Posted 6/16/2014 12:00 am
Updated 4 months ago
Few people familiar with Heifer International doubt the sincerity of the nonprofit and its mission: Who is so callous as to deride working to end world hunger and poverty?
But five years after the organization laid off about 20 percent of its workforce because of a falloff in revenue and almost four years after it announced a new CEO, Heifer is placing new emphasis on measuring its impact on the mostly rural families it seeks to help.
At the same time, it’s adopting a new attitude toward revenue, one of diversification.
“The focus on revenue as an indicator of health is, I think, overemphasized,” said that still relatively new CEO, Pierre Ferrari. “It’s always good to grow revenue, but it’s not really one of our objectives. The objective is to increase impact, to have more families engaged so that we can take more people out of poverty.”
“The culture has shifted from a culture of effort to a culture of performance,” he said of Heifer, based in Little Rock but operating in 30 countries. “That means that we are capturing all these data in terms of outcome, impact measures. We’re much more systematic.”
However, Ferrari reassured, the nonprofit is maintaining its dedication to “values-based holistic community development,” which he described as a “sort of theology here.”
Ferrari, who came to Heifer in October 2010, called the nonprofit’s fiscal 2015, which begins July 1, “the tipping point year.” Most of the new poverty-alleviating projects during the year will be incorporating a new model, one that has established a baseline for the projects and then measures impact based on 21 objectives. The model will enable Heifer to determine much more precisely how effective its projects are.
Ferrari cautioned that results won’t be instantaneous. “Some of the measures take time to develop,” he said. “Development is not like planting roses. I mean, it takes a long time for changes to happen, in all sorts of conditions. So we’re going to track them over the five years using those measures.”
As for revenue, the nonprofit learned lessons from the recession, when its donors, many of them individuals giving relatively small amounts, were forced to cut back. Heifer’s donations took a hit, and they’ve fluctuated in the years since (see chart in slideshow above). Before the recession, individual donations comprised about 80 percent of the nonprofit’s revenue. Now, after working to diversify contributions, that individual donation figure is closer to 60 percent, with a goal of the mid-50s.
Heifer has been adding corporate and foundational support to broaden its portfolio.
One recent example is the $25.5 million awarded to it in January from the Bill & Melinda Gates Foundation. The money was given to expand Heifer’s East Africa Dairy Development project, which is working with more than 136,000 farm families in Kenya, Uganda and Tanzania.
The EADD project was implemented in 2008 with an initial grant from the Gates Foundation of $51.3 million.
‘Screaming for Data’
The heightened focus on project measurement is a response to donors urging Heifer to think bigger, Ferrari said.
“The screaming — not just asking — the screaming for data and information had been going on for decades,” he said.
Ferrari came to Heifer with years of experience not only in the nonprofit world but also with solid private-sector credentials, including several years as a senior vice president at Coca-Cola. And, he said, he understands the importance of accountability and results in the nonprofit sector.
The desire for proof of results is so strong that it led one donor to dedicate $1 million of a $2 million project solely for research to determine the efficacy of the project.
Ferrari said that Heifer International has a superb reputation in the field of agricultural development. “However, we were always playing small,” he said. “And when I first got here, I visited a lot of projects, and potential donors were saying, ‘You guys are terrific but you play small. And the problem is huge. It’s a billion people who are in extreme poverty and you’re playing with 150 families per project. Come on. Size it up.’”
So Heifer embarked on a plan to increase the size and scope of its projects. This “scaling up” strategy has two components, Ferrari said. One is to find partners in development projects who will match or even contribute more than Heifer’s investment. The other is to lower the per-family cost of its poverty-alleviating efforts.
When he came aboard, Heifer had about 900 projects with an average size of 125 to 150 families per project. Now, its projects target 10,000 families and the average cost to help one family has fallen from $660 to $200, tripling the nonprofit’s efficiency.
Success and Stumbles
Heifer, founded in 1944, provides livestock and other resources to rural farmers to not only alleviate hunger, but to allow them to sell surplus agricultural products to generate family income, which in turn helps families become self-sufficient.
What the nonprofit calls the “core” of its model is “passing on the gift,” requiring families that Heifer helps to pass on the first female offspring of their livestock — cows, goats, ducks, for example — to another family in need. The families in Heifer projects often hold powerfully moving “passing on” ceremonies that, in addition to helping another family, allow the original recipients to assume the role of benefactor to someone else.
Heifer’s revenue and profile began to soar during the tenure of Ferrari’s predecessor, Jo Luck, a former director of the Arkansas Department of Parks & Tourism who brought energy, enthusiasm and solid marketing skills to the role.
Both Heifer’s revenue and profile further increased when the nonprofit began marketing its Christmas catalog, which allowed donors to symbolically buy livestock for a project family. The photographic combination of smiling children and fuzzy animals was a potent donor motivator, and other nonprofits that do global development work adopted the strategy.
In 2006, Heifer moved into a new $17.5 million, 94,000-SF LEED-certified headquarters in downtown Little Rock adjacent to the Clinton Presidential Library. The former president spoke at the dedication ceremony.
The Heifer headquarters at 1 World Ave. was envisioned as the first phase in a three-phase development at the nonprofit’s 33-acre campus. A $13.5 million educational facility, the Murphy Keller Educational Center, was Phase 2. The third phase was to be a $64 million “global village” to educate the public about solutions to hunger and poverty.
In 2008, Heifer revenue — primarily small donations from many individual donors — hit a high-water mark of $130.1 million, more than double the $64 million it had brought in just four years earlier. The recession, however, caused revenue to tumble, and in 2009, in a cost-cutting move, Heifer laid off more than 200 employees, both in the United States and globally. Even Heifer executives took a 3 percent pay cut. And the grand $64 million global village, which had never had broad-based donor support, fell by the wayside. The Murphy Keller Educational Center is now known as the Global Village.
Jo Luck retired as Heifer CEO in January 2010; in June 2010, she was named a co-recipient of the prestigious World Food Prize.
And in May 2011, the nonprofit confirmed reports of a “strategic realignment,” though it declined to give specifics.
Ferrari said the changes he has led at Heifer are three-fold: First is the diversification of revenue to ensure stability. Second is the “scaling up” strategy to increase efficiency. And third, Heifer has invested heavily in financial accounting, project management and content management systems to enhance efficiency, improve communication and provide better data.
Financial accounting that once operated using unwieldy spreadsheets maintained by offices around the world is now done using a software system that captures “all the data in the same way everywhere,” he said. “We can actually consolidate our books on a quarterly basis now literally with the push of a button.”
When Ferrari first arrived at Heifer, the comments from the auditors were “the size of a Russian novel. Now it’s the push of a button. They say, ‘Great. That’s the way you should run a company.’”
Ferrari said Heifer International had embraced change because the nonprofit, its employees and its supporters understand that alleviating poverty is a matter of both “heart and mind.”
“We’re committed to the mission,” he said. “We want to change poverty, but you’ve got to show results too.”