Monday, May 27, 2013

7 Thing About Fundraising That I've Learned From Charities That Don't Fundraise

I meet with a lot of charities - big and small, Irish and international - all sorts of causes, all sorts of people. I love it - in every meeting I have the privilege of learning about the organisation, their history and the work they do. But I also learn about fundraising and their perception of fundraising. And there are trends. So here are 7 things about fundraising that I've learned from charities:

1. Charities Don't Like Any Form Of Fundraising...Until They Do Them
Charities and their boards are usually fearful of the next step in fundraising whether that's mailings, telephone, on-line, door-to-door or whatever. They're afraid of complaints and they're afraid it won't work.

But the reason other organisations are doing it is probably because it works, so at least test it.

2. Your Database Is Bigger Than You Think
Whenever I work with a small charity I start by looking at what's in their database - often on a spreadsheet or across a few documents or scribbled on some pieces of paper. Small charities always begin by saying they have nobody on their 'database'. Nobody. But that always turns out to be false.

They usually have past donors, volunteers, fundraisers, families of service users. At the very least they have a board of directors. And all of these have the potential to donate or generate income. The best piece of advice I could give to a new charity is to record in one place the contact details of everyone you come across and get their permission to contact them in the future. Do it from the start.

3. You Are Not Your Target Audience
You would never respond to a letter asking for money. You would never stop and talk to one of those chuggers. You would never buy a scratch card, give your bank account details to a stranger, or increase your donation when asked. Neither would I.

But that's irrelevant. Because your donors will.

4. Your Supporters Are (Generally) Neglected
You don't say thank you enough. You only respond to 50% of questions. You don't give enough opportunities to increase donations. You don't make it very easy to donate on-line. You don't let your donors give their input in to how you're run.

You could pick up the phone to one of your supporters right now and increase your income.

5. Fundraiser Goes Wrong...Charities Give Up
A lot of organisations don't have a fundraiser, which is surprising. If the first employee in a charity is the founder then the second should be a fundraiser. The whole point is that they pay for themselves and more.

But a number of organisations tell me they "Tried a fundraiser but it went didn't work out." Imagine that attitude with any other staff - the CEO went wrong so we're not going to get another CEO, the nurse wasn't great so no more nurses.

6. The Other Charities Are Easier To Fundraise For
International charities say local charities are easier to fundraise for.
Human rights charities say cancer charities are easier to fundraiser for.
Most charities say children's charities are easier.
Children's charities say dog charities are easier.

Every charity is easier to fundraise for than yours...or not. It depends. They all have advantages and they all have disadvantages, so it's important to know what your advantages are and work with them. University/college alumni donations reached a record high while 20,000 children die a day around the world from something preventable. Everything is important to someone.

7. Fundraising Is Unappreciated
I recently had a meeting with a senior manager who had moved across from several years of project work to a fundraising position. It was satisfying to hear them say fundraising was the hardest job they had ever been tasked with.

But many charity boards don't see that. And it's undermining to the profession to see unqualified staff put in to these roles. Many boards I've met with think fundraising will just happen regardless of who, if anyone, is looking after it. When budgets get cut fundraising is usually the first to go, and the long-term effects are often detrimental.

Too many boards view fundraisers as professional beggars, but the truth is there is a huge skill to coordinating, creating opportunities, managing donors, finance, sales, innovation, design, statistics, analysis, yada yada. Some people are good at it...and some people are really good at it.

However, it's true there are not enough qualified and experienced fundraisers in Ireland. That's naturally addressed over time, as well as through the fundraising courses that have recently started. But on top of that we need to promote the job and promote the profession. Fundraising needs to be presented as an option at job fairs and in schools. We need to put time and money in to training and in to building it. We need to grow it.

Wednesday, May 15, 2013

Iona Institute's Accounts 2011

A few people have been asking me for Iona Institute's (Charity No: 17347) audited accounts since I mentioned them in blog posts discussing charities and political donations here and here.

So here are The Iona Institute's audited accounts for 2011, as available to the public from the Companies Registration Office.

