News and analysis
February 19, 2012

St. Jude Builds a Fundraising Machine

Courtesy of St. Jude Children’s Research Hospital

A patient at St. Jude Children’s Research Hospital is the guest of honor at a party marking the end of her chemotherapy.

After an early dinner at the Majestic Grille here, David McKee, chief fundraiser of St. Jude Children’s Research Hospital, is almost out the door. But he’s stopped by the maître d’ who admires his tie, which is peppered with cartoon images promoting the institution.

Mr. McKee immediately takes off the tie and gives it to the man, explaining its connection to the world-famous medical center for children with cancer and other life-threatening diseases.

The tie makes it easy for Mr. McKee to share St. Jude’s story, and he’s given away dozens. Among the successes he can tout: how the hospital saves the lives of 96 percent of kids with the most common form of childhood leukemia, which used to kill nearly everyone diagnosed with it. But what he hasn’t talked­ about publicly until now—and what other charities would love to know—is how St. Jude raises more money than any other American hospital.

In the past two decades, St. Jude’s donations have grown by more than 350 percent after inflation. And since Mr. McKee joined the hospital’s fundraising arm in 1977, St. Jude has gone from raising $13-million to more than $698-million last year. It’s an enviable accomplishment for the 65-year-old fundraiser, who says he will retire in June after 35 years at the hospital.

To be sure, St. Jude has a heart-tugging mission that’s hard for donors to resist: curing the sickest children with world-class treatments at no cost to their families. Yet even apart from that built-in advantage, the hospital’s ability to win contributions is impressive, experts say, offering lessons for charities of all missions and sizes.

The hospital has perfected a diversified approach that reaches donors of all socioeconomic levels at every stage of their lives. Mr. McKee calls it “cradle-to-grave fundraising.” His career has been spent figuring out how to reach, as he says, “the people who write the checks.”

To that end, the hospital’s fundraising events are designed to reach people of all ages, with the youngest seeking donations from parents and friends. The events include tricycle races for toddlers, walkathons, radiothons, golf tournaments, house raffles, fancy dinners, and all-night dance parties and Greek events on college campuses. The hospital has more than 1,000 people on its fundraising staff, many of whom work with local volunteers to plan grass-roots events.

Unlike most other nonprofits, St. Jude, now celebrating its 50th anniversary, excels at almost every other kind of fundraising, including direct mail, telethons, and radiothons, as well as attracting corporate grants, lucrative business marketing deals, and bequests and big gifts.

Achieving such success has required the institution to spend a lot of money on fundraising—its development staff is one-third as large as its staff of medical researchers, physicians, and nurses—and St. Jude has paid a price for that. It was criticized by Forbes in a November ranking of 20 big charities that the magazine said were the least efficient with their money. [Editor's note: The previous paragraph corrects an inaccuracy in the percentage of fundraisers compared with medical workers.)

Planning Far Ahead

But few people can argue that St. Jude is a fundraising force, and Mr. McKee deserves much of the credit for that, his colleagues say. A soft-spoken man who hates to travel, he says he learned what he knows about fundraising on the job. He seldom, if ever, attends professional fundraising conferences.

Mr. McKee, who worked at St. Jude’s regional office in Atlanta for four years before joining the hospital’s fundraising arm, in Memphis, likes to be in the background, his colleagues say. He’s more comfortable being the No. 2 fundraising leader at the organization, leaving the chief executive to shoulder tasks he dislikes: public speaking, after-hours socializing, business travel.

Mr. McKee’s skills are just as essential, his colleagues say. He puts a lot of energy into recruiting the most talented fundraisers available.

“He hires people who are experts; he gives them what they need and gets out of the way,” says Lori O’Brien, the hospital’s former senior vice president for national direct marketing. Before she left her job in 2010, after nine years at the hospital, Ms. O’Brien helped St. Jude triple its direct-mail returns, to $300-million.

Mr. McKee knows how to keep people like Ms. O’Brien on track while also looking far into the future, says Marilyn Elledge, another top fundraiser, who retired from St. Jude in 2010 after 30 years. Long before strategic planning became a buzzword, she says, “we’d do long-range plans for five years, but we finished them in two years. He pushed us to think big.”

Ms. Elledge says that consulting work she now does on the side has given her a new perspective on St. Jude and Mr. McKee. “So many charities are focused on the current year, but he was having us look to the future way back in the 1980s,” Ms. Elledge says of her former boss. “If we had just been thinking one year at a time, we never would have achieved what we did.”

