Fundraising Strategy 2014 2019

FUNDRAISING STRATEGY 2014 – 2019

INTRODUCTION

 Fundraising is something of an alien tradition to The Charity. Until recently, there was little appetite for the business of securing the funds to run or grow the organisation. Advances and some genuine successes have come despite the lack of a strategic plan.

 Today the Fundraising Department is small and under constant pressure. The focus has drifted towards events based activity, which demands much more manpower than has been made available. This has been at the expense of developing the greater support of members, while major prospects and trust funders have been treated as a low priority.

 Fundraising has more to do with relationships than money. Donors want to belong; they want to be part of the solution but first must be convinced of the need. Diligent research, careful cultivation and the request for financial support, backed by active stewardship, combine to create an effective long-term fundraising environment which will attract new donors and sustain the interest of existing ones throughout their lives, creating the conditions for increasing numbers of legacies.

The aim of this strategy document is to establish the principles for The Charity to double its voluntary income within three years.

FACTORS AFFECTING SUCCESS

 A Balanced Portfolio. A key driver for this strategy is the need to rebalance the portfolio of income streams. Events based fundraising is extremely expensive and loaded with risk. Moreover, there is ample evidence that the public is increasingly weary of requests to sponsor friends and family. In 2013, our drift towards more events based activity meant that 53% of the charity’s gross revenue came from events. This is hugely unbalanced, notably when little attention has been given to the considerable potential of grant making trusts, individuals of high net worth and corporate partnerships. And it is quite worrying that after more than 30 years of development, we have no obvious legacy pipeline.

 Focused Fundraising. Just 29% of households give to a charity in any meaningful way. The most successful fundraising organisations carefully mine their data and focus on the areas which will yield a higher chance of securing philanthropic giving.

1  Database. We have a database with just 122,800 records. Of these 28,000 are members. Analysing this information is a priority because these are our closest potential supporters. On the basis of national averages, the chances are that 8% (2,240) individuals will have the capacity and will to give very generously. In addition, we know that there are some 220,000 people with an xxxx disease who are not on our database. We need to do all that we can to identify and cultivate them. The fact is that we have a considerable amount of information, but have failed to convert it into useful intelligence.

 Volunteering. The role of a fundraiser is not to organise activity but to manage volunteers to run it. A substantial amount of our core cost is attributable to the time spent by full time staff on administrative functions which can be fulfilled by volunteers. We should not be deploying four, five or six employees to be on parade at the London Walk or the Great North Run, with all of the travel, accommodation and TOIL that implies. We need to define and implement volunteer recruitment and development plans.

 Tax Efficiency. HMRC should be our largest single donor. If we were 100% tax efficient, 20% of our income would be tax recovered on donations. Too many fundraisers, let alone charity employees, fail to get to grips with the opportunities to enhance the value of giving by higher rate taxpayers and individuals with shares in public companies.

 Making the Most of Every £ Invested in Fundraising. We need to challenge ourselves about the way in which we invest in fundraising. The key question is ‘can we earn more by investing this sum in another activity.’ Apologists for poor financial returns tend to point to unquantified public relations benefits, or argue that some return is better than none. We must adopt a more stringent policy. Every activity will be planned, priced and tested for its profitability. In an ideal world, we should secure a return of at least 3:1 for the cost of any event. The principle applies equally to financial returns on gifts in kind: donors of such gifts actively expect us to multiply the value of their commitment.

 Stewardship. The term ‘stewardship’ is the synonym for ‘donor care.’ Donors want to be recognised, valued, nurtured and educated, no matter how we recruit them. Every fundraiser and member of staff must acknowledge the imperative for good stewardship in which we understand our donors, their motivation and their potential. Donors are the people who decide what their gift will be and when. Stewardship must be practised as diligently for the donor as for his gift. This will create the conditions for donors to repeat their giving. Good stewardship creates legacies and enhances lifetime giving.

 Communication. Philanthropy is a participative process which involves cultivation, the development of a sense of belonging and being part of the solution. We need to be clear about our needs, involve others to examine those needs in detail, then communicate a collective vision which can be easily understood by laymen. We need to articulate our mission, values and strategic goals and demonstrate the impact that has on our beneficiaries. To quote a Chinese proverb ‘tell me, I’ll forget. Show me, I may remember. But involve me and I will understand.’

