Fundraising spend is directly proportional to income, research finds

Fundraisers at a triathlon event
Fundraisers at a triathlon event

Charities that spend more on generating voluntary income tend to raise more money, according to new research from consultancy nfpSynergy.

The research, which looked at the fundraising expenditure and net income in the 2013 accounts of the top 200 charities by voluntary income, shows that larger charities – with incomes of more than £50m – and environment or health charities were particularly likely to raise more if they spent more money on fundraising.

But the link between fundraising expenditure and income is weaker for religious and arts-based charities, the research shows.

Presented earlier this month at Fundraising First Thing, a closed-door event for nfpSynergy’s clients, the research shows that of the five charities that spent more than £30m on fundraising in 2013, the biggest spender - Cancer Research UK, which spent £80m - raised the most money, at £369m.

In the same year, Marie Curie Cancer Care spent £37m to raise £84m, the British Red Cross spent £49m to raise £128m and Macmillan Cancer Support spent £58m to raise £186m.

But the charity that spent the least of the five – Save the Children, which spent £33m – raised almost as much as CRUK (£325m), despite a significantly lower fundraising spend.

Joe Saxton, co-founder of nfpSynergy, told Third Sector that Save the Children had done exceptionally well at increasing its expenditure and changing the way it appealed to people through its 'No Child Born to Die' campaign.

He said it was an outlier in the data rather than an indicator that the other large charities were not raising enough in relation to the money they invested.

The research also looked at the impact that increasing or decreasing expenditure had on incomes between 2008 and 2013. While the majority of charities – including Comic Relief – increased their expenditure over the five-year period and saw a corresponding increase in income, some charities that increased their spending– such as the Disasters Emergency Committee  and the Elton John Aids Foundation – went against the trend by experiencing a fall in income despite increased spending.

In line with expectations, several charities that decreased their expenditure over the period – such as Oxfam, Age UK and the international children’s charity Absolute Return for Kids – saw a corresponding fall in income, although there were several exceptions, such as the Royal British Legion  and Maggie’s Cancer Caring Centres, which saw their income rise over the period.

Saxton said Oxfam’s fall in income was due to the charity having lost its market supremacy between 2008 and 2013: "Simply being the best-known charity in the UK didn’t bring in the money and they hadn’t innovated and found new and compelling ways to get people to give."

He said the charity’s 'Lift Lives for Good' campaign had been particularly weak and praised the move to appoint a new director of fundraising, Tim Hunter, from Unicef in 2014.

Asked how some charities had managed to increase income without increasing expenditure, Saxton suggested this might be because they had a large number of major donors – particularly likely in the arts sector, he said – or because they had large numbers of volunteer fundraisers - for example, religious charities working with church congregations.

He said that charities that had increased expenditure but not achieved higher incomes might have experienced a time lag on their investments, which might yield results at a later date, or they might simply have invested the money in ineffective ways.

"This is why we have some of the pressure we have in fundraising today: if you want to increase your income, you usually need to spend more money," Saxton said. "Spending more money means asking more people to give. We are beginning to see why particularly the bigger charities are starting to use more call centres and do more door-stepping, because that is what generates more income."

He cautioned charities against simply spending more money and expecting their incomes to rise, saying a compelling brand proposition and a strong team were also necessary to make this happen.

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