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City Research Online City Research Online City, University of London Institutional Repository Citation: Kay-Williams, S.M. (2001). Ten years of challenge : the impact of the external environment on charity fundraising and marketing 1989-1999. (Unpublished Doctoral thesis, City University London) This is the accepted version of the paper. This version of the publication may differ from the final published version. Permanent repository link: https://openaccess.city.ac.uk/id/eprint/8226/ Link to published version: Copyright: City Research Online aims to make research outputs of City, University of London available to a wider audience. Copyright and Moral Rights remain with the author(s) and/or copyright holders. URLs from City Research Online may be freely distributed and linked to. Reuse: Copies of full items can be used for personal research or study, educational, or not-for-profit purposes without prior permission or charge. Provided that the authors, title and full bibliographic details are credited, a hyperlink and/or URL is given for the original metadata page and the content is not changed in any way. City Research Online: http://openaccess.city.ac.uk/ [email protected] Ten years of challenge: The impact of the external environment on charity fundraising and marketing 1989-1999. by Susan Margaret Kay-Williams PhD City University Centre for Voluntary and Nonprofit Management (VOLPROF) City University Business School February 2001 1 Ten years of challenge: The impact of the external environment on charity fundraising and marketing 1989-1999. Contents Abstract 12 1. Research genesis and history 13 1.1 Introduction 13 1.2 Structure of the work 14 1.3 The aims of the1994 study 15 1.4 Indicators 17 1.5 Aims of the study - 1999 18 1.6 ' Definitions 19 1.6.1 Naming the sector 19 1.6.2 Registered charity 22 1.6.3 Fundraising 23 1.6.4 Voluntary income 24 1.6.5 Marketing 25 1.7 Summary 26 2. Fundraising — the gap in the literature 27 2.1 Introduction 27 2.2 The recent rise of academic interest in the 28 non-profit sector 2.3 The growing interest in social policy 32 2.4 The literature on fundraising 33 2.5 The rise of the practitioners 36 2.6 The literature on non-profit marketing 39 2.7 Exchange theory 42 2.8 The marketing concept: literature and practice 44 2.9 The development of non-profit marketing 47 literature in the UK. 2.10 Recent developments 48 2.11 Closing the fundraising literature gap? 50 2.12 Summary 51 3. Methodology 52 3.1 Introduction 52 3.2 The philosophical position 53 3.3 Establishing the method of investigation 55 3.4 Approaching the research 56 2 3.5 The choice of charities 58 3.6 The interviewees 62 3.7 Issues in interviewing elites 64 3.8 Issues of objectivity 65 3.9 The questionnaire for 1994 68 3.10 Approach to analysis 73 3.11 Process of analysis 74 3.12 Summary 78 4. The external environment 79 4.1 Introduction 79 4.2 Method of analysis 79 4.3 1969-1979 81 4.4 1979-1989 83 4.4.1 The rise of the one-off spectacular 85 4.4.2 Legislation 88 4.4.3 Fundraising innovations 89 4.4.4 Networking 90 4.5 1989-1994 91 4.5.1 Recession 91 4.5.2 Contracts 94 4.5.3 More legislation 98 4.5.4 The professionalising of fundraising 100 4.5.5 Marketing and the business approach 102 4.5.6 Competition 103 4.6 1995-1999 104 4.6.1 Increasing competition 104 4.6.2 The political landscape 106 4.6.3 Volunteering 107 4.6.4 Charities Act Part II 108 4.6.5 The National Lottery 109 4.6.6 The Diana phenomenon 111 4.6.7 Management, strategy and planning 113 4.7 Conclusion 114 5. The five stages of fundraising: a framework 116 for fundraising development 5.1 Introduction 116 5.2 The development of charities 117 5.3 The life cycle of charities 119 5.4 The development of the fundraising function 125 5.4.1 Lindsay and Murphy 125 5.4.2 Rosso and Fogal 126 5.4.3 Mullin 128 5.4.4 Hanson 129 5.5 The development of new theory 130 5.5.1 Evidence for the variables 132 5.6 Organisational culture theory 135 5.6.1 Three perspectives of organisation culture 137 5.6.2 The fourth perspective 138 5.7 The five stages of fundraising: 139 5.7.1 Appeal Phase 141 5.7.2 Appeal Phase: stage one 143 5.7.3 Appeal Phase: stage two 145 5.7.4 Fundraising Phase 146 5.7.5 Fundraising Phase: stage three 147 5.7.6 Fundraising Phase: stage four 150 5.7.7 Marketing Phase 153 5.7.8 Marketing Phase: stage five 154 5.7.9 The difference between stage four and stage five 157 5.8 Movement from stage to stage 158 5.8.1 Characteristics of transition from stage one to stage two 159 5.8.2 Transition from stage two to stage three 160 5.8.3 Transition from stage three to stage four 161 5.8.4 Transition from stage four to stage five 163 5.9 An example of how charities progress through the levels and stages 164 5.10 Summing up the five stages of fundraising 165 6. Applying the five