Go figure: Assessing Fundraising Performance in Small Charities

By Janine Edwards, Head of Learning & Business Development, The FSI

One of the key strategic responsibilities of a Trustee Board is to ensure their charity has sufficient resources to pursue its aims and objectives.  Linked to this is the duty of prudence – ensuring that the charity’s funds are used responsibly. When it comes to fundraising, Trustees and staff teams need to ensure they are assessing how much of a return they are getting on the time and resources that are invested in fundraising.

So, with this in mind, what should charity fundraisers, CEOs and Trustees be considering when assessing their fundraising performance?  Janine Edwards from the FSI considers some Do’s and Don’ts.

Do ensure you are looking at the full costs of your fundraising when calculating Return on Investment.

When we talk about Return on Investment, we mean the relationship of income to fundraising costs, typically expressed as a ratio, i.e. £4:£1 would mean that for every £4 raised we spent £1.  Often when I am working with charities to review or develop their fundraising strategies, they are calculating their return on investment but omitting some very important costs – such as the cost of recruitment, training and development for the fundraisers the CEO’s time spent at events or developing high level relationships,.  Just as we encourage charities to use full cost recovery when budgeting for their services and activities, it is also important to apportion a share of organisational overheads to the fundraising budget as well.   Without understanding the full costs of fundraising it is very difficult to assess a meaningful ROI.

Don’t see external benchmarking figures as the be all and end all.

Fundratios produce a useful set of annual statistics that analyse Return on Investment trends, available at http://www.cifc.co.uk/Fundratios14.html.  By using this externally available data you can see just how your charity is doing in respect of its return on investment in fundraising.  However, don’t let the ratio’s stop you pursuing your fundraising goals, instead see them as something for you to aspire to and make sure that you are moving each year forwards towards mirroring the national fundraising ratio’s.

Do consider a mean return on investment approach

For Trustees and CEO’s, and very much linked to the above, it is not always totally helpful to assess return on investment only by each individual fundraising method.  Looking at the bigger picture you may consider adopting a ‘Mean Return on Investment’ approach for the Fundraisers in the charity. So instead of getting into the detail as a Trustee Board and CEO you focus on the overall return on investment i.e. the bottom line, decide what ROI you want the fundraising team to deliver to your charity, this will enable a much more holistic approach to fundraising.

For Fundraisers this also reduces the temptation to cut low-ROI activity such as community and events fundraising which can have a knock on impact on higher ROI areas.  It also allows strategic decisions to be made by fundraisers, in conjunction with the CEO about which methods to invest in to increase the average return on investment over a longer period.  It may also mean looking at which areas could be managed differently to reduce the resource but maintain the income, thus increasing the ROI for that specific fundraising method i.e. Community, Trusts, Corporate etc.

Do consider Return on Investment as part of a range of opportunities to maximise your investment in fundraising.

To increase your Return on Investment, you might consider:

  • How effectively are we involving the whole staff team and Trustees in fundraising?
  • Are we using all opportunities to involve volunteers in fundraising?
  • How well are we retaining and stewarding our existing supporter base?
  • How well are we converting one-off donations to other forms of giving?
  • To what extent are we securing second and third gifts from Trusts and Corporate supporters?

Want to find out more?  The FSI delivers a series of free ½ day ‘Trustee Role in Fundraising’ workshops and full day ‘Developing Your Fundraising Strategy’ courses across the UK.  Check out what is available near you at http://www.thefsi.org/services/training/

Establishing a return on investment assessment is helpful – but let’s be clear, it only measures fundraising efficiency and not the overall effectiveness of the organisation.

Janine Edwards is Head of Learning & Business Development at the FSI, delivering training and consultancy projects to support small charities develop and implement sustainable fundraising strategies.

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