Quality Before Growth

Mr. McKee says he has pursued steady growth in the hospital’s fundraising approaches, like its radiothons or its planned-giving appeals, while focusing on St. Jude’s financial needs. The hospital differs from other medical centers because it doesn’t get as much money from insurers or other typical sources. Instead, St. Jude must raise more than 70 percent of what it costs to run the institution from private sources.

“We were small when I started,” Mr. McKee says. “As we added programs over the years, the key was to stay focused. We never grew to be big. We grew to support the hospital.”

Small charities, he advises, should “try to be innovative and add quality to all of your fundraising programs, then expand.”

A Chance to Experiment

Creating an environment in which fundraisers can experiment and excel is yet another ingredient of Mr. McKee’s success.

Triena Winbery, a Memphis fundraising consultant who worked at the hospital for more than 20 years, until 2006, says that Mr. McKee and another longtime fundraising leader, the late Richard Shadyac, whose son now works at St. Jude, brought senior fundraisers with different types of expertise together in frequent meetings. Everyone was given an equal say, she says, and people were encouraged to question the status quo.

“Dave would tell me I was always challenging his ideas,” recalls Ms. Winbery. “He gave you the freedom to do that. Lots of us were there for a long, long time because of that environment.”

In 2001, Ms. Winbery was tapped to oversee direct marketing, and she put the newly hired Ms. O’Brien in charge of much of St. Jude’s direct mail, then generating about $100-million annually. Just a few weeks before, the terrorist attacks had prompted many charities to hold off sending out fundraising appeals because of the nation’s somber mood.

But instead of following their example, Mr. McKee led St. Jude in taking the opposite approach. After fundraisers told him about direct-mail companies that couldn’t sell their rental lists, he saw an opportunity. With competing charities sending less mail, he reasoned, the hospital would be wise to spend more on appealing to potential donors.

That strategy paid off, as did other direct-mail changes that Ms. O’Brien put in place. For example, to offset the high cost of recruiting donors by mail, St. Jude started calling people who had already given through the mail to urge them to become monthly donors. It also started providing better, more in-depth information about the hospital’s work to more than 10,000 direct-mail donors who had made gifts of $250 or more. Contributions from those donors grew by 30 percent in the first year.

And, Ms. O’Brien says, the hospital started a new direct-mail campaign to offer bricks for the walkway at the hospital’s entrance engraved with the donors’ names at levels ranging from $7.50 to $1,000. Not only did that encourage many donors to give more, she says, but it also brought them closer to the hospital after St. Jude started inviting them to a special ceremony in Memphis every year.

One thing that Mr. McKee always understood is that fundraisers who handle direct mail, telemarketing, and other mass appeals are judged by how much their donors give, Ms. O’Brien says. They fear losing credit if those donors are turned over to other fundraisers who seek bigger gifts. Mr. McKee eliminated that problem by giving both types of fundraisers credit for donors who were moved in or out of their purview, says Ms. O’Brien.

“Dave was great to work for,” she says. “I did my best work under him.”

Doing the Numbers

Another hallmark of Mr. Mc­Kee’s leadership is “making the ideas work,” says Ms. Elledge, the retired fundraiser. One example is the charity’s “mathathon.” Throughout the country, elementary and middle-school students compete for prizes and raise money by asking parents, relatives, and friends to make a small gift for every math problem they tackle.

A staff member came up with the idea and worked with teachers on math problems appropriate for each grade level, Ms. Elledge recalls. But asking St. Jude fundraisers who organize local events to recruit area school districts to hold the mathathon wasn’t working.

That’s because their skill is planning events, not systematically pitching events to other groups, says Mr. McKee. He decided to move recruitment efforts to national headquarters and use in-house telemarketing staff to call schools about the mathathon. He also decided that St. Jude should contact individual schools, rather than school districts. Even though that approach was more labor intensive, it enabled St. Jude to form solid relationships with the principals and teachers who hold the contest each year.

With those changes, Ms. Elledge says, the mathathon took off; it now raises about $15-million annually.

In the contest’s early years, Ms. Elledge says she met with another charity starting a similar event for students. The other charity, which Ms. Elledge declines to name, relied on its local chapters to recruit schools and raised $3-million or $4-million annually. “But that’s where they stopped,” Ms. Elledge says, “and we just kept growing.”

The mathathon, she says, is one more example of how Mr. McKee has led St. Jude’s evolution into a well-oiled fundraising machine.

“We were building a plane,” she says. “And now it’s a space shuttle.”