At the weekend, The Sunday Times wrote: “90% of the donations intended to help sick and poverty-stricken children never reached them, but instead paid for expensive fundraising campaigns run by the direct mailing firms.”
Chance would be a fine thing. In reality maybe two years’ income from a donor is paid to recruit them. In reality, most of that is paid to highly reputable and controlled agencies.
This isn’t new. A £20-a- month pure life policy will earn the seller around £350. Consumers accept this. They are comparing what they pay with what they get. And don’t care about how that works.
Donors do.
I believe, if presented as the Sunday Times has done, many (most) donors would find this a surprise, to say the least. We are all committed to transparency. But it will take time to encourage donors to see why it is good to invest in fundraising.
Meanwhile, we need to tread very carefully.
May I look at this a different way?
The graph below is real. It is based on a basket of charities, large and small, from popular and unpopular charities. Net income from regular givers. (It is six years old. The principles haven’t changed.)
Take £1m of your reserves. (Or £100,000 if you are smaller.) Invest it in stocks/bonds. You will get the line in blue. (You probably have an investment committee spending hours looking at this.)
Or, invest it in recruiting new regular givers. In 2011, the graph followed the red line.
- Immediately, a net loss.
- The £1m investment will pay for itself in 1 ½ years. (Today it may be 2 years, but, as I have said, the principle is the same.)
- In ten years the return is nearly £3m (3:1), and the graph is still going upwards.
- Looking at the graph, the return is likely to go above £4m (4:1)
- And the possibility of a legacy. (Isn’t that where a great number of our legacies come from, even if we can’t identify it?)
- Does most of our fundraising produce that return?
It requires us, our finance directors, CEOs and trustees to take a long term view. At least ten years.
It requires us all to see fundraising costs as an investment, competing with stocks/bonds.
But how do we present all this to donors?
Present it as the Sunday Times did, and they might balk.
“90% of the donations intended to help sick and poverty-stricken children never reached them, but instead paid for expensive fundraising campaigns run by the direct mailing firms.”
Present it as follows, to a £1,000 donor:
“We would like to spend 75% of your giving, over the long term, on our beneficiaries. And we would like to spend 25% on encouraging others to give £1,000.”
I have asked this to many groups of donors, many times, and never received anything but nods. They were happy that their gift was both helping the beneficiaries, and encouraging others to give.
Is this spin? Or is it presenting the facts in a way that will encourage donors to have a good donor experience?
Of course we must drive down costs. We must improve retention/reduce attrition. Avoid the ‘churn and burn’ mentality like the plague. And so invest in ‘the donor experience’ as well. So as to encourage thinking about the long term, not just the short term.
There is no doubt that if we do what I have suggested, we will have more money to spend on beneficiaries.
Will we encourage donors to see fundraising as an investment? I hope so. It may take time. One of the projects that the Commission on the Donor Experience is looking at is: ‘Fundraising Investment’. I hope that, over time, we can find ways of encouraging donors to view fundraising costs in a different way.
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