Computer Says Yes

In a New York office in the early 1980s, a young currency trader listened intently during meetings of newly formed NGO Helsinki Watch. The meetings were taken up with passionate talk of human rights and the need to expand freedoms in undemocratic nations, vital issues to the young financier, who was born and raised in autocratic, Soviet-era Hungary before coming to the US to make his fortune.

The trader was George Soros, and the NGO later became Human Rights Watch.  In 2010, Mr Soros made a donation of $100m to HRW, the largest in its history.  It was a transformational gift allowing them to expand beyond their traditional base in wealthy western countries, into influential developing nations like Brazil and South Africa.

At the time of his attending Helsinki Watch meetings Mr Soros would not have scored highly on a recency, frequency, value (RFV) giving model, and he would not have matched on a wealth screening.  His gifts became significant only after years – decades – of involvement with HRW and it’s predecessors.  However, during this time, he formed an enduring attachment with not only HRW, but the cause of human rights more widely.  By 2010, he saw himself (and was) an integral part of the movement; rather than just handing over a cheque, he was funding a project with which he was intimately involved.  The question in his mind when making the gift would not have been ‘how much do they want from me this time?’ but ‘what do we want to achieve, and what will it realistically cost?’.  Indeed, when the call came for a transformational gift, Soros actually bargained up, arguing that to achieve their aims HRW needed more than the $50m they thought. The only explanation for this is that he is deeply committed to and trusting of the organisation and their project.

This story matters for at least two reasons.  First, the number of major gifts made in the UK,  including really large ones such as that of Mr Soros, should be growing — but aren’t (indeed, there has never been a nine-figure gift from a British philanthropist to an operational UK charity).  The wealth of members of the Sunday Times Rich List and value of £m donations in the Coutts Million Pound Report bear no relation, with UK top wealth doubling since 2009 but £m gifts static:

Coutts £m 2014
Also, the majority of such gifts are concentrated in a few sectors such as Arts & Heritage and Higher Education, missing other important areas; of 197 £m gifts in the most recent Coutts Million Pound Report, ‘Human Services’ received 10, ‘the Environment’ six,  and ‘Government’ one.  Vital though it is, non-university education received exactly zero £m donations in that year:
Coutts £m 2014 no2
Wealth alone obviously does not predict donations, but the lack of association between the two in this case is worrying, and indicates issues with the nature of philanthropic engagement, and perhaps the profile of philanthropy fundraising, in the UK charitable sector.

Secondly, and relatedly, charities’ methodologies often direct fundraising appeals  toward those supporters giving smaller, regular gifts.  Indeed, this is a striking absence from recent commentary on UK charities; a critical reason some donors come to be contacted repeatedly is that, time and again, transaction-focused methodologies lead back to those giving recently and/or often.  Major gifts result from major involvement and affinity; but transaction-obsession gives no insight into this causal connection.  Seeing gifts as a synonym for affinity is wrong, rather like measuring the number of leaves on a tree to understand its health, rather than the roots.  Confusing the two is part of the reason charities, like the Red Queen in Through the Looking Glass, must run ever faster just to stand still; RFV always reveals the same pond, and often leads to over-fishing.   Success depends upon asking, and acting upon, the right questions, and our current toolkit often leads us to bad explanations, bad conclusions, and, even worse, may even prevent us from asking the right questions.  This matters because, (as Professor Adrian Sargeant and others have proven), “charities exist as an expression of their supporters’ will to make a difference“, so measuring affinity must be the challenge to tackle in identifying those supporters most likely to increase giving.  Recognising this is crucial to identifying those most connected to the cause, and therefore to stepping off the transactional treadmill (or is a hamster wheel?).  Donations are means, not ends in themselves.
red queen
So, what to do?  We need the computer to say ‘yes’, and be right.  That is, a methodology to identify affinity/connection and capacity to give at higher levels.  My suggested agenda for practical, insightful Philanthropy prospecting, and what Adrian Salmon recently called ‘leadership giving‘, is based not only on donations, but also on the range and frequency of touch-points with the charity, such as spontaneously offered comments and feedback, survey sign ups, questionnaire responses, petition signatures, as well as measures of estimated capacity.  Critical to this is the degree of activity supporters show in their interactions and that the fact that in many cases engagement does not take the form of donations.  In thinking about identifiable forms such engagement can take, I often ask myself things like:

Who is responding to more than one in ten appeals? (‘responding’ not necessarily meaning sending gifts)
Which supporters contact us unprompted to update details, chase us to re-send something or ask unprompted questions about our work?
Do we have petition signatories from affluent areas who may want to uplift their giving or become a supporter?
Who donates via active methods, ie internet donations, cheques, telephone calls or mail donations?
Who attends our advocacy events?  Are there repeat visitors?
Which households have more than one family member who is a supporter?
Who is supporting us in memory? Who among our supporters has direct experience of the cause we work to support?
Whose giving is uplifting spontaneously?

