donor

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database on a regular basis. This group has been primarily occupied with the processing of monetary gifts. These direct mail initiatives have resulted in an overall response rate of approximately 1% or less. The monetary return from the mailing, which equated to roughly $50,000, was often less than the cost of producing and executing the mailing.

3. Telephone solicitation process

Two years ago, the annual gift department hired a telemarketing manager to develop a telemarketing campaign. The same 600,000 individuals who received mailings were called and asked to make a tax deductible donation to the Philharmonic. Due to poor results, the organization decided to outsource this process to a professional telemarketing firm. Last year the company had limited success with its telephone effort, partially due to bad phone numbers. A large part of this was the adverse data from Raisers Edge, the Philharmonic's internally managed database.

Assumptions:

When this document refers to ticket sales, please understand that the development department does not actually sell and process the tickets. Once these tickets are sold by the subscription department, these patrons become prospective donors, therefore a development function.

There are two concert seasons, winter and summer, therefore leading to two separate direct mail and telemarketing campaigns.

The Philharmonic currently has 300,000 donors.

Project Definition:

Project Name: The development department of a major symphony orchestra.

Mission: Improve the efficiency and productivity of the development department at a major symphony orchestra using standardized processes in order to evolve and grow the annual campaign division.

Objectives:

Business:

Improve efficiency by reducing staff time spent on the donation handling process by 75%

Expand name recognition and demographic reach 25% per year Increase donations by 25% annually

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System:

Create a system that will allow department to remain abreast of project status and eliminate total reliance on a particular person(s).

Automate the database to handle solicitations, reminders, thank you's, etc. Increase staff productivity & efficiency in soliciting new donors and increasing

donation levels of existing donors Automate donation handling process (receipt, paper trail, bank handling--checks

online) Outsource the direct mail process for soliciting bi-annual donations Improve the quality of the department's database content

Context:

Agents Outside the Company:

1. Donora) Inflows

DonationDescription: Monetary giftMedia: Check or Credit CardVolume/frequency: 75 gifts per week

InquiriesDescription: Unsolicited Event InquiriesMedia: Phone, Fax, Internet and E-mailVolume/frequency: 100 per week

Donor Ticket SalesDescription: Subscription and single ticket salesMedia: Box Office, Internet, Phone and FaxVolume/frequency: Winter Season: 1,800 per week

Summer Season: 12,000 per weekDocument Requests

Description: Change in address, replacement tax-deduction forms, amount of donation changeMedia: Phone, E-mail, Fax and MailVolume/frequency: 20 per week

b) OutflowsDonation Renewal Forms

Description: Donation Renewal FormsMedia: Paper - MailVolume/frequency: Approximately 600,000 bi-annually (This includes names on purchased lists.)

Thank you notes with tax-deduction receiptsDescription: Thank you notes and tax-deduction receiptsMedia: Paper - MailVolume/frequency: Approximately 300,000 bi-annually

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Tickets Description: Concert and Special Events TicketsMedia: Paper - MailVolume/frequency: Winter Season: 1,800 per week

Summer Season: 12,000 per weekSubscription Brochure

Description: Bi-annual subscription brochure and formMedia: Paper - MailVolume/frequency: 300,000 per year

Inquiry AnswersDescription: Answers to unsolicited event inquiriesMedia: Telephone and e-mailVolume/frequency: 100 per week

Invitations to Donor EventsDescription: Invitations to donor events as part of the Patrons of the Philharmonic program.Media: High quality paper - MailVolume/frequency: Gala Invitations - 15,000 bi-annually

Donor Event Invitations - 300-500 per event (roughly 6 events per year)

Document Request AcknowledgementDescription: Acknowledgement of the documents requested

Media: Telephone, fax and mailVolume/frequency: 20 per week

2. Prospective Donorsa) Inflows

Subscription and single ticket salesDescription: Subscription and single ticket salesMedia: Box Office, Internet, Phone and FaxVolume/frequency: Winter Season: 3,600 per week

Summer Season: 69,000 per weekInquiries

Description: Unsolicited InquiriesMedia: Phone, Fax, Internet and E-mailVolume/frequency: 200 per week

b) OutflowsDirect Mail

Description: Donation request lettersMedia: Paper - MailVolume/frequency: Approximately 600,000 bi-annually

TelemarketingDescription: Telemarketing callsMedia: PhoneVolume/frequency: Approximately 600,000 bi-annually

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Tickets Description: Concert TicketsMedia: Paper - MailVolume/frequency: Winter Season: 3,600 per week

Summer Season: 69,000 per weekSubscription Brochure

Description: Bi-annual brochure and formMedia: Paper - MailVolume/frequency: 3.5 million per year (This list comes from the marketing and education departments, as well as the development department.)