Any questions or comments I'd love to hear from you.

Monday, May 13, 2013

Charity Clothing Bins & 'The Agency Myth'

Full disclosure: I own a fundraising agency that charges a fee to carry out various services for various charities. But I acknowledge there are bad agencies and good agencies. There are agencies and suppliers that take the piss and there are agencies and suppliers that offer charities real value for money and can run an aspect of a charity's fundraising cheaper and better than the charity could do themselves.

This isn't about defending agencies, but it is about clarifying a misleading statement that seems to worm its way in to any report on any form of fundraising.: The majority of the revenue goes to the agency, not the charity.

In most cases this will be true, and if you don't really think too much about its meaning it can be shocking and disappointing. But it's misleading.

Take the recent coverage of charity bins: One article claimed that a clothes bank can generate €7,000 in a year, but the charity only received €150 in the year. This implies the private company running the clothes banks gets a whopping €6,850 or 98% of the revenue.

But what it doesn't talk about is costs. The costs in this example fall entirely on the private company running the bins - the cost of insurance, transport, wages, sorting, rent of space, waste disposal, tax, PRSI, etc. It's important to know the costs before a conclusion is made. If it costs €1,000 per year to maintain a clothes bank, well that seems a bit unfair. But what if it costs €6,800 per year to run a clothes bank? The company comes away with €50, the charity comes away with €150,

If the charity decided to bring the running of that clothes bin in-house they wouldn't be €6,850 per year better off. They would be €6,850 minus their new-found costs better off. They'd have to take on all the costs of running the risk.

Here are some interesting figures:
  • Eco-environmental (a private clothing bin company) recorded €30,000 profit in 2011 and a €23,000 loss in 2010. Average €3,500 profit.
  • ISPCC received about €76,000 per year from them (according to the Irish Times).

How many private companies do you know that donate 96% of their profit to charity?

Thursday, May 9, 2013

Case Study: Tax Shortfall Campaign December 2012

I believe 'tax shortfall' campaigns, conducted by telephone, can be the most cost-effective form of fundraising in Ireland. It surprises me how few Irish charities are doing these and so I wanted to share the results of one the small campaigns we ran in December 2012.

Looking at Charity X's database we found that they had 19 donors who were committed to giving €20 per month by Direct Debit and had been doing so for some time.

Approaching the end of 2012 it was clear that these donors were on track to have given €240 each in the calendar year - €10 short of hitting the tax-effective threshold of €250. We telephoned each of these donors in an attempt to secure a further €10 credit card donation over the phone and to also achieve an upgrade of their monthly donation to at least €21 per month.

We successfully contacted 10 people. 9 donors could not be contacted.

Of the 10 we saw 6 of them agree to process a one-off donation on the phone averaging €18. This ensure they all reached the €250 threshold in 2012. This is back before the consolidated tax-relief amount and so each of these donors would now be worth an additional €62.50 - €173.73 in tax-relief.

Of the 10 we also 7 people upgrade their monthly donation to an average €22 per month. Not only is this extra revenue in donations, but also eligible for tax relief in future years.

Of the 10 we saw 2 people say they would arrange it themselves and only 1 person said no.

The campaign also allowed us to update the donors on the charity's work and update contact details.

Campaign Summary:
Income (assuming donors go on to donate for 3 more years)
€110 in one-off donations
€396 extra in monthly donations after upgrades
€375-ish extra in tax relief for 2012
€2118-ish extra in tax relief for 2013-2015
Total: €2,999.00

€91.14 agency fee
€30-ish in fulfilment
Total: €121.14

ROI: 2475%

If you want to talk about how we can help you achieve this in 2013 then please contact me.

Tuesday, May 7, 2013

Should Charities Receive Tax Relief?

Irish charities and their donors are eligible to receive tax relief, including relief on Income Tax, Corporation Tax, Capital Gains Tax, DIRT, Capital Acquisitions Tax, Stamp Duty and Dividend Withholding Tax. This can be quite substantial: in 2010 over €30 million was paid out by Revenue on PAYE donations alone. Add self-assessed and corporate donors and you have a big chunk of our taxes.

