# The future of fundraising: reasons to be cheerful?

- Link: https://fundraising.co.uk/2016/02/26/the-future-of-fundraising-reasons-to-be-cheerful/
- Published: 2016-02-26T01:30:12+00:00
- Author: Howard Lake

**Fundraisers are living in interesting times.  The media spotlight on fundraising
is continuing, and no-one knows yet how the Etherington report will affect practice
and income generation.  But we’re approaching the new financial year, and budgets
and plans have had to be set.  Fundraisers are trying to chart their way across 
an ocean of uncertainty, because somehow, for charities to continue their work, 
they need to keep on bringing in the money.**

But everyone is in the same boat. So early in February, =mc worked with the British
Red Cross to host a seminar for senior Fundraising Directors of many of the largest
charities, to get together and discuss scenarios for the future of private/voluntary
income.  We wanted to know how recent events had impacted on long and short-term
hopes and plans.

Twenty fundraising directors attended, representing charities with a combined net
voluntary income of nearly £1 billion and across sectors including health, heritage,
education, social welfare, and animal welfare. The discussion was wide ranging-covering
demographic trends over the next 10 years, changes in public trust etc. There were
expert speakers from the fundraising industry, from academic life, and from the 
commercial sector.

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## Overall ambition for growth

Despite all of the difficulties faced over the past year, most of our attendees 
were broadly positive about the future.  Based on a survey filled in before the 
event, the combined net growth projections for the charities attending reached 27%
over the next 5 years (based on 18 sets of submitted projections).

But this strong projection concealed wide variances. Many directors also felt their
growth projections were fuelled by a need from CEOs and Boards to drive voluntary
income to continue delivering services, in a climate of increasing need and shrinking
government funds.

15 charities shared with us their thoughts on the change of their income mix over
the next 5 years, showing some enlightening patterns.  Firstly, there was a significant
push for diversification, with the current largest income streams – mass giving 
and legacies – expected to decline as a percentage in the mix to make way for smaller
income streams to grow.  But despite losing share, these streams were expected to
grow in cash value. The legacy stream was expected to decline in the mix by more
than 3 percentage points, but net value was estimated to grow by close to 15%, far
outstripping the Legacy Foresight predictions of a c.4% increase in income by 2020.

Only two of our 15 charities predicted a drop in net value for this stream, despite
eight expecting it to lose share. This may be based on the idea of a window of opportunity
for legacy income connected to rising death rates among the boomer population.

Regular giving led to the greatest variance of opinion, with five charities expecting
net value to decline and nine expecting it to increase.  This is a good reflection
of the wider uncertainty in the sector regarding the future of low-level individual
giving.

The higher value pieces – High Net Worth Individuals, corporates and trusts – were
areas for optimism, all predicted to grow in net value by all charities.  HNWI giving
in particular came out as a key focus, expected to more than double in aggregate
net value for our respondents.

Excluding one outlier (excluded because of low income and a radically different 
business model), HNWI giving was a relatively small part of the current fundraising
mix for our respondents, averaging at around 3.3%. But this stream was expected 
to account for an average of 6.2% of voluntary income by 2020, almost doubling its
share of the mix. The trusts and corporates streams showed a little more variance,
with several charities expecting no increase or even a decline in the mix, but overall
both streams were expected to grow by an average half a percentage point in prominence
in the fundraising mix.

There was also cautious optimism around the community/events line – nine of our 
15 charities were expecting an increase in share of the fundraising income mix, 
and all but one expected net value to increase.  The growing importance of these
streams seems to reflect the drive towards increased and varied donor engagement.

 

## Business model

There was a feeling among the group that fundraising is facing necessary change,
and that this gives the sector an opportunity to improve ways of working. How well
the sector will be able to grasp that opportunity caused some debate. Some attendees
expressed concerns that boards and CEOs may be underestimating the impact that these
changes could have, both on income and on ways of working beyond fundraising.