stages: examining the case 167 study charities 6.1 Introduction 167 6.2 Reliance on voluntary income 168 6.3 The perception of fundraising 171 6.4 The position of fundraising within the organisation 175 6.4.1 Titles 176 6.4.2 Levels of authority 179 6.5 The relationship between structure and the five 182 stages 6.5.1 The historical focus of fundraising 183 6.5.2 The length of time the head of fundraising has been in post 185 6.5.3 The level of skills and seniority of fundraising staff 189 6.5.4 Inclusions and exclusions in fundraising 191 6.5.5 Size of the fundraising department 192 6.5.6 Implementation of marketing ideas, techniques and philosophy 194 6.6 Assigning the charities to the five stages of fundraising 195 6.7 Summary 196 7. Indications of upheaval 197 7.1 Introduction 197 7.2 The changing environment and the financial picture 199 7.2.1 Changes to income targets 199 7.2.2 Fundraising/service delivery tensions 202 7.2.3 Financial analysis 205 7.2.4 Competition 207 7.3 Structure, strategy and fundraising activities 211 7.3.1 Strategy 211 7.3.2 Reactive or proactive strategies 213 7.3.3 Departmental structure 214 7.3.4 Fundraising activities 217 7.4 The use of marketing 221 7.4.1 Marketing fundamentals 221 7.4.2 Marketing concepts or marketing activities 222 7.4.3 Corporate identity 224 7.4.4 The role of branding 226 7.4.5 The use of market research 228 7.4.6 Relationship fundraising in action 229 7.5 Was life more difficult for fundraisers? 230 7.6 Summary 231 8. Five years later... a longitudinal study of the 232 ongoing development of fundraising 1995-1999 8.1 Introduction 232 8.2 Aims of the longitudinal study, 1999 233 8.3 Methodology 234 8.4 Basis for selection of charities for the longitudinal research 235 8.5 Questions 1999 237 8.5.1 Exploring the issue of marketing 238 8.5.2 The questions 241 8.6 Findings 245 8.7 The changing perception of environmental factors 245 8.7.1 The black cloud on the horizon 251 8.7.2 Strategies for growth 252 8.7.3 Fundraising activity 255 8.7.4 Legacy marketing 257 8.7.5 Direct marketing 258 8.7.6 Big gifts and niche products 258 8.7.7 Broadening the range 259 8.8 The role of marketing 263 8.8.1 The application of marketing to fundraising in 1999 263 8.8.2 Customer focus 264 8.8.3 Marketing titles and language 265 8.8.4 Use of research and analysis 266 8.8.5 Relationship fundraising 267 8.8.6 Branding 268 8.8.7 Market orientation with the charity 269 8.8.8 Fundraising's place within the organisation 273 8.9 Conclusion 275 9. Longitudinal findings in relation to the five stages of fundraising: towards wider applicability 277 9.1 Introduction 277 9.2 Review of basic principles 277 9.3 1999 Findings 279 9.3.1 Leaping forward 280 9.3.2 Gearing up 282 9.3.3 All change 284 9.3.4 The complexity of stage four 286 9.3.5 New entrants to stage five 289 9.3.6 The tentative stage five charity 290 9.3.7 In circles 293 9.4 In summary 294 10. Summary and conclusion 295 10.1 Introduction 295 10.2 At the end of a decade 295 10.3 Review of the aims of the study 296 10.4 The longitudinal study 298 10.5 The development of the five stages of fundraising 301 10.6 Revisiting the five stages 1999-2000 302 10.6.1 Organisation culture theory and the stages 302 10.6.2 Trustees 303 10.6.3 Recognising stage five 303 10.6.4 Levels within stages 305 10.7 Strengths and weaknesses of the research 305 10.8 Limitations of the research 307 10.9 An agenda for future research 308 Appendices 312 List of participating charities 313 II Questions 1994 314 III The external environment 1969-1999 325 IV Examples of some logo changes in the1989-1994 period 333 V Questions 1999 334 References and bibliography 335 Tables and illustrations 2.1 Implementation of marketing by non-profits, adapted from 46 Hooley, Lynch and Shepherd (1990) 3.1 Summary of the two principal paradigms 54 3.2 Types of work of the 30 selected charities 60 3.3 The subjects (causes) supported by the 30 selected charities 61 3.4 Diagram of grounded theory process and its application to this research 75 5.1 The non-rational model of starting a new charity 119 5.2 The charity life cycle (adapted from Hudson, 1995) 120 5.3 Early development of a fundraising charity 123 5.4 The five stages of the development of fundraising within charities: variables and criteria 140 5.5 The Phases and stages of fundraising development 141 5.6 Summary of the five stages and the associated culture theory perspective 166 6.1 The studied charities' reliance on voluntary income 169 6.2 Views of fundraising from the rest of the organisation as perceived by the heads of fundraising 173 6.3 Titles of the senior person responsible for fundraising 176 6.4 Titles analysed into the five stages 177 6.5 Composite illustration of the relevance of the relative position of fundraising staff
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