These are just examples, the point being that thinking analytically about supporter engagement can be done with some simple data and a willingness to try.  Stuart McCoy’s useful presentation to the IoF Insight group a couple of years ago gives many more ideas for such data-driven prospecting.

Combining measures of affinity and capacity can be done quickly, cheaply and to great effect.  When this is understood, the case becomes clear for fundraising appeals and products designed for those passionate donors and volunteers able to offer support in four, five six and seven figures.  But this is not ‘just ask more’ for the 1%; it is responsible, evidence-based practice that can and should profitably guide donor relationship-building by aligning fundraising with society’s evolving wealth dynamics and supporters’ strength of feeling.  Contrary to recent coverage, it would be hugely irresponsible for charities not to try to understand who may want, and be able to, offer more significant support.  Because, by doing so, data driven fundraising can be a path to growth, for the sector as well as individual organisations within it.  Unless and until charity fundraising aligns better with the social dynamics of wealth, and incorporates insights on affinity and capacity to grow giving at the top, charity secular stagnation will continue.

Change often follows a positive message: Barack Obama did not say ‘No, They Can’t’, and Dr. Martin Luther King did not say ‘I have a nightmare’.  And in a sector forecast to be heading for a £4.6bn shortfall (around a third of current total income) within the next four years, an achievable, sustainable way to grow overall giving through enduring donor relationships surely fits the bill.

Chris Carnie interview: “‘value added’ donors have great potential…we can make an inspiring offer”

Chris C

Chris is the founder of research consultancy Factary, and an expert in fundraising in the UK and continental Europe.  He tweets at @chrisfactary and blogs at

The interview is mostly about prospect research, where it has come from and where it is going.  We also discuss ‘value added’ donors, or those falling between traditional markets of individual and major giving, and the potential in this group to play a major part in UK fundraising.  Interesting to contract this with Adrian Salmon’s recent blog on lessons UK higher education fundraising has for charities.  HE blends individual giving and major gifts in innovative ways, as Adrian notes (of which more later), and consequently has a very different mix of donations, with major giving predominant.  Is this a glimpse into the charity sector’s future?

Any prospect researchers out there will be interested to hear about the history of the discipline and how it has evolved since the days when screening meant sifting through paper copies of the Rich List and Who’s Who.  Although we still do this, the range of resources we use has certainly moved on.

Re-listening to the interview reminded me of a comment from another interviewee, Marianne Pelletier, who made the analogy with baseball recently in saying:

“Coaches know early on who will be a better player and how to get them there.
They watch certain stats.  On our side of the fence, Harvard, way back in 1988 when we barely had computers, used to know at a class’s fifth reunion who would give the $1 million professorship at their 25th. They knew because they knew the alumni.  There is a good mixture of stats and hands-on cultivation that will get us to a point where we can predict the winners of the future. I think the next horizon for us as data miners [and researchers] is to figure out how to communicate with our field officers and get richer insight. [italics added]”

Is the “next horizon” to improve human capital in our organisations, and break down the silos?

I hope you enjoy the interview.  If there are future interviewees you would like to hear from, let me know in the comments, or tweet me @benrymer, and I’ll try to make it happen.

The Collective

Craig Linton’s excellent and timely post over at Fundraising Detective got me thinking, especially his points about seeking market share with no growth overall.  For context, this chart from a recent NCVO report neatly illustrates the dominance of ‘big charity’ in raising funds:

NCVO chart charity size_income

Now compare this with the increases in individual giving of six of the largest national charities in the UK:

  • CRUK Individual Giving income 2008/9: £90.9m: 2013/14; £123.4m
  • Save the Children Individual Giving income 2008/9: £28.1m; 2013/14: £43.5m
  • Macmillan Individual Giving income 2008/9; £16.1m: 2013/14: £38.5m
  • BHF Individual Giving income 2008/9; £18.6m (donations): 2013/14: £22.7m (IG not split out; this covers ‘donations’)
  • NSPCC Individual Giving income 2008/9: £48m; 2013/14: £68.1m
  • Red Cross Individual Giving income 2008/9: £19.5m; 2013/14: £48.5m