THE PLAN

 The very first task is to redefine our Case for Support so that anyone associated with the charity can deliver a snappy ‘elevator’ response to questions about our mission. We tend to use language which is unfamiliar to laymen. The subject has been discussed by xxx and more energy is being invested on the issue by Marketing and Communications in collaboration with Fundraising.

 Our objective is to create a balanced portfolio of funding streams, reducing dependency on events and increasing the contribution of purely philanthropic giving from individuals and grant making trusts. An intelligent approach to corporate partnerships will add to the mix. A high priority is to develop a legacy campaign. By 2019, events should represent just 22% of our voluntary income instead of 53%.

 There is no need to decrease the level of events based activity but over a five-year period we must manage limited growth with greatly enhanced financial results. No event should earn less than three times its cost, which includes all staff time and associated overheads. We must identify, recruit, train and nurture effective volunteers to fulfil the roles currently undertaken by paid employees.

 Major Gifts. The term comprises three disciplines: Individuals with disposable wealth, grant making trusts and legacies. Today they contribute 2.6%, 3.7% and 13% of our voluntary income respectively. By 2019 they should contribute 16.2%, 9.3% and 22.7%.

 Work is in hand to identify and cultivate individuals with disposable wealth. Some will be nurtured in order to access their personal networks. All will be guided towards a financial commitment which reflects their ability to give. This involves deep mining of the database, combined with an experienced eye surveying the horizon of the world outside the charity. No new resource is needed this year, but we should budget for a dedicated major donor fundraiser in 2015 and an additional one in 2018. The cost ratio will reduce from 30.25% to 14.4% over the period to 2019.

 We have appointed an existing member of staff to be the part-time trust and legacy officer. Their task over the remainder of this year is to collect, collate and evaluate information on grant making trusts and foundations, together with their trustees. We are hunting for aspects of our service delivery which can be packaged attractively for suitable funders. Applications will be made regularly. This will double income from this source in year one,

3 rising tenfold by 2019 after investment in an additional specialist in 2017 and a further one in 2019.

 One issue about trust fundraising is that much of the revenue may be restricted. Many grant makers are content to contribute to the general purposes of a charity, but the majority are looking for specific projects, thereby limiting the flexibility of the beneficiaries to deploy money where it is needed most. Our challenge is to package normal revenue activity so that it is attractive to funders and, although that may make any contribution restricted, it will actually pay for day to day operations.

 A good legacy plan can take years to evolve because the time between recruitment and fulfilment may be anything from 5 to 30 years. Our lack of any overt pipeline means that we need to do something innovative and exciting to create one. We have developed the concept of a Legacy Club. Research into more than 8,000 people on our database aged over 60 has been distilled into a list of 594 individuals with smarter than average properties. They will be invited to attend focus groups in their area to discuss how the charity can develop a legacy pipeline. This technique is a practical way to kick start a legacy campaign because the prospects themselves contribute to the planning.

 The Numbers:

Staffing Implications 2014 2015 2016 2017 2018 2019 Trusts 0.5 0.5 1 2 2 3 Individual Major Gifts 0 1 1 1 2 2 Legacy Marketing 0 0.5 1 1 2 2 Total Staff 0.5 2 3 4 6 7

Projected Revenue Trusts £ 26,500 150,000 300,000 500,000 600,000 700,000 Individual Major Donors £ 20,000 200,000 350,000 500,000 700,000 1,250,000 Legacies £ 250,000 150,000 150,000 250,000 650,000 1,450,000 Total Revenue £ 296,500 500,000 800,000 1,250,000 1.950,000 3,400,000 Projected Costs £ 29000 70,000 110,000 150,000 240,000 280,000 Cost Ratio 10.2% 9.3% 10.47% 10% 10.9% 7.67%

EDG notes justifying predictions: Trusts: No lead time needed. L is here, in place and has experience. She does need leadership. The modest results of the past were because she had nobody focussing on this activity. And for what it is worth, I am talking to the largest GMT, Esmee Fairbairn, about a three-year commitment. Individual major donors. 4 donors giving £40,000 tax efficiently Legacies: despite the lack of an overt pipeline, we have received £2,110,242 over the past seven years, with the lowest year in 2008 (£1,200) and this year just £40,000 or so. But averaged out that is £301,463 pa – and I am predicting just half of that in 2015 and 2016

 Comparison with Earlier Years.

