Alan Clayton: We can fundraise our way out of recession if we carry on spending

Confidence is key, says the Good Agency's director of innovation

When you are in a serious recession caused by a credit crunch, the importance of confidence becomes obvious. When people are scared of lending to each other, or simply of spending money, everything goes wrong.

Confidence to spend is the key to fundraising success, too.

I am aware of a number of organisations that have invested heavily in fundraising through this recession. They have grown.

I am also aware of others that have taken a short-term, 'protectionist' view and cut back on investment in the past 18 months. They are now having trouble making the first draft budgets for 2010 stand up.

It's a spectrum, of course, and some have stood resolutely in the middle, but the organisations that are most confident going into 2010 are those that remained the most confident during the turmoil of the past year and a half.

Organisations that have strong, confident leadership seem to have fared best. Rolling up your sleeves has proved more effective than rolling your eyes.

Those that have rolled up their sleeves are coming out at the other end with higher income levels, more sustainable income and more market share.

So who are the confident? The confident are those who understand the most basic fundamental of large-scale fundraising, wonderfully illustrated by a research piece published by Sean Triner of Pareto Fundraising in Sydney last year: that over the medium term, the biggest factor in how much income you generate is how much you spend.

It takes a strong, knowledgeable and confident fundraising director to persuade an organisation to prioritise sustainable fundraising investment in the medium term over short-term project funding.

If you are one of those who has remained confident, well done.

If you are one who has had to give in to the demands of colleagues, the chief executive or trustees for short-term action to protect the rest of your organisation, you need to get your confidence (and negotiating skills) honed as you prepare for 2010 budgets.

The effects of this recession will last at least another 12 months for fundraisers.

I'm tired of fighting this battle and justifying budgets to people who don't understand the medium-term damage they are doing.

And I know where I'm going to refresh the inspiration: at the International Fundraising Congress in Holland later this month.

I love meeting fundraisers from around the world, many of whom have a much tougher time than we ever will, but who smile and radiate confidence nonetheless. See you there, I hope.

FACT FILE

Fundraising in hard times

Sean Triner's Ten Steps to Managing Fundraising in a Recession says charities should focus on net fundraising profit rather than on return on investment.

Triner applies the Pareto principle to fundraising. For many events, according to the principle, roughly 80 per cent of the effects come from 20 per cent of the causes.

Eighty per cent of income comes from 20 per cent of donors, says Triner, and charities should focus on targeting those donors.

In June, the Institute for Philanthropy published the research report Giving in the Recession. It points out that, historically, giving in recessions does not contract nearly as heavily as the overall market. This recession, it says, is no exception.

The report says that in many cases, numbers of individual donors have increased during a recession. It also suggests mergers as a way to avoid inefficient fundraising.

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