Fundraising: Challenges and opportunities in a changing world

publication date: Nov 20, 2017
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author/source: Ann Rosenfield, MBA, CFRE


In the last 20 years fundraising has seen explosive growth around the world, with Spain being one of the fastest growing and most invested in markets whilst Canada is not seen as attractive for external investment in fundraising. Increasingly, growth is occurring in Asia and Latin America as some of the mature markets in Europe and North America are stagnating and face crisis, whist fundraising in China is beginning to take off big time.

In Europe media attacks, public concerns and government scrutiny is leading to tougher rules governing data management and how we communicate with donors. The cost of recruiting and retaining new donors through “traditional” fundraising channels are increasing and new channels are failing, so far to generate both high volume/high quality donors. So how do we as a sector adapt, change and, therefore, invest for future success.

Mega trends

Fundraising is going global. There is significant fundraising happening around the world. Two big trends are converging with a mix of large charities looking for new markets combined with rise in small charities in small markets. This means that there is increased competition across the board.

With increased competition and professionalization, average gift size is going up but number of donors is declining in the developed world. The loyalty from first gift to forever is declining. There is a trend to "try, drop" with younger donors. This means charities need better donor relations. 

Challenges

Another reason to improve donor relations is because, there are a lot of terrible front page news stories, particularly in Britain, attacking charities. There are both articles about poor staff treatment as well as strong criticism of charities and fundraising. With this trend, the Canadian charity sector needs a strategy for this kind of scrutiny because these stories travel from country to country. These news stories mean that the public is questioning if we are as good as they thought we were. This has led to a decline in trust in the nonprofit sector.

Not only is that a decline in donor trust but there is a lack of leadership in the sector. Charities have not been good at creating good P.R. in our sector plus there is a global shortage of fundraising professionals. Interestingly, Canadian fundraisers are highly prized employees by European NPOs. In developing countries, there is a lack of experienced professionals.

Human resources issues in the sector include a shortage of skills, particular entrepreneurship, in fundraising professionals. Furthermore, the lack of diversity in the profession is an issue throughout the work. This means we have not enough people, not enough of the right people, and are missing opportunities.

The sector is also missing opportunities with too much reliance on too few channels for new donors. There are only three countries in Europe where direct mail is still working in acquisition. In the meanwhile, face-to-face is the key method for recruiting new donors in Europe. It is worth considering how soon Canadian direct mail will stop working for acquisition.This means we are getting to a dangerous situation where there are fewer and fewer methods to acquire donors.

Complicating this issue with donor acquisition is that nonprofits don't tend to look closely at ROI. Data analytics is a area that needs to be increased. Furthermore, you need to take into account attribution of a direct mail dropping at the same time as a marketing campaign will boost both. Different channels have different lifetime ROI. A concern for ROI is that donor retention is declining significantly.

Opportunities

The outlook for fundraising is not all bleak. Some kinds of are coming back. Areas of giving, like walk-a-thons, have seen a resurgence thanks to digital media. This is a technique that had fallen greatly. In addition, good use to technology through crowdfunding is also on the rise. 

With better technology, you can have a donor journey based on the donors and their interests. Your donor journey can be customized by channel.  Too many charities spend the same for the donors coming through digital as they do other donors.  it is key to adapt your donor journey to your donor efforts. This is imported because, based on Jen Shen and Adrian Sergeant's research, good donor stewardship can double the lifetime value of your donors. Even something as simple as the MacMillan Cancer Research Coffee Morning is a great example of a simple but still engaging activity.

Fundraising has a very low rate of innovation. Interestingly, corporations spend 15-20% investing in innovation. This is leading to a big gap between state of the art testing done by the big charities and the small charities. Another thing that charities should think about is product lifecycle. Charities are as vulnerable to this as are corporations.

Social media will clearly take over the world in donor acquisition, given they have all the mega data and your personal data. As we put more of our lives onto Facebook, it will become easier and easier to target donors based on the information you provide and then to be able to customize their donor journey. These corporations realize we as customers will feel better about them as companies so it will be hard to get the data and control from them.

Fundraising has mega trends, challenges, and opportunities. Fundraisers need to get more innovative, more willing to take risks, and get better at executing great fundraising. 

Based in Madrid, Daryl Upsall has 34 years working with over 230 non-profits in 62 countries. Known for his leadership & innovation he pioneered digital fundraising and is a co-creator of what is known as face to face fundraising during the 1990s when leading Greenpeace International fundraising. Daryl Upsall & Associates SL provides strategic consulting support to the world’s leading UN agencies and INPOs whilst Daryl Upsall Consulting International SL has hired 451 posts for 179 clients in 127 locations worldwide.His is a Fellow of the UK Institute of Fundraising & until recently, Vice-Chair, Association of Fundraising Professionals (USA) responsible for education & professional development.



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