Not all fundraising methods are created equal!

Not all fundraising methods are created equal!

Ian Clark | 12 August 2013

When fundraisers get together to talk shop there’s usually an unspoken assumption that all fundraising methods are as good as one other. This is a fallacy, but fundraisers seem reluctant to discuss the issue.

So congratulations to Cancer Research UK (CRUK) for shedding some useful light on the subject in the detailed notes to their latest Annual Report & Accounts.  The nation’s largest charity has provided details about the income and costs of the different fundraising methods it uses.  So top marks for transparency, and a real challenge to other leading charities to do the same next year.

Here’s CRUK’s data for the 2011-12 financial year extracted from their notes.  I’ve added the last three columns, where Contribution is the difference between income and cost (what is available for charitable operations), and ROI (return on investment) is the contribution divided by the cost expressed as a percentage.  This is sometimes expressed as the income-to-cost ratio (ICR).

Fundraising method Income £m Cost £m Contribution £m ROI % ICR
Legacies 142.5 5.3 137.2 2588 26.9
Direct giving 108.5 33.2 75.2 226 3.3
Events 58.7 22.8 35.9 157 2.6
Partnerships & volunteer 39.7 13.6 26.1 192 2.9
Major giving & appeals 19.1 4.1 15.0 366 4.6
Donations at shops 3.4 0 3.4 ~ ~
Supporter relations 0 1.0 -1.0 ~ ~
Voluntary sub-total 372.0 80.0 292.0 365 4.6
           
Retail income 69.2 54.8 14.4 26 1.3
Evens registration/merch 16.1 14.4 1.7 12 1.1
Other trading 1.8 0.5 1.3 260 3.6
Trading sub-total 87.1 69.7 17.4 25 1.2
           
Total income 459.1 149.7 309.4 206 3.1

The first thing to say is that CRUK’s figures are excellent for these times of austerity.  Voluntary fundraising and trading were both up 6%, and with costs kept under tight control, net contribution to charitable funds was up 9%.  This is the KPI (key performance indicator) that charity CEOs and Trustees should be monitoring.

My second comment is that the ratios for different types of fundraising are broadly similar to those reported by the FundRatios annual survey of leading charities that has been running for many years.  You can see the latest FundRatios headlines in the Research part of the IoF website.  This consistently shows that legacies produce the best ROI/ICR figures, followed by trust grants, major appeals and regular giving.  Trading ROI is always much lower than the rest of fundraising.  Though the retail shops margin of 26% is something that most high street shops or catalogues would die for, with their net profits generally less than 10%.  There are huge costs advantages when you use volunteers and donated goods as a major part of your shop operations.

So not every £1 given by donors is equally effective.  It depends on the method of fundraising, as some are inherently far more cost-effective than others – compare the legacies and retail ratios above.  But if you work in a lower performing method of fundraising (community groups, direct mail, competitions etc) please don’t be too worried.  You have a vital role, even if your donors’ gifts don’t stretch quite as far.  Every charity needs a varied mix of fundraising methods.  I could name some charities that have relied too heavily on say legacies or grants, and when these volatile income streams dry up have to make savage cutbacks to survive.  Keep a close eye on your costs and your contribution will make a difference for some of the charity’s beneficiaries.

And if you are working as a sole fundraiser or in just a small multi-talented team, make sure you use your most precious resource – your time – as productively as possible.  Every charity and fundraiser needs to measure and improve not only income and costs, but their bottom-line contribution.  

 

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Comments

Adrienne Kuatse, still searching | 29 September 2013

Thank you Ian for your analysis.

Just one query to you or any other reader. Please you elaborate more on what you said in the last paragraph and I quote :"sole fundraiser, make sure you use your most precious resource - your time - as productively as possible". I am currently in talks with the Director of a small and young (less than 3 years)charity who wants me to help with fundraising from Trusts and foundations. Thank you.

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