But nowadays, there’s another diagram that I find even more useful: the humble matrix. OK, so this isn’t the first or even the second time I’ve blogged about matrices either (Who knew? I didn’t.) but this matrix is such a useful one when considering your fundraising strategy.
I’m talking about the Boston Matrix.
It’s also known as the Growth-Share Matrix, which gives you an indication of what areas we’re thinking about. It’s been used over decades by businesses to assess their product portfolio. Fundraisers: you need to use it to think about your own income streams!
Here’s what to do. Divide the page into four equal quadrants by drawing one horizontal and one vertical line, as below. The vertical line represents market growth, the horizontal line represents relative market share.
- Your “stars” are in the quadrant with both high relative market growth and high market share (your own piece of the action)
- Your “question marks” have high market growth but lower relative market share
- Your “cash cows” have lower market growth but higher market share, and
- Your “dogs” have (you guessed it) lower market growth as well as lower market share.
Why do I like this matrix so much?
Well, firstly because it represents a new way of looking at income diversity, or spread of income. So many analyses of spread I’ve seen are merely a snapshot in time – simply an indication of a percentage of the total in any financial year. This turns it into a three dimensional picture, and helps you to spot opportunities, as well as which income streams are top performers, which ones may be on the wane for you, and indeed which income streams you should maybe think about knocking on the head.
It’s a great way of understanding that income streams can often have a ‘career arc’ – so you can then mitigate that risk.
But how do you plot it?
I look at publicly available data such as NCVO’s Almanac to plot trends in each income stream, and then plot budgeted income over the period of the strategy against it. By coincidence, I had already begun writing this blog when I saw this particularly helpful tweet from Grahame Darnell. He’s already looked at the trends for you! But what’s going to happen next?
People in planning mode: I created this chart to map NCVO Civil Society Almanac voluntary income data for the whole sector for most recent 5yrs. It shows income by source – and is a ready made slide / image for your strategy. https://t.co/IuGzKEcJ3l
— Grahame Darnell (@GrahameDarnell) October 9, 2018
What you should end up with is a chart a little like the (invented) one below. Focuses the mind, doesn’t it?
Where are your question marks? They can be your next stars. You will need them, because your current stars may well become cash cows, or even dogs one day.
I hope that has been helpful. Apologies if you came here expecting my usual whimsy. Normal service will return soon.