139: A Not-For-Profit CFO Keeps Performance Top of Mind, Bob Bloom, CFO, Heifer International

CFOTL: So, how does a not for profit like Heifer, how do you benchmark yourselves? How do you know this organization is performing in a way you want it to?

BLOOM: Yeah, that's a great question. So, one of the key metrics in the industry, the non-profit sector is functional allocation. So, it's a percentage of your expenses devoted to three activities, programmatic activity, fundraising activity and management in general. So, what I'm trying to do is work to decrease the level of expenses associated with the fundraising, level of expenses associated with the management in general so that we could push as much as we can to the programmatic and actually fulfill our mission. So, that's one simple metric, but increasingly, our work is becoming more outcome-based, and so we are very focused on, so how do we measure our improvement?

Fundamentally if you go to the field with us, you will see that the farms are clearly better off and much enriched from where they came from. And we've got this simple sort of analogy, we're trying to move them, A, which is the most marginalized to a B setting which is relatively self-reliant and to C which is sustainable, so how do we actually measure that? And we can tell people are better off, they're sending their kids to school, they're eating better, their income might be improved but how much, how much of each?

So, we're talking about trying to measure the return, i.e. the donor of return based on their investment in Heifer. So, if the donor, the Gates Foundation is a good supporter with us on a large project in East Africa, and we're trying to demonstrate to them that based on their significant commitment to that, their return, not their financial return but the return to the farmers that they're trying to improve the lives of is significantly enhanced.

So, we are trying to become very outcome based, so we have 21 core indicators of our work around income generation, asset improvement, food security, environment improvement, women's empowerment and social capital. So, we're measuring all of those and each one of those has key metrics around them, so we can draw a baseline and then improve it. We've added here that what gets measured gets done and we've got a lot of anecdotal evidence but how do we really put some hard data to that to actually share with our donors that your investment in Heifer is really threading the needle in a big way.

CFOTL: So, when we use that phrase, competitive landscape and apply it to Heifer, would it be the competition in terms of donors, when you present to the foundations, the Bill & Melinda Gates Foundation, and reveal to them your metrics and your outcomes and your track record, is that where the competition is, were there other likewise not for profits presenting? I mean is that a fair assessment or no?

BLOOM: Yeah, I think that it's fair and then it's clearly a significant part of it because the Gates Foundation has lots of options at their disposal, and being such a well-regarded institution, everybody would be interested in working with them. But I think what really rings out our competitive edge is a couple of things, one is our single focus. We're not trying to do 50 things. We're not trying to deal in healthcare. We're not trying to deal in a lot of the other things that we could be involved with because the poor and marginalized have lots of things to address, but we're trying to be single focused, we're focused on the small farmers so we believe that they're feeding 70% of the earth and if the projections are right, the 7 billion people on earth today are going to be 9 billion in 2050. They're going to have to double their production in food to be able to be sustainable to feed the planet.

So, it's beyond just improving their lives, it's actually been improved a lot of people’s lives because the migration from rural to urban, which is happening in a lot of the developing countries is creating a huge demand for food and so we've got to make the rural farmers a viable opportunity. So I think single focus, I think our focus on the ground is what it's appealing to Bill & Melinda Gates Foundation and other donors that we have a strong knowledge. We've been on the ground for 70 years working exclusively with a small hold of farmers. That's our niche. We're agriculture based, largely livestock and crop based agriculture support and that's what we do.

And I think what we believe as our secret sauce is the social capital angle. So, we believe bringing the women into the picture more, a lot of the developing countries, women are marginalized, subservient to the men and maybe the children in some cases even the livestock and other things, so raising up the women, we believe that really enhances the benefits of our work.

CFOTL: How do you do that? I'm sorry, you're raising that interesting point about raising up the women and exactly, how do you empower them in that fashion?

BLOOM: Yeah, so our methodology, what we're known for is it's a livestock based agricultural organization and so part of our methodology is to aptly some training and how to feed the animals, for example with the cows, how to feed the cow, how to take care of the cow, how to vaccinate the cow, how to carefully breed the cows, what technical training do they need but beyond that, the social capital training. So, there’s about a 90-day period where we do nothing but training, so it's technical trainings but also social capital training where we bring the farmers in in groups of 20 to 30 people typically and we will have training sessions where we teach them about the value of family, about the value of gender and make them a part of the farmer cooperative governance structure so that if they tried to reach into the market with their products, so aggregating milk production or aggregating meat, beef, cattle or goat so that they can have power in the marketplace.