INSTITUTE OF FUNDRAISING: Proof that well prepared investment is rewarding

Lindsay Boswell, chief executive of the Institute of Fundraising

For many years now, the institute has linked up with a major market analysis firm to review trends in charitable giving.

The Centre for Interfirm Comparison (catchy title and does exactly what it says on the tin) carries out research between suppliers in a particular industry, and allows them to benchmark their own performance.

In our case they produce 'fundratios', which compare the fundraising performance of any participating charity. It provides, for many, the only real way of knowing how well they are doing compared with their peers.

As such, it is detailed, but makes compelling reading. Fundraising charities pay to take part and have a substantial commitment to gather the necessary information. A detailed set of results is produced confidentially for each participant, and hides the real identities of the others that have taken part. A summary report is publicly available, which makes some interesting and unexpected points.

Some 42 charities took part in the survey and between them generated a voluntary income of almost £1.5bn. This is a meaningful amount for survey purposes in anyone's book! They were not just the major charities, although all were within the top 500 charities as listed by CAF's Dimensions publication.

This takes you down to charities with a voluntary income of £500,000.

The range of organisations is, therefore, considerable.

Charities in the project have reported growth in each of the past 10 years but the rate of growth slowed markedly between 1998 and 2001, when it was just 2.7 per cent. It accelerated again in 2002 (up 10.8 per cent), and in 2003 that growth continued with an increase of 11.5 per cent. As in recent years, growth has come largely from active fundraising (thus excluding legacies).

Being by far the largest source of voluntary income with a 38 per cent share, legacies have a substantial and, particularly at individual charity level, rather random influence on growth. This year, legacy income grew by a satisfactory 4.1 per cent, while non-legacy income grew by 15.7 per cent , giving an overall growth of 11.7 per cent.

Committed giving increases

Central to this growth was the increased income from committed giving, now the largest source of voluntary income after legacies. It provided 17 per cent of all voluntary income, and 28 per cent of non-legacy income.

It grew by 18.3 per cent during the year, and 69 per cent over three years.

Other activities that did well during the year were trusts, corporate, special events and the small but rapidly growing income from major donor fundraising programmes.

This year has seen a maturing of the committed-giving campaigns that have been a feature of fundraising in the past few years. Last year, investment in obtaining new committed givers rose by 70 per cent. This year, expenditure fell by 3.6 per cent, though it remains the main area of expenditure, accounting for 25 per cent of fundraising budgets.

Having invested heavily in building up their committed donor base, some of the larger charities are now spending only to maintain and replenish that base. In consequence, the typical return has risen from £3.43 to £4.07; as others reach this situation the returns should continue to improve.

A challenge to perception

Many of the results of this year's Fundratios buck the perceived view that life is getting tougher. Perhaps it is just a product of human nature that when an area is under-performing we tend to share this knowledge in the hope that others are experiencing the same. Yet if an area is doing particularly well, we keep quiet to avoid drawing attention to that area of success for fear of increased competition. As a result we tend to only hear the doom and gloom stories.

Whatever the many and varied conclusions to be drawn from this information, there is one fact that I am sure stands out. Properly managed and well thought-through investment in fundraising, when looked at over a suitable period of time, is vital for the long-term growth of any fundraising organisation.

- For further information contact Laura Thomas, policy officer, email: laurat@institute of-fundraising.org.uk.

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