Combined gains of £123m in five years; pretty chunky in a low-growth sector where most organisations have 10 or fewer employees.  Craig cites the £18m increase in individual giving expenditure by six large charities last year, and declining ROI.  From the figures above though, (our lists don’t exactly match, but Macmillan and British Red Cross, not included in his expenditure figures, must be at the high end of spenders), ‘big charity’ was spending on the basis of success — their IG income has grown hugely, if expensively.  It’s plausible that the ripple effect of this costly growth was for other smaller charities also to turn up the volume on acquisition.  I’ve not been through the accounts so can’t definitively say this, though in the comments to the article Mark Phillips, Founder of agency BlueFrog, does say that, according to his analysis of accounts, this trend prevails outside the top ten biggest charities.

To me, these gains present the sector with what economists call ‘collective action problems‘, where individuals’ incentives differ from those of the collective.  So, individually, it made business sense in 2008 for ‘big charity’ to (aggressively) pursue market share through existing channels.  But, collectively, this race often took the (ultimately damaging) form of higher ask rates and more acquisition without a matching focus on retention.  When I interviewed  Macmillan’s Head of Insight earlier this year, one of the questions was ‘if you could choose to have one piece of data/information about your suporters, what would it be?’.  Answer: supporters’ ask tolerance level, ie, how often can we ask before their patience snaps.  Just a straw in the wind but telling nonetheless.

This speaks to a similar, but bigger, issue, namely a lack of disruptive innovation.  As Craig says: “if the market isn’t growing, then the only way you can grow is by taking market share from your competitors”.  But as it stands there is little ‘first mover advantage’ for many charities to strike out with a really big, but risky, initiative which may not pay off, and which can be co-opted if it does.  But not creating new types of products (not just versions of existing products or appeals) harms the collective in stunting overall growth.  This is a classic collective action problem, the tricky bit being that such problems are often solved by the (Enrepreneurial) State stepping in to do basic, blue-sky research that moves things forward; as this now-classic chart from Mariana Mazzucato’s book of the same name shows, the iPod and iPhone is almost entirely derived from Government-funded technology:

iphone ES MM pic

So, of course, market growth via product innovation is possible, and we do have great initiatives like SOFII and Innovation in Giving (to name but two).  But the the current Government is unlikely to ramp these up anytime soon, and we can’t wait for A. N. Other Government.  Karl Wilding, Director of Public Policy at the NCVO, flags the important example of ethical products, UK sales of which have quintupled since 1999, as this graph shows:

ethical spending graph

He’s right to raise the example: this growth is both a promise and a threat; promising because it shows that demand is there for ethical products, a threat because how long before this growth subsumes our own?

If something cannot go on forever, it will stop“, and after the last few months, it’s pretty clear that growing by turbo-charging acquisition again will not fly, and new markets have to be created for charitable giving.  Creative destruction is real; without growth, fundraising will be overtaken.  Craig and Mark nail the issue (I think) in pointing out that the wealthiest 20% of British society donate a smaller fraction of their income to charity than everyone else, and raising the question “[which charity] is going to make the break and try and establish a more ‘luxury’ giving brand?”. 

I’m off to buy a crystal ball…

Cargo Cult Fundraising

During World War Two, a tribe in the Pacific Islands saw American supply planes disembark their cargo onto a landing strip.  Having a strong belief in the divine, they reasoned that the planes were sent by a God, and that, were they to build a replica airstrip, correct in every detail, the God would send them planes laden with valuable supplies (‘cargo‘).  So they set about building wooden huts, a wooden airstrip, painting their chests with ‘U.S.A’, even staffing the huts with people and building fires alongside them to mimic guide lights.  But the planes were not sent by a God, they were built and flown by the American army, and none brought the hoped-for cargo to the Islanders’ airstrip.