The gut reaction is that this is justified - charities deserve as much help as possible and very often charities are providing services that the state should, and are doing so more cost-effectively.

So how does Revenue define charity?
"the body concerned is engaged in an activity under either one or more of the
following headings:

  • Relief of Poverty 
  • Advancement of Education 
  • Advancement of Religion 
  • Other works of a charitable nature beneficial to the community."

There are many that would object strongly to the funding of the advancement of religion, in the same way many would object to funding a charity promoting atheism. Essentially it comes down to a handful of people determining what is worthy and what isn't, and we only have our say through electing politicians we hope have the same beliefs.

In some cases the state is providing tax relief to organisations with contradictory views and policies, which could be interpreted as a government paying for people to debate, argue and undo each other's work.

And what if you don't agree with a charity's work? How do you feel that the tax you pay is going towards enabling this charity to run?

This becomes glaringly obvious when you look at a registered charity like Iona Institute. Promoting "the place of marriage and religion in society". This blog post isn't supposed to pass judgment on any charity or talk about my own beliefs/politics, so it's also important to point out that there would be charities on the other end of the spectrum. Great organisations working towards LGBT equality...there are individuals objecting to these. Similarly, some members of the public take issue with our government sending money abroad in aid. And the recent SpunOut controversy saw more conservative individuals furious at the charities approach towards education.

The fact is that whatever the charity and their cause there is an Irish tax payer who objects to their work and existence. And yet every Irish tax payer is partially funding these organisations through charitable tax relief.

Let's look at Iona Institute's most recent accounts. These aren't available on their website and at first glance are not available on the CRO website. But the Iona Institute is actually a registered charity named Lolek Limited ('lolek' is Polish for 'free man'). With an income of over €200k per year you could be looking at tax relief (funded by tax payers) at an amount of €20-30,000 each year. Many people would be happy for their taxes to be spent like that...but many people wouldn't.

Drilling down even further we can see where the Iona Institute is spending their money. 'Political donations' in 2011 caught my eye. Only €500, but still...IF Iona Institute is receiving tax relief from Revenue, then how do you feel about your tax going towards a charity making 'political donations'? And should they be eligible?

Anyone has the right to ask the question, should your charity be eligible for tax relief? And why?

In the charity sector we try to increase the relief the state gives and we campaign to see relief on VAT for charities. But are you able to vocalise why you are entitled to this relief? Can you show that you are benefiting the community? Can the tax relief you receive deliver a stronger impact than if the state had kept that money?

Thursday, May 2, 2013

What If Every Form Of Fundraising Had 'Solicitation Statements'?

Did you know in Northern Ireland face-to-face fundraisers are required to make a 'solicitation statement' at the point of sign-up? They must also disclose the 'notifiable amount' - the amount the charity pays the agency that employs them. It runs along the lines of:
“I am a professional fundraiser employed by Fundraising Ltd. on behalf of CharityAid. We expect to be paid approximately £200,000 in connection with this particular appeal, and the method used to determine our payment was calculated on the fixed cost of £200 per donor. We expect to raise at least £516,000 for the charity from this particular appeal."
There's no regulation like this down south yet, but we introduced our own declaration regardless, along the lines of:
“I am a professional fundraiser employed by Fundraising Ltd. and regulated by the 2009 Charities Act and the Irish Fundraising Forum for Direct Recruitment’s Code of Practice. The charity pays Fundraising Ltd. a fixed fee to undertake this public face-to-face fundraising work and to recruit long-term regular givers. This is one of the most cost-effective and efficient ways to raise funds.”
Regardless of what I think about having to declare the fees and costs and the wording of the statement, I began to think what other media would look like if they were subject to similar rules.

A declaration on the front of the envelope

A banner declaration visible from the start of the ad.

Small print on every ad.
Although, to be comparable the small print would have to be at the top - the first thing visible.