Steps to increasing Trust Income
Trust fundraising is often referred to as the backbone of fundraising. When aspects of the fundraising climate becomes challenging, as many charities have experienced recently with cuts to statutory funding, many charities have looked to trust fundraising to fill the gap.
Even for charities who have, as yet, not felt the pinch from statutory cuts (the government’s commitment to spend 0.7% on international aid actually means growth in real terms in the DFID budget), trust fundraising is still an increasingly vital source of income. Trust fundraising delivers one of the highest returns on investment in fundraising; £9.56 for every £1 invested, and is surpassed only by the return on income from legacy income.
As a result, it’s easy to see why organisations want to grow their income from trusts and foundations. Unfortunately, what’s not so easy, is to decide how. A radical increase in trust income will not happen overnight; regardless of the size of your organisation, you need to have organisational readiness, a robust strategy and the right team in place to deliver it.
A SWOT analysis is a great tool to assess the internal and external factors impacting on your trust fundraising capabilities. The internal factors form your strengths and weaknesses; and relate to the skill-level of your trust team, degree of buy-in from senior management and trustees, and access to relevant sector tools and resources. Opportunities and threats are dependent on the external factors impacting the trust fundraising environment, which differ according to your income level and beneficiary group. Consider whether there is growth in grant making to your cause; the affect of cuts to statutory funding on competition for funding your organisation’s work, and whether media scrutiny of charity cost effectiveness and CEO pay will be a help or a hindrance to your charity’s perceived value.
Your financial, numerical and operational objectives should naturally fall out of your SWOT analysis. Once you have defined these objectives, you need to develop the strategy and tactics to deliver on them. Organisational readiness is key to the success of your strategy; if you don’t have the right team in place, what business case can you develop to convince your senior management and Trustees to invest in a dedicated trust fundraising resource? How can you improve your data management?
Once you have a strategy to address your infrastructure, the ANSOFF matrix is a great tool to develop your income generation strategies. To increase income you need to take at least one of four potential approaches.
(1) Market penetration
Increase your market penetration in the trust market you currently operate in, with the same fundraising product. This is the safest growth strategy but there will be a natural limit on how much your income can grow as a result. Prospecting will be key as you need to grow the number of grant making organisations you can approach, and retain the same success rate.
(2) Market development
Are there other grant-making markets that you currently don’t approach, but who may be interested in your current fundraising product? If you currently focus on UK Trusts and Foundations, is there scope to approach US or EU Foundations? If you are a mental health organisation and you currently only approach grant-making organisations focused on health, would your organisation appeal to a grant-making organisation focused on social exclusion? Think broadly about which grant-making markets you operate in.
(3) Product development
If you currently have relationships in all of the grant-making markets you think your organisation would appeal to, can you think creatively about the fundraising product you are offering? Although you must always be guided by organisational need and programmatic priorities, there is often scope for innovation in packaging these programmes, perhaps shifting from unrestricted, one-off gifts to multi-year, restricted gifts.
Although the most risky, diversification is the gold standard of income growth strategies, bringing together market and product development. Investing resources in diversification will require the highest levels of buy-in from senior management and your Trustees, but if it pays off, you could create a wholly new income stream which doesn’t cannibalise on any of your pre-existing trust income.
So, you have your SWOT analysis, your objectives, and your ANSOFF strategy. You’re all set; just don’t forget to monitor, evaluate and revise your income growth strategy on a regular basis.
Hannah-Polly Williams, Senior Manager - Major Gifts, Oxfam
- trust fundraising