cargo cult pic

Cargo cults are a famous example of ‘magical thinking’, where a conclusion is reached that evidence does not support, or even suggest.  Fundraising seems to be suffering from a classic case of magical thinking.  The patient is serious but stable, although the long-term prospects are dim.  Exhibit A: digital fundraising.  By looking for the next ice bucket challenge or #nomakeupselfie — in effect praying for free money to fall out of the sky — we may as well build our own plywood airstrips.  No doubt a strong digital brand is a prerequisite for many organisations in this day and age.  However, in scrambling to co-opt the next trending hashtag, we are diverted from the demanding, but rewarding and necessary work of building enduring donor relationships of long-term value.  We are also labeled cynical and opportunistic by the very audience we sought to engage; ultimately, this is not an arms race with a winner, it ends in scorched earth and attrition.  Exhibit B: certain types of direct fundraising, including philanthropy and individual giving.  In these areas, for different reasons and in different ways, wishing harder seems to be an accepted methodology.  At major donor seminars, the almost palpable hope is for a wealthy philanthropist to come to the first event they are invited to, immediately write a huge cheque with no expectation of reporting or stewardship, and do the same the next year.  And individual giving keeps a-wishin’ — despite continued 90%+ nonresponder rates — for a white knight (looking at you, behavioural economics) to come and save the day, despite no evidence that either response rates nor overall giving will grow, or even remain static, with current methods.  The gifts keep not coming or coming more slowly, but we still build our wooden airstrips, light the fires and wait for the cargo to arrive.

These are off-the-cuff examples — there are more. The point is that growing giving will be disruptive and require a complete refutation of the ‘churn and burn’/’just ask more’ mindset which is “as baffling as it is persistent“.  Innovation always bears risk.  But the risk posed by business as usual is surely greater still.  To mitigate it, we could do worse than follow Rene Bekkers’ suggested agenda to increase donations, proposed recently at the University of Kent:
  1. A serious political discussion about the role of philanthropy in public policy.
  2. Decent research informing policy decisions, paying attention to undesirable side-effects.
  3. An Impact Philanthropy Lab (IPL): creation and evaluation of new philanthropic / business investment instruments.
  4. Knowledge about what works in fundraising, and about failures

My addition to the list would be to discuss failure openly and constructively.  Learning from failure is fundamental to progress and innovation but often, it seems, we brush it under the carpet or quietly shelve ‘failed’ projects.  Organisations such as Glass Pockets and Fail Forward, taking their lead from initiatives like Engineers Without Borders Canada’s ‘Failure Report’, are helping not-for-profits learn that, as NPC said recently,  “the public wants to see charities use evidence to become more effective and don’t mind hearing about past failures as part of this process”.

failure report

Choosing whether to take these lessons on board may now not be a matter for charities, in the UK at least.  The British Government announced this week that, following recent high-profile scandals and tragedies, it would back new laws to limit charity fundraising communications; the first step in this being a review of charity self-regulation by NCVO Chief Executive Sir Stuart EtheringtonCharities’ Minister Rob Wilson has left no doubt that charities are losing control of their own destiny in saying recently: “[c]harities need to take more responsibility for their […] fundraising, and ask themselves how they would feel if they were on the receiving end of their organisation’s fundraising practices..[n]o one should try to deny that there is a problem here or that there are indefensible practices taking place..[charities] do not have the luxury of time. There are demands for immediate action not words…I urge you to take that window of opportunity seriously as [it] may not remain open for much longer.”

The calls for actions should not be a surprise.  As previous interviewee on this site Charlie Hulme pointed out in a brilliant polemic this week, their causes have deep roots in our methodologies, particularly the singular failure to understand donor motivation: “[w]hat do we actually know about the people we systematically bombard with requests for more money? We know their transactional history and demographic profile. But knowing who gave, what they gave, when they gave and how they gave tells us nothing, nothing, NOTHING about why they gave or would give again….As a sector growth is stagnant. Retention rates are catastrophic. And fewer and fewer people like, much less trust, us.  Our jaded, complacent, timid sector is mired in bad business and bad ethics. Bad business because, despite the rhetoric, we do nothing to change a set up that, by definition, precludes the concept of being ‘donor centric’ from being anything more than a buzzword. Bad ethics because this stops us growing and making the slightest dent in mission.”  These are strong words, but to quote economist John Maynard Keynes, to have their full impact “words ought to be a little wild”.  Charlie, Kevin Schulman, Roger Craver, Ken Burnett and others have warned for years (and decades) of the risks associated with ‘just ask more’.  They are surely being proven right now, and deserve to be listened to.

