The State of Relationship Fundraising – A Conversation

This is the first of two blogs looking comprehensively, and provocatively, at the state of relationship fundraising. In this first blog, we define relationship fundraising, and look at its implications, strengths and weaknesses. In the next blog, in ten day’s time, we look at the challenges faced by relationship fundraisers, the lessons we have learned, and what is the future for relationship fundraising.

So what is Relationship Fundraising?

First, it is a book written by the legendary Ken Burnett. Secondly, and derived from that, is a shorthand for a particular approach to fundraising.

Deal with the book first.

Relationship Fundraising has been a best seller for 23 years. It is an easy read, and if you haven’t read it, I urge you to do so.

And the approach?

Conventional fundraising positions the charity, the charity’s needs, and the scale of the work done by the charity, at the centre of its fundraising. Fundraisers encourage prospects to give, to support the charity, through a giving transaction. Results are measured appeal by appeal, using such tools as ‘response rates’, ‘average gift’, and ‘ROI’ as determinants of absolute and relative success.

Relationship fundraising, on the other hand, positions the donor at the centre of its fundraising. Fundraisers link the donor with the cause, through the charity. As a result, donors have a much better experience, and are therefore motivated to give again, and again. Results are measured by LTV, which is heavily influenced by loyalty, commitment, and satisfaction. Satisfaction becomes the key measure of performance, as it is the key driver of LTV under the influence of the fundraiser and the charity.

In short, relationship fundraising positions the donor’s relationship with the cause, through the charity, as central to success, rather than conventional short term transactional thinking.

The goal of relationship fundraising is to raise more money for the cause, and more money for charities as a whole. It is not an end in itself.

So how did you use this approach at NSPCC?

At NSPCC, we translated relationship fundraising into six Donor+ Principles:

• Our passion will inspire donors
• People give to help people, not organisations
• Open their hearts, then open their minds, then open their wallets
• Understand donors, and what motivates them to give
• Donors are partners in doing our work
• Donors are for life

We made a big song and dance. We inducted new people, and existing staff. We got to the point that most fundraisers could read off by heart the six principles. And the result was a lot of good work. People did change their behaviour. A Stewardship department was set up, whose manager was a member of the senior F-R team. So, for example:

• People realised that fundraising was about donors, not about us.
• So we realised that if we focussed on the needs of the donor, not the charity, then we would meet the needs of the charity.
• We turned our thinking through 90°, from “Our charity is awesome. – We helped 100,000 children last year. Thank you for your help.”  to “You are awesome. You changed a child’s life last year. Would you like to change another child’s life today?” Effective fundraising is not about your excellence. It is about your donors, and what they can achieve through you.
• We realised that fundraising was both a numbers driven science and a heart driven art.
• We gave much more attention to the process and content of thanking and welcoming donors.
• We also started to give much more attention to reporting back on what donors were achieving through their gifts.
• We realised that complaints should not be delegated to a back office, or dealt with at minimal cost. They should be listened to, responded to (sometimes by phone by the Appeals Director), and treated as an opportunity to create a loyal supporter.
• We knew donors were interested in how effective we are. But they can’t feel the work. They can’t touch it. The ‘ feel-good ‘ factor is what they get from our communications about the work. They look at the way they are treated by us; the fundraisers. Donor satisfaction is the best surrogate marker of how effective donors feel about our work.
• We knew all this in principle, but we failed to assess with rigour what systemic, strategic, structural and operational changes, across departments within Fundraising, and across divisions within the Charity as a whole, should be made. We were at the forefront of charities adopting relationship fundraising. Ken Burnett would support that claim. But we were in the foothills. I realise now how much is left to be done.

You obviously feel strongly. What do you think are the strengths of relationship fundraising?

Relationship fundraising is valid because it maximises income from donors in the medium to long term, and therefore optimises the net income that can be used for charitable purposes.

• Relationship fundraising is about long term income, not short term (see weaknesses).
• It shifts the balance from acquisition towards retention.
• Fundraising isn’t a simple process of asking for money, it is about transferring the importance of the cause to the donor.
• It keeps donors for longer.
• And it raises more money because of the emphasis on satisfaction, loyalty and LTV.
• Evidence suggests that giving is inherently rewarding. The brain churns out a pleasurable response when we engage in it.
• More findings suggest altruism and social relationships are intimately connected. We are hard-wired to “do unto others” in many ways.
• Communications should always reinforce the donor’s decision to give.
• Most important factor is how donors feel after the communication.
• Giving should make the donor feel good, not bad.

Are there any weaknesses with relationship fundraising?

• Relationship fundraising is about long term income, not short term (see strengths).
• However, Trustees look at cash received on a monthly basis. They are not being convinced that they should be looking at long term income, via donor satisfaction. This creates a great tension in the mind of the Appeals Director, who wants to pursue a philosophy of relationship fundraising.
• Too many charities think that they exist by right… And employ fundraisers to undertake activities to raise the income to meet this year’s budget.
• There is no appetite for a fundamental change from monitoring short term results, to creating measures with both a five year time horizon, and a one year one.
• Even amongst those that can persuade their Trustees, most fundraisers who say they are committed to relationship fundraising, don’t actually know what to do, strategically, structurally and operationally, to make that commitment real.

On 20th April, we will build on the above, and suggest practical ways in which you could transform your fundraising. We look at the challenges faced by relationship fundraisers, the lessons we have learned, and talk about the future for relationship fundraising.