Fundraising: It'll never work

Many of today's most common fundraising techniques were originally met with scepticism. Alex Blyth charts their development and success.

This new 'telephone' has too many shortcomings to be seriously considered as a means of communication," read a Western Union internal memo of 1876.

"The device is inherently of no value to us."

Western Union isn't alone in being made to eat its words: new ideas and technologies are often met with indifference or even contempt or ridicule in all walks of life. It is easy to miss the potential of a new idea - even one of the greatest communications innovations in history.

Perhaps, then, we can excuse the short-sightedness of those in the charity sector who have, in the past, opposed the introduction of charity shops, direct mail, telephone fundraising, direct-response TV and face-to-face street fundraising.

Over the past 50 years, fundraising has changed almost beyond recognition.

For one thing, the level of funds raised has grown exponentially. Research commissioned by the Charities Aid Foundation and the National Council for Voluntary Organisations revealed that in 2003 individual supporters gave £7.1bn to charities. Just under two-thirds of adults gave an average of £12.32 each to charity in a typical month.

To a large extent this has been due to a new approach to fundraising.

As Lindsay Boswell, chief executive of the Institute of Fundraising, puts it: "Fundraisers have changed. They now operate in an increasingly professional environment, and this highly qualified and experienced workforce is seen as the public face of charity." Fundraising techniques have also changed.

Many of the staple techniques used today are relatively new and initially provoked great controversy.

1940s - Charity shops

Oxfam set up the first charity shop in 1948 and now has more than 760 - about the same number as Dixons and Currys combined. Oxfam shops generated £17m profit in 2003. More than 250 charities run charity shops in the UK and they had a combined income of about £450m and contributed £100m to charities' coffers in 2004.

The shops themselves have changed significantly. In the 1950s and 1960s they tended to have a 'jumble sale' feel, to be located in undesirable retail space and to be run entirely by volunteers. Today, many have paid staff and modern interiors, sell new goods and are often on high streets.

Jo Spetzel, marketing manager at the Association of Charity Shops, believes the public has generally been very supportive of charity shops. "British people understand them and they are a well-loved fixture on the high street," she says. "According to our research, 94 per cent of the public believe they are a good way of raising funds for a charity."

Despite this, charity shops continue to face a number of challenges.

The Federation of Small Businesses has called for charity shops that sell new goods to be subject to the same business rates as local retailers.

Discount retailers are increasing the competition for affordable locations and bargain-hungry shoppers and are contributing to a decline in the quality of clothes donated to charity shops. Recent legislation surrounding waste disposal has introduced a major new cost for charity shops. Even Bob Geldof has hit out at charity shops, linking them with the decline of town centres.

But charities remain undeterred, and the sector is responding by diversifying.

Cancer Research UK has opened a number of shops selling upmarket labels and designer goods. Oxfam has two shops that offer fancy dress hire. Recycling and aid charity Traid, which has shops in London and Brighton, employs designers to customise some of its donated stock. Many charities are also now selling products through their websites.

1960s - Direct mail

Despite all the talk of junk mail and the criticism of charity pens and hard-hitting campaigns, direct mail remains the single most effective form of charity fundraising. Charities such as Barnardo's, which pioneered its use in the 1960s, were widely criticised at the time, but now there are few charities that do not use DM.

Even the recent rumours of its declining effectiveness appear to have been exaggerated. According to figures from market research company ACNielsen, the quantity of direct mail sent out by charities doubled between 2003 and 2004, following a 40 per cent increase in the previous year. The CAF/NCVO research shows that church collection is the most profitable single fundraising technique, bringing in 4.4 per cent of the total given, but the combined total for appeal letters, subscriptions, charity catalogues and legacies comes in at 19.5 per cent. While not all of this results from direct mail, a large proportion does.

However, some people believe charities are in danger of over-using direct mail. In particular, the practice of list swapping is coming under increasing scrutiny. Ian Ventham, corporate services director at the RNLI, comments: "My mother-in-law donates small amounts to several charities. However, she now receives so many mailings from charities that have swapped lists that she is now becoming more resistant to appeals, even from those charities to which she was originally donating. At the RNLI we don't swap lists, and we're doing all we can to tailor our communications so that we contact donors at a time and in a way they like. As a sector, we have a great deal to do in this area."