wright bros plane

Charities can persist — as cargo cults do — or they can change and thrive.  The causes we represent are the best imaginable, but as Sir Stuart Etherington said this week, “[c]harities can only do the work they do because of the trust, confidence and overwhelming generosity of the British people”.  Not regaining this trust and confidence will be the death knell for ambitions to grow, or even maintain, giving.  Nobel Prize-winning physicist Richard Feynman famously said that to avoid ‘cargo cult thinking’, “the first principle is that you must not fool yourself–and you are the easiest person to fool”.  Rather than fooling ourselves, we should dare to know why our supporters choose the charities and causes they do, and dare to break the ‘ask less’ taboo.  Rigorous use of evidence, learning from ‘failure’, being honest with ourselves and donors, and actively seeking out disruptive innovation will all be key parts of our being able to raise, and do, more for those who need us.

The planes will not land unless we have the courage and skill to build them.

A Lie That Reveals the Truth

This is adapted from a presentation I gave last week for Researchers in Fundraising, titled ‘Introducing Data Analytics’.  Enjoy!

Prospect researchers should care about analytics for many reasons.  There has been no rise in charitable donations in the UK or US for decades; charities urgently need to build stronger relationships with supporters; only half of high-value individuals are covered in wealth screenings; it need not be rocket science, and automation is real, and prospect researchers must remain relevant.

The presentation shows what analytical thinking is using the example (originally from Ernst Gombrich’s ‘Introduction to Art’, quoted in John Kay’s book ‘Obliquity’) of Pablo Picasso.  The Picasso museum in Malaga (where he was born) is ordered chronologically, and the level of realistic detail in his work decreased through his career.  He abstracted more to reveal more; he became more expressive by using ‘styilised simplifications’, a term which also describes quantitative models.  To paraphrase him, Picasso ‘lied to reveal the truth’.

Building a team and culture are central to using analytics and being evidence-based.  As Martin Squires, Head of Insight at Boots the Chemist, said at the Insight Special Interest Group conference in 2014, the essential qualities for an analyst are more than anything “curiosity, communication and commons sense”.  This culture can be built from the bottom up or the middle out.  As Clara Avery (Clara Avery interviewee on this site) has said, Macmillan were “probably calling ourselves an evidence-based organisation for two years before we were one.”  Slide eight below shows how Macmillan use evidence at each stage of the innovation process, a process which, as Clara says, took time to grow but is now established.

In terms of methods, analytics for fundraising often identifies a group of supporters, profiling them using behavioural, demographic and/or attitudinal data and looking to the wider population of supporters to try to identify those with a similar profile.  Different organisations will have different supporter profiles; likewise, appeals and products will have different ‘typical’ supporters.  Slide 11 of the deck shows some of what I think are particularly insightful data points, none of which need any great numeracy to work with.  Indeed, none of the methods I’ve quoted in the slides needs advanced numeracy, let alone a background in statistics or econometrics.  The slides in the deck here are from a great Stuart McCoy/Marcelle Jansen presentation from the IoF Insight special interest group.

Analytical methods don’t need to involve statistical packages, and one of the points of the presentation is that we can gain significant insight using Excel and other widely-used packages.  In my example, I create a simple summary spreadsheet with weighted measures (scored at 1-10) of affinity and capacity.  These are pulled through into the first tab to create a score, indicating overall likelihood to give at a major level.  Some of the major indicators of affinity and capacity mentioned in the slides are:

  • Giving tenure/Continuity of Giving: the length of time a donor has been donating to your organisation, and how continuous this giving has been.  Continuous giving is great, but a high hit rate can also be really useful to measure
  • Giving ‘velocity’: basically the uplift in giving.  Dividing the current years total giving by the average of the previous three is a good way of doing this; another method is called ‘Compound Annual Growth Rate’ (CAGR)
  • Recruitment date: date of first contact with your organisation.  Interesting to contract this with the first gift date
  • Response ratios: rule of thumb is that people responding to more than one in 10 of your appeals is pretty engaged.  This is simply the total number of appeals divided by the number of responses
  • Unprompted communications: how often are supporters contacting you with being prompted?  Updating changed addresses, responding to surveys or questionnaires, signing petitions…all good signs of engagement
  • Wealth flags: setting up alerts for equity sales, or first-time donors who work with wealth managers are just two examples of how screening can be part-automated to help discovery through analytics
  • First gift amount: big first gift amounts are always to be followed up on
  • Current Lifetime Value (LTV): a great measure of potential and engagement, and very simple to calculate
  • Event participant/volunteer: again, simple to measure and a really strong signal of affinity and connection

