Thursday, March 6, 2014

The future of fundraising in Australia?

A recent post by Louise Williams on the Fundraising Institute Australia LinkedIn group recently asked the oft repeated question.  What will fundraising look like in ten years?

What do you think?

My thoughts....

Looking at the data, it really depends on the size of the charity.  Nearly all donations, statistically speaking, go to a couple of hundred charities, and the top 50 of them get the majority of that.

So, looking at those guys and ignoring government and sales of services, we see that by far and away the bulk of that money comes from direct mail, face to face, bequests and major donors.

Things like affinity deals (book a hotel and 3% goes to charity), fashion parades, fundraising events, fundraising offers and auctions can be very important fundraisers for smaller charities but despite a few outliers (eg Cancer Council NSW superb events program, Movember and Inspired Adventures trips abroad across several top charities) they don't add up to a massive slice of total fundraising.  Of course, if your charity makes all of its money from such events you may feel different, but it doesn't change the fact that the bulk of income comes from individuals giving through regular gifts and direct donations, and this is dominated by the biggies.

I don't see this shifting enormously in the next ten years - though I do see one area that will almost certainly give face to face a bit of competition:

Regular givers acquired by telephone, following lead generation techniques.  This is already huge in Australia, and is growing near exponentially.  Charities run surveys, campaigns, online and offline to generate leads and then they are called for regular giving.

A group convened by Pareto Fundraising, now run by the FIA and consisting of lots of charities, is working to encourage the telecommunication companies  to help include SMS lead generation in the mix.  This is massive in UK and Spain, leading to the London Underground building in a quota system to stop all ads on the Tube being charity 'please SMS this number to donate...' ads.  Note that the point of these ads is not the donation but the number to call to get a monthly donation.

Also, sensible charities are investing much more in bequest marketing these days; although the bulk of the income from that area won't be in the next ten years, enough will come in towards the end of the next decade to make significant impact.

Back in 2004, face to face began to provide more than half of all new regular givers, whilst direct mail plodded along.  By 2014, face to face provided nearly 90%(!) of all new regular givers and direct mail was providing twice as many 'classic' donors as it was in 2010 when it's recent growth spurt began.  I see continued growth for these two, despite the competition, for at least another half decade.

'Direct digital' donations - ie acquiring donors through online ads to online forms - currently provide a smidgen of donors (except for disasters) but this will definitely change.  How much in the next decade is hard to tell.

My thoughts... Anyone else?


Anonymous said...

Although crowd-funding could be seen as a bit of a 'fad' (I guess only history will tell), I believe that the way it allows donors to be (a) very specific in their giving and (b) demand transparency in the projects they support, can only grow from here. I don't know about what the data tells us, but my feelings are this could be a huge-growth area. ~Jonathan

'Sean is always learning' said...

Jonathan - good point. This area is growing year on year; I guess the problem is defining crowd funding. Do we mean people doing an event, and using one of the awesome peer to peer online services as their virtual sponsor forms? If so - it isn't really crowdfunding. It is simply a much more effective means of get personal sponsorship for events, and is therefore events fundraising.

The 'few outliers' I mentioned all happen to use this kind of fundraising. What we know is that 'conversion' of sponsors to ongoing donors is very low. It can often be lower than we get from people who have made no financial commitment at all but signed up to a prize draw, quiz or petition!

If we mean crowd funding like Pozible, then I am really excited, but it doesn't seem to have made a strategic impact in ongoing revenue to Australian charities yet.

Thanks Jonathan!

Anonymous said...

Hey Sean - I work in development at an Australian university. The possibilities that crow-funding (and yes - Pozible definitely springs to mind) offer, I believe, are huge... particularly in bringing impactful research out of the uni's four walls (Ivory Towers?) and more into the public space. My thoughts are that not only is this a good thing for the general Australian public to be made more aware of the impact and great work universities do, but also ensure that researchers are 'forced' to be more precise and 'incisive' in how they translate their work into the public domain... thus developing a virtuous circle around my first point about building awareness.

'Sean is always learning' said...

It could well be, and I am excited by it too. Has anyone actually got a good case study for us!? The Climate Council showed how an online campaign, which they called crowd-funding, can work brilliantly - raising the $1.4m or so the Government stopped giving them in a matter of weeks. But it doesn't really demonstrate crowd fundraising - it was just superbly orchestrated integrated fundraising.
And events funded through sponsorship aren't really crowdfunding either. So, does anyone have an actual crowd funded example to share?

Anonymous said...

Deakin did something which was very interesting - it was lead by researchers, rather than fundraisers:

Alistar Johnson said...

Hi Sean,

Thanks for your post! Just read through it myself!

I personally think that there is always a future for fundraising! There are always ways in which it can be and is going to be developed.

Take technology for example, that has advanced fundraising no end. 20 years ago, I bet nobody expected that we would be able to donate from charities over the internet or via text message!

I'm sure there are still plenty of opportunities for fundraising to develop, lets just see what is waiting for us round the corner, another development hopefully!

Thanks again for the post


Allen Marco said...

What is crowdfunding pr?

Kristen Best said...

Hi Sean, It's nearly two years since this post. Have you noticed any new trends in giving in Australia? Has crowdfunding taken off? Have the rates of conversion increased with email to online giving?

'Sean is always learning' said...

Hi Kristen
This has not changed at all:
"The bulk of income comes from individuals giving through regular gifts and direct donations, and this is dominated by the biggies."

But one company - Everyday Hero have had pretty much 100% growth on event participants donating online since just before I wrote that article. (This kind of event support is often what people mean when they talk about crowd-funding). I imagine the total market doubled.

And lots of our clients are doing well 'converting' some of these eventers and donors to regular giving. These converts have mostly been through the phone though - it is massively more effective than email for this purpose - but also massively more expensive.

But like all fundraising, it is better to have 100 donors giving $20 a month for several years at a 'cost' of $24,000 than 3 such donors at a cost of $20. The charity can do more.

Conversion rates by phone vary from 3.5% to over 10% of those called. It depends on the event of course. The bottom line - if you have more than 2000 participants or sponsors, phone is worth investing in but below that the numbers may not add up.


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