CHOOSE YOUR FUNDRAISING STRATEGY APPROACH
How do organisations choose a fundraising strategy? Here are four approaches we see used by Australian and New Zealand non-profit organisations:
Approaches 1 and 3 will provide incremental, but unremarkable growth. Approach 2 will eventually lead to a diversified fundraising operation as seen in some of the large hospitals. Approach 4 might feel to staff like the fundraisers are always trying to catch up to the institution, but if fundraising efficiently and reliably contributes a portion of the budget it will be valued by the institution.
If setting a fundraising strategy was simple, we could all find the best strategy and copy it. However, no two non-profit organisations are the same and each needs a unique solution. Consider the issues that might affect your fundraising strategy:
- The kind of organisation you are (e.g. you can doorknock for Salvation Army or Cancer Council, but you can’t door knock for a university or TAFE)
- Your organisation’s fundraising “assets” (donor records, engaged board, location history, trustworthiness, demographic characteristics of your constituents, your fundraising office, volunteers and their expertise)
- Cultural and moral restrictions (e.g. attitudes to gambling, certain foods and drink, holy days), which limit both fundraising activities and even people from whom funds might be accepted
- When you need the money (e.g. bequests have a high return on investment but up-front investment and delayed return)
- How much money you need (e.g. major gifts provide larger sums than an annual appeal but a major gift strategy not feed by activities soon run out of qualified prospects)
- Your constituency and current donors (e.g. how many are there, do you know their donation history and communication preferences?)
- The attractiveness of the projects for which you need the funds (e.g. buildings tend to be less attractive than projects providing immediate benefit to people – or animals)
- The skills of your staff, including whether they have skills in the fundraising methods you would like to use, the availability of professional development, and the willingness to outsource new functions
- Whether certain fundraising activities rely on other activities (e.g. a long-running annual appeal might help identify bequest prospects)
RETURN ON INVESTMENT
Also, consider the effectiveness of various fundraising activities. Certain fundraising expenditures produce a higher return on investment (ROI) than others. Our study of charity annual reports where fundraising type, expense, and return is listed shows the differences in result for every fundraising dollar spent. In descending order of effectiveness, these are:
Has your organisation been directing enough attention to these higher return on investment (ROI) activities? Lower ROI activities should support higher ROI activities or some other institutional goal. A fundraising regime dominated by low ROI activities is not good practice.
Ensure that you show within your organisation how the lotteries, art unions, events, and direct mail activities each make a net return for the organisation, and also how they contribute information that is vital to other fundraising activities. Fix or abandon any fundraising that doesn’t contribute net revenue or that has a substantial opportunity cost (how much more you could have raised if you had applied the same level of resources to another activity?).
For both high and low ROI activities, follow the information trail to ensure that no names, addresses, donation amounts, or other information are ever lost; and that the information is used for other fundraising activities.
As you choose items for your fundraising strategy, think about how you will measure the effectiveness of each activity within your own organisation, as well as the overall strategy. For individual activities, you can’t just measure net return. You need different types of indicators, both current (attendances, members, money banked, renewal rates etc) and forward (donors managed, bequest conversations).
PLAN FOR THREE YEARS
It is good discipline for all non-profit organisations to develop a three-year fundraising plan, with a revision each year. Ideally, this plan will show the interaction between the different fundraising types and how each individual aspect, as well as the overall fundraising strategy, will be measured. Provide a narrative or flow chart showing the information flow between the different fundraising activities.
For advice on implementing a customised fundraising strategy, contact Dr Daniel McDiarmid or the AskRIGHT team.
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