More advanced methods of analytics include:

  • Regressions: these are a family of mathematical methods which aim to discover how important given variables are in a given situation
  • Text analytics: this uses software to scrape websites to carry out ‘sentiment analysis’, ie how users feel about a product or topic
  • Algorithms: an algorithm is a mathematical model to represent the relationship between variables
  • Automated scoring and screening: using business rules to automate database processes of screening
  • Machine learning: a branch of Artificial Intelligence which aims to teach computers to recognise logic, humour or other complex concepts

And before we get to advanced methods, a few resources to get prospect researchers started in using analytics:

Kevin MacDonnell’s blog: Cooldata

His and Peter Wylie’s 2014 book ‘Score!’ (ISBN 0899644457)

Josh Birkholz: Fundraising Analytics

See list at:

Join Prospect-DMM: scarily advanced at times but well worth it:

Twitter: @joshbirkholz @iofinsight @n_ashutosh, @mpellet771, @mueggenburg

Finally: some potential pitfalls for those of us looking to use more analytics.  The main ones in my mind are:

  • Just because you find the answer you want(ed) doesn’t mean it is the right one.  Correlation does not equal causation.
  • Various factors quoted by Kevin MacDonnell and Peter Wylie in their great book ‘Score!’: “conservative nature of our institutions, a natural preference for intuition and narrative over data and analysis, a skills shortage, a fear of disruptive change, scepticism over the claims made for algorithms and a lack of time and resources”
  • A popular method in non-profit donor analytics is called ‘recency, frequency and value’ (RFV for short).  For me, this is part of the solution in understanding who is engaged with you organisation, but often leads back to those giving regular gifts by direct debit.  RFV therefor gives important insights, but is not the whole picture
  • With data, it is still true that ‘garbage in, garbage out’.  Take care of your data!  It will pay you back
  • Complex maths ≠ better results! There is no substitute for your expertise, judgement and attention

And the final word to MacDonnell and Wylie, who give a great summation of why prospect researchers should move into analytics as soon as possible:

“Data analysis is a rewarding, challenging, and above all fun line of work that will provide much value to your employer and a stepping stone in your career in fundraising to you”

Helen Brown interview: “we need to stay relevant…the computers won’t get any less smart”

Helen B

Helen is President at fundraising research consultancy The Helen Brown Group.  She blogs at The Intelligent Edge and tweets at @askhelenbrown.

The interview looks at how prospect researchers can remain relevant, ways we can move to the higher levels of our organisations, and how technology has changed the industry.  Helen speaks eloquently about some of the challenges facing prospect researchers, and how we can overcome them.  Hope you enjoy it!

Lucy Gower interview: “You can’t do good innovation without insight”

Lucy G

Lucy is an innovation expert who works with charities to improve their ability to innovate and raise funds.  She tweets at @LucyInnovation.

Lucy makes the point that innovations are unlikely to give returns within financial year; so the pipeline of new innovations needs to a) be well populated and b) have a multi-year strategy/budget.  The challenge isn’t to not ‘fail’, it is to make your innovation process robust enough to withstand ‘failure’, for senior leadership to make failure something people are happy to discuss and mull over, and to spread the attitude that discussing failure is not a bad thing.  It is the case though that we become invested in our ideas, and sometimes lose our willingness to accept that something isn’t working.

Every charity wants to innovate.  However, leadership and culture are critical.  A culture of innovative practice doesn’t come about without examples from the top, especially as it can be difficult for more junior staff to say “that project I worked on absolutely tanked” if they are worried that it will be perceived badly by their superiors.  The whole organisation must be behind a change to innovative practices or it is likely to fail.  We discussed the example of shoe company Zappos, who pay staff to leave if they are not happy.  As founder Tony Hsieh says in a fascinating article about his sale of the business to Amazon, “I believe that getting the culture right is the most important thing a company can do”.

For prospect research and insight, its interesting to consider the role of “translators”.  These are the people in organisations who draw out the narratives from information and present the story.  For researchers, this is a key skill, and is really important in modern, information-rich/time-poor organisations.  And Lucy is clear that “you can’t do innovation without insight”.  Building and using a base of evidence for new products and projects, and evaluating existing work, is absolutely essential in the innovation process.  While “creativity means not copying“, creativity and innovation rely on learning from experience and incorporating this learning into future work.