** 2012 2013 Trusts £ 100 25,575 Individual Major Donors £ 0 0 Legacies £ 1,049,428 377,172 Total Revenue £ 1,049,528 377,172 Costs £ ? ?

 Events. We are conducting a thorough review of the effectiveness of our current events portfolio. Some, like the London Marathon, the London Walk and the Great North run appear to deliver acceptable profitability and cost ratios, although they can be massaged to excel when we deploy more volunteers. Other activities like parachute jumps need careful evaluation because the standard cost ratios are often little better than 50%.

 The majority of the income comes from sponsored activity. Herein lies a problem because British parsimony is increasing. Across the Voluntary Sector, up to 45% of sponsors fail to honour their commitment. This means that the charity still has to pay 100% of planned overheads, but receives only 55% of anticipated income. Twenty years ago 30% of sponsors failed to pay, so it is evident that the trend is going the wrong way and in due course 50% of sponsors will not pay. We need to focus on more cost effective methods of raising the money.

 Over the period to 2019 the margins on events will improve, as will the amount of income. But the objective is to reduce the relative contribution to gross revenue from 53% to 22%.

 The Numbers:

5 Staffing Implications 2014 2015 2016 2017 2018 2019 National Events Staff 3 4 5 5 5 5 Regional Events Support 1 1 1 2 2 2 Staff Total Full Time Staff 4 5 6 7 7 7 Equivalent

Projected Revenue £ 975,000 1,100,000 1,200,000 1,500,000 1,500,000 1,650,000 Projected Costs £ 245,814 290,000 305,000 335,000 345,000 365,000 Cost Ratio 26.2% 26.4% 25.4% 22.3% 23% 22.1%

 Comparison with earlier years: 2011: £798,679; 2012: £830,772; 2013: £1,027,096

 Corporate Partnerships. Companies are in business for profit, not philanthropy, so only 2% of the money in the Voluntary Sector comes from corporate giving. Businesses despair of the eternal flood of ill-considered requests for charitable support. Many businesses simply will not give while the vast majority of those that do contribute a fraction of a single percent of net profit. At the top end of the range, though, those companies which espouse Corporate Social Responsibility sincerely (e.g. Tesco, Unilever, Yellow Pages, Saga) or which have genuine charitable interests (e.g. Associated British Foods, Northern Rock, Peacock, Timpson) make a real difference to their selected partners in the Voluntary Sector.

 Companies can provide many different forms of support through:

o The provision of goods, services, plant or property

o The temporary appointment of staff (for their career development)

o Allowing access to the workforce for payroll giving

o Encouraging staff to adopt charitable interests for their own teambuilding

o Matching staff funding initiatives

o Agreeing to ‘on pack’ promotions

o Board level financial commitment and volunteer leadership

 The challenge for us is our lack of a national footprint. We have recently declined the invitation of First Group to bid for their Charity of the Year (COTY) scheme because it would have been impossible to service their many depots. The same will be true of Tesco, Morrisons, BAe and other multi-site businesses. Our key prospects will be tight knit units like Grattan plc in Bradford, where there is a very strong commitment by management to staff fundraising. We are currently seeking a relationship with Kimberly Clark (the owners of the Andrex brand).  Our objective is to create a portfolio of medium and small businesses that we know we can service effectively in order to counter balance our current reliance upon pharmaceutical companies.

 We are also reviewing how we perform with pharmaceuticals because we realise that they are not wholly content with what we deliver for them. The review will include an evaluation of the current system of gold, silver and bronze membership offerings.

 The Numbers:

Staffing Implications 2014 2015 2016 2017 2018 2019 Corporate Staff 1.5 2 3 3 3 3

Projected Revenue £ 197,980 300,000 450,000 600,000 850,000 1,000,000 Projected Cost £ 65,000 100,000 150,000 150,000 200,000 250,000 Cost Ratio 30.4% 30% 30% 25% 23.5% 25%

 Comparison with Earlier Years

o 2012: £57.320 2013: £129,802

 Direct Marketing and Stewardship. Direct marketing is the volume end of the fundraising business. It is the method by which charities seek to engage the wider public over a prolonged period. It is the antithesis of big gift fundraising, in which carefully researched individuals are cultivated before being approached, and the expectation is that one in three will succeed. In direct marketing we communicate with a large number of strangers about whom we know the barest detail. The expectation is that one approach in one hundred and forty will succeed.