Inquiry AnswersDescription: Answers to unsolicited inquiriesMedia: Telephone and e-mailVolume/frequency: 200 per week

3. Telemarketing Firma) Inflows

Response ReportsDescription: Weekly response reports Media: FaxVolume/frequency: 1 report a week

Bad Information ReportsDescription: Invalid address and phone numbersMedia: E-mailVolume/frequency: Approximately 30,000 bi-annually

Donation ReportDescription: Summary of all donations obtainedMedia: FaxVolume/frequency: 1 report per week

b) OutflowsPersonal data for prospective donors

Description: Names and Phone NumbersMedia: Paper - MailVolume/frequency: 1 report including 600,000 names and phone numbers per campaign

Phone ScriptDescription: Solicitation scriptMedia: Email or hard copy via mailVolume/frequency: 1 script per campaign

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4. Mailing Housea) Inflows

Mail ListsDescription: Lists of names, addresses and phone numbers purchased from various companies Media: Electronic media - DAT tape, comma or tab delimited files on floppyVolume/frequency: Varies, quantity of names dictates what and how many lists are used

b) OutflowsDemographic Criteria

Description: Criteria for names, addresses and phone numbersMedia: Email or hard-copy via mailVolume/frequency: One instruction set prior to each campaign

Agents Inside the Company

5. Marketing and Subscription Departmentsa) Inflows

Subscription BrochuresDescription: Subscription Brochures for winter and summer seasonsMedia: Paper - MailVolume/frequency: 300,000

Personal Data from Concert PatronsDescription: Name, Phone Number and Address from concert patronMedia: Interoffice MailVolume/frequency: 80,000 per season

b) OutflowsText for the subscription brochure

Description: Text about donating to the Philharmonic which will appear in the subscription brochureMedia: E-mailVolume/frequency: 1 per season

6. Development Database Staffa) Inflows

Donor DatabaseDescription: Comprehensive database of donors and their historyMedia: Network Database - Raisers EdgeVolume/frequency: 1 database

Donor Monetary ConfirmationsDescription: Hard copies of checks or credit card receiptsMedia: PaperVolume/frequency: 5 copies per donation

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Gift Detail ReportDescription: Daily report of all monetary donationsMedia: E-mail Volume/frequency: 1 report per day

Mailing LabelsDescription: Mailing Labels for event invitationsMedia: Avery Dennison™ Mailing LabelsVolume/frequency: 300-500 labels 6 times a year

b) OutflowsDatabase Updates

Description: New names/changes to be added to the databaseMedia: E-mailVolume/frequency: Varies

Mailing Label Criteria Description: Invitation list criteriaMedia: E-mailVolume/frequency: 6 times per year

Process:

1. Primary Business Function:

Raise money to support the Philharmonic Orchestra

2. Events/Triggers:

a) Inbound Events Receive Donation Receive Inquiry Receive Document Request Receive Telemarketing Reports Receive Direct Mail List

b) Outbound Events Sell and Send Tickets Send Donation Renewal Forms Send Thank You Notes for Donations Send Tax Deduction Receipts Send Subscription Brochures

c) Transactions Gift Recording Database Management for new and existing donors Database Management for prospective donors resulting from ticket sales Donor Events

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3. Roles/Functions

Director of Developmentfunction: Oversees the departmentfunction: Approves all fund-raising projects

Deputy Director of Developmentfunction: Supervises the Annual Gift Manager, Major Gifts Manager

and Database Managerfunction: Oversees the telemarketing and direct mail process

Annual Gifts Managerfunction: Coordinates the two annual telemarketing campaignsfunction: Coordinates the two annual direct mail campaignsfunction: Coordinates the Patrons of the Philharmonic program

Major Gifts Managerfunction: Liaison with donors who give more than $10,000 annuallyfunction: Coordinates the six donor events

Database Managerfunction: Supervises Database Coordinator and Assistantfunction: Runs daily gift reportsfunction: Coordinates with annual gift manager regarding

telemarketing and direct mail listsDatabase Coordinator

function: Records daily donations in Raisers Edgefunction: Updates the database records with new informationfunction: Liaison to the subscription departmentfunction: Enters subscriber information into Raisers Edgefunction: Creates mailing labels for donor invitations

Database Assistantfunction: Initiates gift recording process function: Opens all mailfunction: Records gifts in a hand-written logfunction: Copies and distributes checks to appropriate parties function: Delivers checks to accounting function: Delivers log to Database Coordinator

Director of Marketingfunction: Oversees the development and production of the

subscription brochuresDirector of Subscriptions and Ticket Sales

function: Oversees the box office and all ticket salesfunction: Implements the ticket delivery processfunction: Generates ticket buyer data for the Database Coordinator in

the Development DepartmentAccounting Associate

function: Processes check and credit card transactions with the bank.

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Data/Subject Areas:

1. Donor Information Name Address Phone and Fax Number E-mail Donation History Employment Information Family Members Subscriber/non-subscriber Event Attendance Referrals

2. Prospective Donor Information Name Address Phone and Fax Number E-mail Donation History Employment Information Family Members Date of inquiry

3. Monetary Transactions Date of transaction Donors personal information Donation Amount Geographic Area New or existing donor Subscriber or non-subscriber

4. Donation History Name Address Phone and Fax Email Employment information Contribution level Events attendance Last date of donation

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5. Events Name of event Guest artist featured Date Location Time Number of donors invited Donors giving level Caterer Number of attendees

6. Telemarketing Reports Number of people called Geographic Location of calls Donation Amount Raised Comments Bad Information Direct Mail Responses

7. Direct Mail Campaigns Date List(s) used Quantity mailed Wrong address return rate Response return rate Date of response

Terminology:

Development Department - The department that is responsible for all the fundraising activities for the Philharmonic

Subscriber - A patron who has season tickets to a Philharmonic concert series.

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