Where is the money?

We all know that overall charitable giving in the UK hasn’t moved in decades, and that it needs to grow (a lot) to get near to meeting the need.  But how we raise funds seems not to match the society we find ourselves in.  The UK is lopsided in terms of wealth, with basically all the gains in the last 30 years going to several thousand London-based financial services executives.  Economically, the UK is a big city that happens to have a country attached to it:

Poorest wealthiest regions EU picLondon wealth graph pic I’d love to be proven wrong, but some technologies of fundraising seem not to be geared to raise significantly more than they already are from a society like the one described in these charts.  How many teams focus on neglected ‘middle donors‘?  How may Legacies departments have a ‘HNWI unit’ to capitalise on rising home prices?  I wonder.

Then there is ‘wealth’.  Using rich lists and wealth screenings has conditioned us to focus on (often illiquid, asset-based) ‘wealth’.  But the key concept should surely be liquidity or affluence.  In a fascinating 2013 Sunday Times article, research by credit rating firm Experian showed that there is very little overlap of their house price and affluence indices (affluent households are those with high home equity/no mortgage and low identifiable debt/outgoings).  The article highlights the disparity between SW7 1, around Rutland Gate in Kensington & Chelsea, and N20 8, around Totteridge Village in North London, which top the house-price and affluence indices respectively.  Although house prices in Totteridge are lower, the area has many large detached properties, some in several acres of land, which sell for up to  £20m.  The area is home to many footballers and two members of One Direction, and 40% of home buyers pay cash.  These are liquid, cash-rich households, and are consequently more likely to be able to offer charitable support than those loaded up with mortgages and other outgoings.  This is not even the largest discrepency between the lists, with WD17 3 (around Cassiobury Park in Watford, Hertfordshire) coming 14th on the affluence index, but a mere 247th on the home price index, and SW1Y 5 (St James’ in central London) the 9th most expensive post code sector, but only the 425th most affluent.  And we can take the analysis of affluence further by looking at equities.  These are trackable, for the princely sum of £200 a year, via the ‘Director Deals‘ area of the FT website (many websites offer similar services, including email alerts).  For me, these are a far better qualifier of wealth than a database screening, and, as Director dealings give insights into the performance of the company, are useful as well for corporate partnerships and trusts.  Prospect researchers can add real value in this area, by shouting from the rooftops about the value of analysing affluence, and steering away from simplistic wealth estimates in campaign planning.

Furthermore, as Marianne Pelletier highlighted in a previous interview on this site, we could do more to understand when our donors feel most confident to give.  Charities often use research on the timing of competitor appeals (to avoid clashing with established events such as Movember, Comic Relief, World’s Biggest Coffee Morning etc).  But do we track times of the year when major outgoings are due for relevant constituencies (Eton’s school fees of £35,000+ are payable in advance of enrollment in September, UK bank bonus season is often in February), and build these into our ask schedule?  Again, I wonder if this happens often enough.

And at the other end of the spectrum, there are a remarkable number of low-income households in the British regions, relying to some extent on benefits for their income, with even greater disparities in London (world financial centre Canary Wharf is in Tower Hamlets, one of the UK’s most deprived boroughs).  Indeed, as the map above shows, nine of the ten lowest income regions in Northern Europe are in the UK.  Granted, many charity supporters will come from the (upper) middle classes and associated professions, but the first chart above and the one below (from the great Flip Chart Fairy Tales blog) gives a sense of the degree to which many households will struggle to make ends meet, let alone make any kind of charitable contribution.  This should surely be factored into charity campaign strategy.  How many DM packs drop each month onto the doormat of households claiming tax credits or housing benefit?  How confident are these households likely to be to make a charitable donation?

flipchart rick screen-shot-2015-05-26-at-12-49-29The UK is still undeniably a major economy, with a significant middle-class and long history of giving time and money to support charitable work.  And there may well be mega-opportunities in changing demographics, engagement with corporates and building stronger donor relationships.  But to grow giving (and consequently reach), charities must break the cycle of low value, low commitment relationships with donor constituencies a mile wide and an inch deep.  As Mark Phillips very rightly says: “[d]onors don’t give enough to warrant special treatment, but without special treatment, the donors who can afford to give more, simply won’t…just as there’s no skill required to open up a pound shop, there’s no skill required in asking people for very small gifts…What’s harder is creating an offer that supporters will pay a premium for. It might not bring in as many donors as discounting, but the long-term value and loyalty of the donors it does attract will far outweigh the quick wins of being just another charity [in] the £3 a month club.”

