Why not all funding relationships are equal

Laura Smith coordinated the core work of the Sustainable Funding Project (enabling voluntary organisations to implement a sustainable income strategy). Laura no longer works for NCVO but her posts have been archived on this site for reference.

I spoke to someone from a large charity recently about a spectacular failure they’d experienced after launching a new fundraising programme.

They thought they’d come up with a really innovative and unique way of allowing people to give to their cause, which would attract new donors from a new demographic. They invested loads of time and money into developing the web page, marketing, and payment process. They thought it would revolutionise their fundraising.

It was a flop. A major flop. When I asked why, they said, “We had completely misunderstood the relationship we were trying to create. We thought we were offering a chance for people to donate through a process of giving – what we were actually offering was an opportunity to buy a service through a purchasing process. The donor wasn’t a donor at all, they were a customer.”

As customers, people using the site applied the same considerations that they would when buying a product in a supermarket – is the service value for money, do I like the way it looks, can I get it cheaper elsewhere. The charity hadn’t really thought about these things; rather, they’d thought about why people might give something, not why they might buy something. When people give, they think about different considerations – do I support the cause, have I been personally affected, is my money going to be used to do good.

This organisation, although extremely adept fundraisers with a track record of success, hadn’t recognised the very different relationships involved in generating different types of income. NCVO uses an income spectrum to think about all of the income options available to voluntary and community organisations (VCOs). Most of us are familiar with the donor (giving) relationship, or the funder (grant) relationship. But as more VCOs look to other forms of income, such as contracting, trading and enterprise, or even social investment, we need to build relationships with commissioners or purchasers, customers or investors. These people are still giving us money, but they’re all expecting something different in return.

It’s not always easy to find out what that is, but a good way to start is by putting yourself in their shoes. Why might someone want to donate to your charity? The motivations for giving are many and varied (see the Helping Out survey for an insight into why people give), but you could make some reasonable assumptions by profiling the type of person who might give (a concept from commercial marketing theory).

I worked with a youth organisation recently who received donations from adults who attended the club when they were teenagers. They gave because they understood the value of the service, but they had no chance of getting anything back as they no longer qualified for the support. The same youth club ran music nights for the local community. People paid money to see a band and have a good night out. Some of these people were the same adults who had previously donated, but if they turned up and found out that their ticket money didn’t provide them with a service (the live music), it’s likely they would be very angry. In this case, the people giving money are customers buying a product, even though they might be the same people who are regular donors.

As new opportunities for financing VCOs are developed, we need to build new skills to attract income from across the spectrum. Why should anyone give us money? The answer isn’t simple, but it’s key to the success of our work.

That’s why we’ve made it the theme of NCVO’s Sustainable Funding conference this year, which will take place on 24 November. We’ll give you more details soon, but in the meantime, feel free to let us know who you’d like to hear from by posting comments below or tweeting @NCVOFundingTeam.

Laura Smith,
Sustainable funding manager

P.S. I can’t reveal the name of the charity mentioned at the beginning of this article, but I can tell you they learnt from that failure and have moved on to a bigger, better fundraising project!

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