1980s - Telephone

During the late 1980s, charities began to use telephone fundraising, primarily as a means of contacting newly recruited donors. Critics said the method was irresponsible and that donors would never want to be called at home. However, charities rapidly became persuaded by the fact that whereas direct mail campaigns generally produce a response rate of between 3 and 5 per cent, telephone campaigns regularly achieve between 10 and 15 per cent.

Critics of telephone fundraising often produce statistics to show that the public is opposed to it. In March 2004, a survey by think tank nfpSynergy found that 43 per cent of those polled said they were irritated by being called at home by charities. At about the same time, however, the rules governing the Telephone Preference Service were relaxed so that charities can now call their existing donors - a move that, according to the supporters of telephone fundraising, reflected widespread public acceptance of the technique.

Some agencies have recently developed controversial new techniques such as using pre-recorded messages from celebrities to request donations.

But according to Tim Hunter, deputy director of fundraising at the NSPCC, who started his career at telephone fundraising agency Pell & Bales in the late 1980s, the challenge is to expand the existing model to new areas.

He says: "I expect charities to start using the telephone in areas such as legacy requests and campaigning. Despite the criticism, I believe the area will continue to expand. However, it is vital that charities ensure they have motivated and knowledgeable people on the phone. This takes a lot of effort but is the key to success in this area."

1990s - DRTV

Until 1990 it was illegal for charities to advertise on television to raise funds. Once the law was changed, the NSPCC was the first charity to try direct response TV.

Giles Pegram, director of fundraising at the NSPCC, recalls: "We produced clever, snappy, creative ads, and they completely bombed. I sat down with our agency, WWAV Rapp Collins, to try to work out why this was happening, and we eventually agreed that we needed to apply direct mail principles to this new medium - we needed to run longer ads that told a compelling story, and we needed to focus heavily on the response mechanism.

"In 1991 we launched the 'Ellie' DRTV campaign (pictured) using these principles and it was a great success. Today, more than half of our donors have been recruited through DRTV."

ActionAid tried DRTV for a second time in 2003. "We'd tried it unsuccessfully in the mid-1990s," says Jo Smith, head of fundraising at the charity.

"But when we started again from scratch a couple of years ago we found that the public had become more accepting of DRTV as just another medium, and that the explosion in the number of satellite channels made testing new campaigns much more feasible.

"Our campaign, 'Rosa's Story', won awards and now DRTV is responsible for about 10 per cent of new donors."

The immediate challenge for charities is to maintain the return on investment in a market that is rapidly becoming overcrowded and expensive. Some expect UK charities to adopt the American practice of running 'infomercials', which can last up to an hour. Looking further ahead, Pegram is determined to increase the NSPCC's television reach. He says: "Prime airtime is very expensive and not always well suited to response-based television. This means we don't reach about 40 per cent of our target television audience.

We expect to make some progress on this in the not too distant future."

2000s - Face-to-face

At the 1998 International Fundraising Conference in Holland, Greenpeace Austria and DialogDirect Austria delivered a presentation on its face-to-face fundraising pilots. They reported notable success, having gained more than 50,000 regular givers in a year from a market of eight million. This set many in the audience thinking.

Gordon Michie, now international development director at face-to-face agency Fundraising Initiatives, was working at a cancer charity in 1999 and was intrigued when his employer suggested trialling this new technique.

"Most people were sceptical and didn't think the public would sign direct debit forms on the street," he says.

The results were astonishing. Michie adds: "Young people, many of whom had never been asked to give to charity before, were signing up. Face-to-face revolutionised fundraising overnight." Amnesty International tested face-to-face street fundraising in 1998.

Sonya Burke, direct marketing manager at Amnesty, reports that the results were indeed impressive, which led the charity to increase its use of the technique.

However, by 2000, Amnesty was beginning to receive some complaints. "No one noticed it at first," says Burke. "But when more charities started doing it, the technique attracted quite a few complaints. We received a normal amount. However, by then we were aware of the benefits of face-to-face fundraising, so we were able to deal with criticism."

The charity stopped increasing its use of street fundraisers, but continued to use the method. Now 16 per cent of the charity's income is raised this way.

The Charities Bill will resolve the confusion surrounding the regulation of street collections, and charities are likely to invest in techniques that will make their targeting by location ever more sophisticated. Despite the controversy, then, it looks like face-to-face is here to stay.

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