We know more than ever about ‘where the money is’.  But it will not be easy to steer the fundraising oil tanker to a more relationship-focused, evidence-based way of working, nor to move to a more nuanced conception of ‘affluence’, rather than a blunt wealth estimate.  Until either or both these things happen, however, it seems that charitable giving, and the amount of good work we can do and people we can help, will struggle to grow to any degree.

Ken Burnett interview: “our organisations were founded in anger”

Ken Burnett

Ken has won many accolades, including the Institute of Fundraising’s ‘Lifetime Contribution’ award, and being named, in 2011, the most influential person in British fundraising.  He has also acted as a Trustee of ActionAid and the Disasters Emergency Committee (DEC), as well as writing many books and articles on fundraising, including the classic ‘Relationship Fundraising’.  He tweets at @kenburnett1, and his website, featuring ‘Relationship Fundraising’ and new book ‘Storytelling Can Change the World’, is here.

Ken’s passion is using communications to build strong relationships with supporters.  For more on this, see Ken’s recent blog posts, and series on ‘The Future of Fundraising’, available here, which describe some of the barriers facing charities in building enduring relationships with their donors.  Some of those covered in the interview, are:

  • Underinvestment: Ken highlights the long-term lack of investment in fundraising products and appeals, as well as the relative neglect of customer care compared to the commercial world.  This may have been understandable in the past, but with the revolution in customer service lead by firms like Amazon and Zappo’s, poor or average customer service is just not acceptable, and is indeed not being accepted by the majority of charity supporters, who move their support between charities while staying within the same sector with great regularity 
  • On this, he says that “almost all of the [big questions] are examples of underinvestment…because of the nature of our business we think money will come to us…if we’re losing donors at the rate we’re losing them…that’s a recipe for disaster”
  • High staff turnover: from Trustees to admin staff, most not-for-profits have average turnover rates of up to 20%, making it difficult to build lasting relationships with supporters and reducing the institutional memory of many not-for-profit organisations
  • Short-termism, which is, in Ken’s opinion, “the major thing that holds our sector back”, with a lack of long-term thinking allied to the fact that “we do not have R&D budgets”, a “blinkered approach [that] holds us back”

Ken calls his “greatest heresy” the assertion that the CRM revolution which swept through fundraising in the 1980’s and 1990’s was a mis-step.  He says: “we’ve become very professional…but donors want to be inspired by people who are every bit as passionate as they are”, adding that many charities struggle to build lasting relationships with supporters as, while “our organisations were founded in anger”, many have become slick and professionalised, sometimes losing, in their communications, the sense of outrage which moved their founders to create them, and which drives donors to support them.

Lots more in the interview.  Hope you enjoy it.

Aid and Philanthropy: Two Stories

Story one:

For a long time, Governments gave money to other Governments.  The money was called ‘aid’.  It was to be used to increase prosperity and reduce poverty and suffering.  But there were problems.  Projects went wrong, were not finished, or didn’t meet the need.  Administration costs were said to be too high, and recipients struggled to be independent of the aid support.  Some of the money couldn’t be accounted for.  Another way was sought.  Soon, countries learned not to give money, but rather to purchase goods, or services, from one another, or to give money in return only for tangible outputs, or agreed outcomes.  They expected to be partners in the projects, have a say in decisions and be kept informed of progress.  They had learned through experience that this was a better way to achieve goals than writing cheques.

Story two:

For a long time, donors gave money to charities.  The money was called a ‘donation’.  It was to be used to increase prosperity and reduce poverty and suffering.  But there were problems.  Projects went wrong, were not finished, or didn’t meet the need.  Administration costs were said to be too high, and recipients struggled to be independent of the donations.    Some of the money couldn’t be accounted for.  Another way was sought.  Soon, donors learned not to give money, but rather to buy things from the charity, or to give money in return only for tangible things or agreed outcomes.  They expected to be partners in the projects, have a say in decisions and be kept informed of progress.  They had learned through experience that this was a better way to achieve goals than writing cheques.

I wonder if these stories are in fact as similar as I’ve made them out to be?  Answers on a postcard (or in the comments).