It is normally used to assess the relative contribution of various fundraising activities or donor clusters at a particular point in time. But the matrix is enormously flexible and can be used to assess a range of offerings from the relative contribution of corporate supporters, to which services are most attractive to foundation donors. (It can also – see below – be used for non-fundraising assessment.)
The matrix brings together four key ideas:
Like The Balanced Scorecard – another of our Big Ideas for Fundraisers – The Boston Matrix can be used as a ‘top table’ tool – that is, it can be used to influence whole organisation strategy.
So in non-fundraising settings it can be used to analyse the relative return of a range of service, education, social development or campaign offerings. In these cases instead of measuring fundraising return you could measure the impact of different campaigns on changing government policy on homelessness, or the relative effectiveness of different kinds of marketing initiatives on theatre attendance.
The Boston Matrix was first developed by the Boston Consulting Group, a commercial consulting company based in the USA. In its original incarnation, it was a tool to establish the relative market share of any business in an overall market, plotted on a logarithmic scale. As such, it’s not very useful to fundraisers or charities since we rarely have that level of detailed data.
In 1992, =mc adapted the matrix in a quite radical way to make it about market growth and returns in a fundraising setting.
The =mc version of the matrix is now widely used throughout the fundraising world.
=mc’s been using its version of The Boston Matrix for almost 15 years with a range of organisations to establish how effectively they are investing time and resources.
Because the result is in an easy to understand graphical form, the Boston Matrix can be used to:
We’ve used the matrix with organisations at an international and national level:
We’ve also used it with agencies as diverse as the NSPCC, Oxfam GB, Greenpeace International, the RNLI, The British Film Institute and Glasgow City Council.
The Boston Matrix is a way of taking a snapshot of the various cycles that your portfolio consists of. So before explaining the matrix itself, stand by for a bit of an explanation about cycles generally…
The idea of cycles is fundamental to most management thinking including fundraising. Essentially, the argument goes that all activities or products have a lifecycle.
Below is the archetypal lifecycle – called the sigmoid curve – for a typical fast-moving consumer product such as a new brand of washing powder.
As you can see, the washing powder starts by losing the manufacturer money – the R&D costs aren’t paid for and not enough people are buying it. Over time it breaks even as sales increase. These sales then grow rapidly until they eventually peak. They stay at this peak for a short period of time and then the powder begins to fall off in popularity. Sales shrink and income goes down – until it gets to the point where, once again, the powder is losing the manufacturer money.
Other products or offerings can have very different lifecycles from this type of curve. Coca Cola, for example, has a very long life cycle. There probably was a time at the start when Coca Cola didn’t sell well, but for many years now it has been hugely successful. Its ‘peak’ has lasted 40 or 50 years with little evidence of long-term decline. On the other hand, a new pop band may grow in popularity very quickly. But their success in the charts lasts only a few weeks before sales drop off and they fall into oblivion. (How many winners of Pop Idol or American Idol are ever heard of beyond their debut single?)
It’s possible to track general life cycles for different fundraising activities and donor clusters:
So cycles exist at a general level. But the shape of the curve may vary for different charities, or for specific initiatives. For example, the cycle below is one charity’s attempt to launch a major donor initiative.
Our hypothetical charity could create the same kind of graph for all of the fundraising sources they are currently exploiting:
All of these initiatives would have different cycles – that is each initiative:
Mapping fundraising lifecycles need not just apply to techniques. In the same charity, the Trusts & Foundations department could do the same exercise for all the trusts and foundations they are in touch with. In this instance they could show that some are growing in contribution, some are staying stable and some are shrinking over a specific time period.
Below is the graph the charity produced showing the cycles of all their different activities over three years.
It’s all very interesting knowing the lifecycle of different fundraising activities, but is it useful? Well, not really in its raw state, no. How do you get from a lot of wavy lines to understanding how you’re doing now? And how do you use that information to plan future activity? The answer lies in a matrix.
The matrix – the =mc Boston Matrix – is a snapshot of your current portfolio, whether it’s all your fundraising activities or your donor clusters.
To do this, the =mc Boston Matrix takes two dimensions in the cycle diagram and puts them on the axis of a box – see below. The dimensions are:
Mapping the points on the cycle onto the four distinct quadrants creates the matrix. In the diagram below we’ve shown how a fundraising activity at four distinct points in its life cycle could appear in different quadrants.