 Our database contains 122,768 records. Our objective is to communicate with the 250,000 individuals living in the United Kingdom with the conditions we support in order to persuade them to support the Charity. This means that we have to consider the best ways of engaging with them. One existing form of direct marketing is the national raffle in which the full membership of some 28,000 people is invited to help the charity by buying tickets. Last year this activity raised over £60,000.

 ‘Cold’ mailings to communities. The response rates for traditional paper appeals will be at the lowest end of expectation, probably as low as 0.5%, so any campaign will be carefully 7 tested and analysed before spreading the effort further afield. Each ‘cold’ recruitment campaign will be prefaced by a calculated communications programme which will raise awareness. The recruitment programme may well cost £1.20 to £1.50 for every £ raised.

 Digital Marketing. Digital forms of marketing are much more attractive because they are substantially cheaper. They are going to be increasingly sophisticated and they provide the opportunity to create a relationship with many more individuals. We cannot wholly dismiss paper-borne appeals because many older people do not use information technology, but we will develop and enlarge the digital programme to address the modern age. Recent work by our Digital Manager delivered a stunning 480% increase in our Facebook fans (from 15,000 to 72,000 in four months) and on 18 May, the day before World IBD Day, our posts on Facebook reached a record 2.5 million people.

 The fact is that we have not deployed our website fully yet and the potential is enormous. For example, we pay more than £30,000 a year to intermediary collectors like Just Giving. If we were able to focus supporters on using our own website, we would not only save most of that charge, but we would also harvest information on donors with a greatly reduced administrative burden. We could also develop other fundraising opportunities like Tribute Funds (Cancer Research UK has used specialised ‘funds’ for years: the Bobby Moore Fund was established in the mid 1990s and is still a most effective focus for donors).

 Volunteer Recruitment. Despite strong Government pressure, it is harder to recruit volunteers than it was ten years ago. Nevertheless, there is real potential in recruiting via direct mail. The initial cost of recruitment will be in the region of £30 per person recruited. The plan is to conduct a test on specific Boroughs as the first stage in wider development.

 Donor Welcome and Stewardship. The first gift allows us to move towards a sense of rapport with donors. Our objective is to make them feel valued in order to cement their relationship with The Charity. As our relationship progresses, we will identify a difference between ‘supporters’ and ‘donors’, which will force us to communicate with each group in ways that reflect their status. Members, for example, will continue to receive newsletters but will be filtered to create rational lists for appeals. We do not seek to alienate them.

 Donations and in Memoriam. The Charity has the benefit of thousands of donations each year from members of the public. In 2013 this amounted to almost £250,000 and that was supplemented by tax recovered on donations and membership contributions amounting to a further £200,000. By and large the gifts are unsolicited and unprompted. How much better we could do if the opportunities were managed.

 As a common rule in fundraising, a donor’s first gift tends to be the smallest one. Their last gift (in a Will) tends to be the largest. Our mission is to engage with the donor to develop their interest, their commitment and their philanthropy. To date, nobody has had the time (and possibly even the knowledge) to know how to develop all of the raw information on the database into intelligence which can be used effectively.

 We will now address this challenge by studying the 122,000+ records on the database to evaluate them for potential. We will focus on promoting repeat, planned giving and we will seek out those with the capacity to provide larger gifts.

 The Numbers: No comparison with earlier years because this is new activity.