For example, increased involvement by HNWIs brings benefits but may also cause governance
challenges as these donors seek to direct charity priorities. Across the sector 
people are ‘talking about stronger, deeper relationships with donors’, but our discussion
struggled to pin down what that means in practice. Giving donors genuine involvement
with the charity’s work needs buy-in from the whole organisation, not just fundraising.
Many participants felt that a number of boards, CEOs and programme departments would
be wary of allowing donors too much input into the work they undertake.

Even if this barrier could be overcome, some attendees questioned whether donors
actually want deeper relationships?  Charities also need to cater for those who 
don’t necessarily want to engage.  This may be people who are event-led, rather 
than cause-led, but it might also be longer term, committed donors who give because
they want to know a cause is being addressed without needing further information.

People who are very involved with the cause initially may well prefer to take a 
back seat as time goes on, continuing their support in the confidence that their
money is being used well, but without wanting to know all the details.  The suggestion
was raised that the key might not necessarily be stronger relationships, but in 
giving the donor control over those relationships.

 

## Who will do well?

When asked who was admired and who would prosper in the coming years, **MacMillan**
and **Cancer Research** topped the list, with **Save the Children, British Heart
Foundation and RNLI** all also getting multiple votes.  The most mentioned factors
for future success were: those who had already begun to develop ‘donor-centric’ 
relationships; those with funds to invest in developing fundraising; a simple and
clear proposition and Case for Support; and causes that affected people personally–
especially health. The importance of engaging in a ‘meaningful’ way with donors 
came though strongly.

The strong growth projections of an aggregate 27% raised some eyebrows, particularly
in view of the prediction by Adrian Sargeant, Director of the Centre for Sustainable
Philanthropy at the University of Plymouth, of a [sector-wide £2 billion reduction in fundraised income](http://guest.thirdsector.co.uk/2015/12/17/why-im-predicting-a-2-billion-hole-in-voluntary-income/)
over the same period. But when we broke the aggregate figure down, we could see 
a huge level of variance. Of the 18 charities who submitted figures, seven predicted
growth even higher than the 27% average, while five predicted growth of less than
5% or none at all. So confidence in growth varies very strongly.

 

## _Good_ reasons to be cheerful?

Given the current context, is the strong prediction of aggregate growth realistic?

The bulk of attendees were from established charities with well-known brands, and
these are likely to be more insulated from the pressures facing the sector than 
smaller, less established charities.  But the strong forecast may also signal pressure
being placed on fundraising departments to drive continual growth regardless of 
the context.  And so the question was raised: it is time for the sector to move 
away from this focus on continual income growth, and instead focus on using our 
existing resource more cost-effectively?  This would be a huge cultural shift for
the sector – a daunting prospect.

But the day ended with an enthusiasm for more – more discussion, more joint thinking,
more opportunities to meet and sense check with peers. At =mc we are planning to
host future events to keep building on the discussion, and work with our clients
to help build the evolving sector-wide picture into strategies and plans.

Perhaps working together on questions such as these is the first step towards paradigm-
shifting change.

 

**If you’re interested in taking part in the ongoing dialogue or would like to talk
about developing scenarios, please get in touch with [Maeve MacRory](https://fundraising.co.uk/2016/02/26/the-future-of-fundraising-reasons-to-be-cheerful/m.*******@*****************co.uk).**

 

_**[Maeve MacRory](http://twitter.com/maevemacrorymc) [⌊Maeve MacRory⌉](http://twitter.com/maevemacrorymc)**
is a consultant at The Management Centre.  She has been working in the charity sector
for nearly 10 years, for a variety of organisations including healthcare, international
development and arts. She specialises in strategic and operational planning and 
delivery, and project management. Her past roles have included business and operational
management for high value, corporate, community, membership, and individual donor
fundraising, taking in management of capital appeals and other large projects as
well as day-to-day business operations and supporter care. At the Management Centre,
she has recently been supporting the South Downs National Park Authority and east-
African INGO Adeso to begin fundraising in the UK, and working with Humane Society
International to explore and develop their international markets._

 

_Main image: [light at the end of the tunnel](http://www.shutterstock.com/pic-127662719/stock-photo-light-at-the-end-of-tunnel-black-and-white-grain-added.html)
by Glebstock on Shutterstock.com_

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