Fundraising Controversy: What Does the Data from 10 Top Charities Tell Us?
Thursday, July 16, 2015
Every fundraiser in the UK will be aware of the sustained attack fundraising practices have had from the media, MPs and other commentators.
Whilst some of the criticisms may be legitimate (if overblown) others have been little more than hatchet jobs and extremely damaging to our profession.
There have been numerous articles in the sector press, blogs etc with people queueing up to give their opinion. What I have been surprised at is the lack of analysis that has been undertaken to understand why the Olive Cooke case has been the catalyst for so much scrutiny and abuse of fundraising.
Many people have suspected that we had a problem (my epiphany was when my mum started complaining about charities calling her - she never complains!), but we haven't done anything until a sustained media spotlight has been shone on us.
What I have been surprised at is the lack of data analysis to back up some of the criticisms, solutions and arguments.
Rather than offer more opinion, I wanted to look at the figures to see if they could offer some insight into the problems we are facing as a profession.
First of all we know that individual fundraising income in the UK has seen no real growth for nearly a decade:
Source: UK Giving Report 2014, CAF
What are the implications for this lack of growth? Well, if the market isn't growing, then the only way you can grow is by taking market share from your competitors.
My theory was if that is the case, then the best performing charities would need to be more aggressive in their asking, invest more money into fundraising and this would result in a declining ROI (but increased net income).
That's why I decided to look at the fundraising income of the top 10 charities* since 2010.
This shows that gross and net income has grown considerably, but that ROI has dropped by around seven per cent.
When you analyse the growth in income and expenditure, then the five year ROI of the increased investment is considerably lower than the overall four to one.
|Increase in income 2010-2014||£172,585,000|
|Increase on expenditure 2010-14||£59,741,000|
The extra £60m or so spent has returned less than three to one over a four/five year period. Most charities would be relatively pleased with this.
However, this doesn't give the whole picture as it includes corporate, trusts and legacy income.
Therefore I wanted to look in greater detail at individual giving income. Fortunately six* of the ten charities breakdown income and expenditure of fundraising and have done so since 2010.
This shows that costs are rising more than three and a half times faster than income!
This means that individual giving ROI at these six charities has dropped by 20 per cent over the last five years (from 4.28 to 3.48).
At the same time all 10 charities have spent an additional £60 million (around £10m per charity) over the period. That is a huge number of extra phone calls, street fundraisers, direct mail etc. Especially at a time when inflation has been low.
If we take a look at the increase year on year, you will see there was a huge investment (nearly an extra £18m) into individual giving last year:
Was this the straw that broke the camel's back? Remember, this is just six charities. If the top 100 fundraising organisations* all increased their spending in a similar way over the last five years then that is a huge amount of extra requests to a pool of people who aren't giving any more overall.
A return of 1.63 over five years (though admittedly skewed by 2014 expenditure) is unsustainable in the long run.
So what's the answer? There has been a lot of hot air, but also some good ideas too.
Here are three of my favourites:
Ken Burnett was ahead of the controversy with his five part 'Future of Fundraising' series.
I've just caught up with Mark Phillips excellent presentation at the Institute of Fundraising National Convention last week.
Finally, Charlie Hulme of Donor Voice was in fine form in this article at UK Fundraising.
We can't keep fighting for the same donors and the same pot of money. The last three months has proved that. Hopefully now we have some figures to help make that argument and develop constructive answers that will strengthen our profession.
I used this list at the Guardian of the top 1,000 charities from UK. I worked from the top down, excluding charities who don't do mass individual giving ( the Arts Council) or who receive a significant amount of funds from government sources (Royal Commonwealth Society for the Blind - Sightsavers to you and me)
The 10 were: CRUK, British Red Cross, Save the Children, RNLI, Macmillan, Oxfam, NSPCC, RSPCA, Christian Aid and the RSPB.
All accounts are for 2014 apart from RNLI and Macmillan.
It wasn't possible to work this out for British Red Cross, Macmillan and the RNLI. they breakdown income but not expenditure. Christian Aid are excluded as well as they only started breaking down income and expenditure in 2011.
If someone has the time to look at more annual accounts then it would be fascinating to see the bigger picture.