“How much should we be raising for our investment in fundraising?” is a question I’m asked very frequently. I tend to bite my tongue and avoid facetious answers like “how long is a piece of string?” because it really can be very complicated.
But it’s an important question that needs answering, of course and (ever since Institute of Fundraising’s Fundratios project hit the dust in 2013) there’s not been enough good data to help fundraisers and charity decision makers (senior managers) to work out which areas of fundraising they should be investing in, and how they might perform.
Not enough good data, that is, until fundraising consultancy LarkOwl stepped into the breach. This blog takes a quick look at their 2020 findings, recently published, but you should check them out for yourself, and definitely contribute to their research for next year, because the bigger the sample size the better.
Return on Investment (often referred to as ROI) is a simple but important calculation loved but also feared by fundraisers and finance directors alike. Essentially, if you raise £10 by spending £1 on a particular activity or income stream, your ROI for that event or type of fundraising is £10. So, simply put, your ROI needs to be £1 if you’re breaking even.
It’s easy to calculate retrospectively, but there are two questions that you need good data to answer:
- How well are we doing compared to other charities? Essentially, this is known as benchmarking.
- How much should we be able to raise if we invest £X in a certain type of fundraising? Basically, this is about ROIs.
And the LarkOwl report can help you with both. Here are a few of the highlights that I have gleaned:
- Fundraising from charitable trusts is a solid and increasingly important performer, with an ROI (increased by 23% from 2019) of just over £10, and average raised per successful application just under £6,000.
- While raising money from grants performs well in ROI terms, Government money is hard to come by for charities, with less than a third of respondents raising income in this way.
- Star of the show in ROI terms is legacy fundraising, with over £30 raised for every £1 spent. While it is often harder to correlate the money invested and the gifts in wills received in any given financial year, however, this is surely an argument to invest in it, even so.
- Corporate fundraising performs well on average, but there is a large variety in success rates here, with some losing money on it, and others very successful. This could be seen as risky area, but one that can pay off handsomely if you get it right.
- Community and events fundraising were each reported to bring in around £5 for every £1 spent – good performers in their own right, but also should be seen as important gateways for other fundraising functions such as individual giving and corporate fundraising.
So why is it a complicated answer? The report provides an insight into the variety of factors that can push your ROIs up or down: the size of the organisation, area of operation, type of charity, length of time invested in professional fundraising so far, support of senior management and trustees, and indeed the diversity of the fundraising team.
The report is entitled ‘The Calm Before the Storm’ and indeed the elephant lurking in the room is how much these figures will be affected by the Coronavirus pandemic. All the more reason for as many fundraisers as possible to submit their data in 2021. For me, a big lesson from 2020 is that organisations mustn’t rely on single star performers in terms of Return on Investment, but need to maintain as diverse an income base as possible, in case a function is hit for reasons we cannot control.
And as we write our 2020/2021 fundraising strategies, and prepare to build back better, fundraisers absolutely need this data to plan their next steps, and senior managers need it in order to understand what might be possible in their organisations, and how they can support and invest in it.
Thank you to LarkOwl for compiling it. I will be referring to it frequently and will refrain from discussing string length from now on.