You can map all your fundraising activities onto one matrix. In the example below the charity has placed a total of 10 different programmes it is currently running onto the matrix. Each of these activities is in the quadrant that reflects where it is in its lifecycle. And the relative contribution of each activity to the overall target is represented by a different sized circle.
Let’s recap after quite a bit of theory. To create a Boston Matrix you need to work through six steps:
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Remember the matrix is only a snapshot at a specific moment in time – for example financial year 2010-11, or 3rd quarter of this financial year. So you need to carefully choose the timeframe.
The names of the quadrants are designed to reflect the status of the activities or clusters in them.
These are offerings where others are achieving significant results. But you’re not achieving those results and success is uncertain. Problem children often occur at the start of their life cycle.
An example might be a new fundraising initiative for a charity – like opting into DRTV. Others are doing it and achieving results. So you believe you should be able to do so too. But you have to invest significant money to make an impact. The results aren’t spectacular. So you’re unsure about whether to invest more or pull out and cut your losses.
These are offerings that are becoming more mature. They seem to be working out and demand is growing. But they still need significant investment of time and probably money to fully develop. It is also not yet clear when demand will stop.
An example might be a new approach adopted by a charity that is producing good results. Let’s say they get into F2F fundraising with a local test. The results are very encouraging, so much so that they decide to invest more heavily with a regional test. Results continue to be positive. If they carry on investing and go to a national roll-out will they achieve proportionately better results? And when will the programme peak?
These are mature offerings or fundraising efforts: demand has stopped growing – though it may still be high. But all development costs and concerns have been met so, in return terms, a cash cow produces very good results. Will this continue?
A cash cow could be a fundraising gala event and auction that always attracts 200 people to a £500 a seat dinner. It produces good results and has done for the last 5 years. But how long will it continue? Lots of competitors are now modelling their dinners on this successful offering.
These are fundraising offerings that have outlived their usefulness. They have a low return and a negative growth rate. These are a drain on resources and management energy.
A membership scheme that has a very low membership is an example. It was popular several years ago but is no longer and the servicing costs for the scheme are high per person. Really this scheme has no hope of recovery – so the only question is how to close it down with the minimum of fuss from the existing members.
To make full use of the Boston Matrix you need to analyse your portfolio carefully. The overall question is: are enough of your offerings heading in the right direction
Some more specific questions you might like to ask:
Analyzing your portfolio is only the beginning. You then need to ask some questions about what action to take. To do this take each quadrant and ask different strategic action questions about activities or donors in that quadrant. Some typical questions are:
| Quadrant | Return & Growth | Key strategic questions |
|---|---|---|
| Cash Cow | + return but – growth |
These are your key dependable contributors – but they’re not growing, so how long will they last and how stable is their income? Can you do anything to put them back up into the Rising Star quadrant – i.e. help them to grow again? |
| Rising Stars | + return and + growth |
These are relatively new, fast-growing elements of your portfolio – but how do you pay for investment in them and maximise return? And will they become stable cash cows at some point or burn out quickly and move swiftly into decaying dogs? |
| Problem Children | – return but + growth |
These are your most challenging elements – why can’t you seem to make these donors or activities deliver results? There’s potential for growth since others are making money on them, but not you. Which should you persevere with and which should you reject? |
| Decaying Dogs | – return and – growth |
These elements are losing money and not growing. Worse, there’s no hope of improvement – so how can you quickly close down these low-contributing activities? The challenge is these activities are often the ‘pet’ of a key stakeholder. |
Welcome to another Big Idea download from =mc. These downloads are designed to share with you some of the classic and contemporary techniques we’re using to help transform the results of major charities in the UK and internationally. Collect the set!
We’d love to help you analyse your portfolio so why not let =mc help unlock your fundraising potential?
=mc has a team of unrivalled fundraising consultants able to assist with the biggest and smallest campaigns. Between us we share experience in large charity work, international development, arts and culture, disability and the environment.
=mc consultants have worked with many of the world’s major charities on their strategy or fundraising. We’re proud to be helping or have helped Oxfam, UNICEF, the World Health Organisation, the Federation of Red Cross and Red Crescent Societies, Greenpeace International, WWF, Concern Worldwide and Amnesty International. In the UK, we’ve worked with Imperial War Museum, Alzheimer’s Society, Oxford University, Care, WWF, Science Museum and the National Trust for Scotland.
To find out how we’ve helped these organisations achieve their big ideas – and how we could help you – contact Charlotte Scott, Director on +44 207 978 1516. Alternatively, contact us online and we’ll make sure to put you in touch.