Staffing Implications 2014 2015 2016 2017 2018 2019 Donor Acquisition 1 1 2 2 3 Donor Care 2 2 2 3 Donations and in mem 1 1 2 2 2 2 Total Staff 1 2 5 6 6 8

Financial Projections 2014 2015 2016 2017 2018 2019 DM Income £ 35,000 75,000 120,000 200,000 300,000 Expenditure £ 105,000 112,500 150,000 160,000 220,000 Net Contribution £ (70,000) (37,500) (30,000) 40,000 80,000 Cost Ratio % 300% 150% 125% 80% 73%

Donations and in mem 345,000 500,000 550,000 650,000 800,000 900,000 Costs 65,000 70,000 75,000 80,000 85,000 90,000 Net Contribution £ 280,000 430,000 475,000 570,000 715,000 810,000 Cost ratio% 18.8% 14% 13.6% 12.3% 10.6% 10%

 Risk will be alleviated by broadening the range of income streams and reducing reliance upon events. Representing 53% of revenue in 2013, events will reduce to 49% in 2013, 40.9% in 2015, 36% in 2016, 34% in 2017, 27% in 2018 and 22% in 2019. Over the same period the three strands of major gifts will grow to represent 48% of revenue, but with none accounting for more than 22.7% (legacies).

 There is a risk that the focus on new or under-developed fundraising actions will take longer to perform than predicted and that they could fail to achieve the desired ROI. The assumptions underpinning the projections are:

9 o That the charity will invest in the staff needed to complete the work.

o That the staff will achieve basic industry standards for their role.

o That the trustees will be strong supporters and ambassadors of the change in culture.

SUMMARY OF STAFFING IMPLICATIONS

 The proposed investment is:

2014 2015 2016 2017 2018 2019 Senior Management 1 1 1 1 1 1 Major Gifts 0.5 2 3 4 6 7 Events 4 5 6 7 7 7 Corporate 1.5 2 3 3 3 3 Direct Marketing 1 3 4 4 6 Donations and in mem 1 1 2 2 2 2 Total Staff 8 12 18 21 23 26

FINANCIAL PROJECTIONS

 Income

Department 2014 2015 2016 2017 2018 2019 Major Gifts 296,500 500,000 800,000 1,250,000 1.950,000 3,400,000 Events 975,000 1,100,000 1,200,000 1,500,000 1,500,000 1,650,000 Corporate 197,980 300,000 450,000 600,000 850,000 1,000,000 Direct Marketing 35,000 75,000 120,000 200,000 300,000 Donations and in 461,660 500,000 550,000 650,000 800,000 900,000 mem Total Revenue 1,931,140 2,435,000 3,075,000 4,120,000 5,300,000 7,250,000  Expenditure

Department 2014 2015 2016 2017 2018 2019 Major Gifts 29,000 70,000 110,000 150,000 240,000 280,000 Events 245,814 290,000 305,000 335,000 345,000 365,000 Corporate 65,000 100,000 150,000 150,000 200,000 250,000 Direct Marketing 105,000 112,500 150,000 160,000 220,000 Donations and in 65,000 70,000 75,000 80,000 85,000 90,000 mem Management and 28,000 70,000 75,000 80,000 90,000 100,000 Central Costs Total Cost 432,814 705,000 827,500 945,000 1,120,000 1,305,000

 Net Contribution

Net Contribution 1,447,686 1,730,000 2,246,500 3,175,000 4,180,000 5,945,000 £ Cost Ratio 22.4% 28.9% 26.9% 22.9% 21.1% 18%

CONCLUSIONS

 Current fundraising activity is out of balance with a very heavy reliance on events. This is the riskiest and most expensive source of funding. Very little attention has been paid to the more profitable income streams, which include individuals of high net worth and grant making trusts.

 In the longer term legacies will be crucial for the long term prosperity of the charity so it is imperative to take urgent action to create a pipeline.

 There is some potential for developing partnerships with businesses, although our lack of a truly national footprint will prevent us from working with multi-site companies.

 Our case for support is more complex than most. We need to define something which is crisp and punchy using layman’s language.

 Too much administrative work is done by paid staff. We need to develop a regiment of volunteers to work in the office and at events.

11  Traditional and digital direct marketing are longer term revenue streams which need to be developed if the charity is to grow.

 Dedication to tax efficiency is vital.

RECOMMENDATIONS

 Urgent work should be completed on establishing a case for support which laymen will readily understand. The use of acronyms should be abandoned in favour of more explicit language.

 Trustees are invited to adopt the fundraising strategy, reviewing it annually during the budget process.

 Trustees agree to the appointment of four new members of the fundraising team for the full financial year 2015.

With thanks to Eric Grounds for providing this example.