By 2018 Some People Think Fundraising Should Happen For Free!

By Tony Elischer
On June 19, 2014 At 2:00 pm

Category : corporate, database, donor service, human resources, Latest posts, retention, strategy

Responses : 2 Comments

recession-recoveryIn the UK 2014 maybe the year that we finally come out of recession, but like all economic changes it will take at least two years truly to filter through to fundraising results and impacts. When the recession started in September 2008 we braced ourselves for the ‘collapse’ of fundraising, but frankly very little happened for eighteen plus months. My biggest worry in 2014 is the mind-set of organisations towards fundraising performance, potential and investment. Coming off the back of a serious recession there now seems to be a more prominent view that you can expect ‘miracles’ from fundraising without investment, patience and the right people.

For example, there has been a huge wave of energy around major gift, or as they should be called HNWI, programmes but what happened to the starting benchmark that you should always allow a minimum of 10% of the target as the required expenditure? Surely a ‘bargain’ by anyone’s standards! So many organisations I talk to start by assuming they can develop major new campaigns either with existing resources (already stretched to the limit) or with perhaps 5% of the target as expenditure. So many programmes stall, collapse or fail due to underinvestment; the main symptom of which is key staff leaving due to underinvestment and over expectation.

In individual giving we all know that smart data, channel management and integration are central to future success, but charities seem to think that these can all happen again through stretching existing resources or ‘modest’ new levels of investment. In my mind this is comparable to the R&D budget of a company that will constantly be reinvesting between fifteen and twenty per cent of its profits to ensure growth, development and competitive edge. We push for the best ROIs but at what cost in terms of medium and long-term growth? ROIR (Return On Investment in Relationships) or ROE (Return On Engagements) don’t even come into the equation, yet these are the measures that contribute to a long-term sustainable base of supporters. Emerging channels can be amazingly cost effective, but rarely in the short term and they have to work as part of a ‘mix’, two factors that require investment.

reducing costsThankfully community fundraising has firmly re-established itself as a critical part of the mix, but charities seem to think that this area runs on goodwill and thin air! Few community fundraising teams get an even slightly recognisable investment fund for growth/development. Worse still community fundraising is often isolated or disconnected from other areas of fundraising so totally dependent on other strategies and how other resources are invested; particularly true in relation to the disconnect with digital development and teams.

Corporate fundraising seems to get a reasonable level of investment, but once a team is ‘flying’ the investment seems to mysteriously reduce and the stress of pushing existing resources cuts in to expect them to do more and more. Corporate fundraising effectiveness and long-term reputation relies on exceptional account management and as such the workload should be no different to a marketing agency serving its clients, but sadly it always is, because after all ‘we are charities’!

Don’t even think about how neglected or under invested Supporter Services is within most charities. The future is already here in terms of service expectations, individualism and tailored services; technology can do wondrous things, but sadly most charities never fully take the leap and find out how much value and impact Supporter Services could add to the mix.

We don’t need to adopt business practices wholesale, as we have our own practices, approaches and style; but we are in danger of ‘falling into line’ and not standing strong against CEOs, Finance Directors and Boards on the need to take fundraising investment seriously. Our whole focus is to maximise the funding available to programmes/services, but it is more critical than ever to balance this with medium and long term growth, which means one thing, the return to solid investment approaches in fundraising. Charities need to review reserves and overall expenditure very carefully before either cutting or under investing in fundraising if they want to survive or preferably thrive in the future. Yes, cost ratios will rise, but hopefully against overall increased income and funds to serve the mission and vision of organisations. Its not time to be more ‘business like’ its time to stand up and be the true fundraising professional that you are!

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Tony Elischer (18 blogs on 101fundraising)

Tony has over 30 years hands on experience in the not for profit sector. He has been a consultant for the last fourteen years working at the highest level across a wide range of causes and organisations and is the founder of the leading international consultancy THINK Consulting Solutions. He is an internationally regarded expert on fundraising and marketing, having extensive experience of helping charities worldwide with strategy, fundraising, management and troubleshooting. In the last 12 months he has worked in over 20 countries.


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Comments

  1. half a year ago I asked these people what the general charges should be and if there were guidelines and blogs on this and the answer was that none was ever done so, it’s good to see you’ve come up with this one. Just like last week I discussed the ‘take’ to cover costs etc, with UNICEF here and when I mentioned that World Vision charges 25% for “Admin”, he said; that be a fair amount. But at first he didn’t have a clue either.
    Another charity by a billionaire philanthropist here in NZ charges 20%. I myself devided it like : 60-20-20 (60 to charity or school etc) 20% to the ones holding and marketing the event at their end and 20% for my lot and in-put.
    What say you? 😉 cheers, Marcel

     — Reply
  2. Excellent article Tony, very well put. One of the dangers of the high ROI of a major gift/HNWI program – is that leadership forgets all of the investment in the relationship that happened before the major gifts officer began working with that donor.

    For example, a major donor may give $20 million, and the major gift team gets all the credit – but let’s go back in time a bit. Their first gift was from an acquisition mailing that cost more than it made. Then money was spent thanking and stewarding the donor. They gave again (again thanks to a direct mail drop that cost money), and eventually received a phone call asking them to become a monthly donor. Investment was made to show the donor how their gift was making a difference (events, donor report). Years later, when the donor’s children had grown, and they had sold their business, a major gifts officer began cultivating the relationship that led to the very big gift. But make no mistake, there was a great deal of investment made in that donor relationship BEFORE major giving ever came into the picture.

    Major gifts requires a pipeline of engaged annual donors. That pipeline doesn’t just happen for free – it takes time, money, investment and effort.

     — Reply