How number crunching is killing good decision making in fundraising

I really dislike numbers. And it’s not just because of a traumatic experience during Victorian Day at primary school.

The reason that I dislike numbers is that they are, more often than not, shields to hide behind and bringers of false-confidence, rather than conveyers of the truth. No-where is this more evident than the debate around ethics in fundraising. Whilst I am really pleased to see that the first recommendation of the Fundraising Review is that Trustees should have a greater role in overseeing fundraising, I fear that all too often, numbers are obscuring any ability for trustees – or anyone else in the charity for that matter – to make properly informed decisions about fundraising methods.

The thorny, complicated problem

Charities exist to further their mission, a mission that has been deemed of social benefit. They exist to Do Good.

But, whilst existing for Doing Good, charities do not have the twin requirement to Do No Harm.

This is a subtle difference, but an absolutely critical one. Trustees currently measure the success of fundraising against its contribution to the charity being able to undertake its activities. To Do Good. They do not, and are not required to measure whether, in undertaking those activities (not just fundraising, all charitable activities), the charity inadvertently causes harm to individuals, organisations, the environment or society.

Usher in the numbers

Return on Investment

How much does a charity invest in fundraising and what does that return? How many pennies in the pound? Until recently, this was the big hot potato. If charities spend 50p to raise every £1, is that too much? What are the most cost effective ways of fundraising? Well, you know chuggers have a very good return. As does direct mail. They are very efficient and effective ways of raising large amounts of money without wasting charity resources on fundraising.

If one charity spends just 5p on fundraising for every £1 raised, then surely, they are a much better charity than one that spends 50p?

Where are ethics and wider impact in this measurement? Nowhere.

Fundraising targets

Every charity is desperate for More Money. Often targets are generated without any conversation about the feasibility of that figure. It has been accepted wisdom, just as in the private sector, that fundraisers should have a ‘motivational’ target. They are told that if they do not hit this target, the charity will be unable to carry out its work. People will be made redundant. Beneficiaries will suffer. For some organisation, people will die.

Where are ethics and wider impact in fundraising targets? Nowhere.

Lifetime value

Another common measurement in the charity sector; fundraisers aren’t just expected to raise money today, but are judged on whether the work today will continue to bring in money tomorrow, next week and in years to come. The lifetime value figure is again touted as an example of fundraising success and of the efficiency of the charity.

Where are the ethics and wider impact in lifetime value measures? They are assumed – if a donor didn’t like what the charity was doing, they’d stop donating, and the lifetime value would fall. Right?

Should charities Do No Harm?

The recommendation of the Fundraising Review that trustees need to play a larger role in fundraising is essential – it’s something we’ve been plugging away at here at NCVO for years (and I’m delivering a session at the Trustee Conference in November on just this). However, until the remit of what a charity ‘is’ changes (and the new regulatory body may go some way to achieving this), then the trustees role remains to ensure the charity is doing the greatest good, according to their mission, NOT ensuring that the charity isn’t inadvertently causing wider harm.

Except that most of the public won’t understand this nuance. So we need to do more. But how far should we go?

Some charities already do have very robust ethical standards in place. They will have ethical investment policies, strong environmental policies, tight controls on procurement and an agreed position on what fundraising they will or won’t undertake. But the extent these policies consider wider effects other than on the charity’s mission is completely optional. The proposals in the Fundraising Review will go some way to changing that.

And what about the numbers? A charity that is taking decisions based on a wider remit probably won’t have the same impressive return on investment. Fundraisers will have fewer options open to them. They won’t be able to raise as much money. Funders, donors and investors will not be happy.

So, trustees, senior managers and government ministers, once you’ve made the decision to hold the sector to the Do No Harm standard, what about fundraising targets? What will you do when the numbers start to fall? When the charity doesn’t have as much money. When people actually die?

What then?

And I do hope that your answer isn’t to blame the fundraiser, who are already doing a difficult, pressurised job that we really need them to keep on doing (we’re British, after all – asking for money is always going to make most of us feel a bit awkward, which could explain a lot about how easily these issues caught the public imagination). The majority of fundraising is lovely, positive and completely necessary – enabling people who support a cause to donate and make a difference. It is a pretty robust fact that unless people are asked, it often won’t occur to them to give. We need fundraisers to be able to ask for money.

The practicalities

My blog posts usually aim to be quite practical. If you are reading this as a trustee or someone in charge of fundraising, there are several ways you can begin to get a feel for the wider implications of fundraising decisions. And I should begin to think about this now – the recommendation is to have a new regulator for fundraising established within six months.

There are two main things you can do now:

1. Make sure your organisation has a robust ethical policy. Some ethical policies are little more than lists of who you will and won’t accept money from. However I’d argue that doesn’t go far enough and unless you have astonishing powers of foresight, probably doesn’t cover all eventualities. Instead look at the process of evaluating opportunities: what questions to ask and how to escalate a concern.
2. Introduce your trustees to some new numbers, and begin thinking about what kinds of questions need to be asked about what those numbers show. Rather than relying on ROI, Lifetime Value and progress against financial targets, look as well at different ways of measuring opportunity costs, measuring future impact and of wider implications. For example as well as looking at direct and indirect impact on your mission, decide whether you want to consider environmental concerns or impact on other charities’ work (eg, if you aggressively fundraise in one area, are you about to damage another charity? Is this ok? And if so, why? Under what circumstances would it not be ok?). And as well as looking at totals and averages, look at the outliers, those not covered in your statistics. What aren’t the numbers telling you? And some questions to focus your mind:
   If someone investigated what your charity is doing, would they be able to generate any headlines?
   How can you be sure?
   Would they be able to discover anything that you, as a trustee or senior manager, didn’t know about?
   And if so, you need to look at your governance, and quickly.

If you’d like some more help on any of the things I’ve mentioned above then there are a few things from NCVO that could be useful:

1. Our Trustee Conference on 2 November – I’m running a session on financial management for Trustees, which includes oversight of fundraising and management of risk.
2. We will be running our Sustainable Funding for Trustees course in the new year. Email training@ncvo.org.uk to be alerted when booking is open.
3. There are some useful publications, including The Good Trustee Guide and Sustainable Funding for Trustees.

And if you think there’s a bigger problem in your organisation, then we can also help you to undertake a review of your governance or your funding position and options. Read more about NCVO consultancy and get in touch.

Other NCVO blogs

1.  What does the Fundraising Review mean for Trustees by Elizabeth Chamberlain
2. Why did the Fundraising Review not recommend statutory regulation by Elizabeth Chamberlain
3. And for the overview, Stuart Etherington’s blog on the Fundraising Review: Regulating Fundraising for the Future
4. Sense and Sustainability: a reaction to the NCVO Fundraising Review by Lewis Garland of Local Giving (written earlier in the summer).
5.  And for some other practical support on ethics, my last blog post: Charging for services, trading and ethics (put a poka-yoke in your pipeline)