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| Marked
progress |
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| While
investment benchmarking is commonplace, fundraising benchmarks
are not so readily used, nor are they as easy to calculate.
David Adams investigates if there is potential, though, for
comprehensive comparison of the fundraising function |
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Using
a benchmark to evaluate the effectiveness of fundraising activities
is not easy. Although such benchmarks do exist, they cannot
usually be regarded as anything more than a useful, but rough,
guide to performance.
This is because there is such variation in the type, structure
and size of the charities submitting data and because the
circumstances of most of them are prone to change as sources
of income are turned on and off, creating big differences
in an organisation’s cost/income ratios from one year
to the next. It is also because if something of any complexity
is being measured there is always a risk of organisations
using different criteria to calculate or collect data.
Yet there can still be much to gain from benchmarking. Firstly,
says Tony Elischer, managing director at Think Consulting,
benchmarking is an important part of responsible management.
“In any organisation, if you want to grow and move forward
you’ve got to be crystal clear in terms of the marketplace
you’re in and the competitors you’ve got,”
he says. “I can’t see how you can run a major
fundraising operation without some form of benchmarking. How
can you move forward if you don’t know where you are?”
Many, perhaps most, fundraisers are already engaged in what
might be termed informal benchmarking: meeting with counterparts
in other organisations to compare notes. “It could be
a question of asking about one particular initiative ‘how
did that go?’, and trying to see what you can learn
from other people about what works, and what doesn’t,”
says Jo Swinhoe, director of fundraising and marketing at
the Alzheimer’s Society. “If people aren’t
ready to tell you about it then they’ll tell you so.”
Benchmarking can give fundraisers and senior managers a clearer
picture of how effectively the organisation is performing
in comparison with others, and whether or how additional resources
should be allocated to fundraising. It’s also a good
way to attract financial backing from donors or investors
of any kind. “What better way of doing that is there
than going to them with comparable data for other charities,
showing them how well you’re doing,” asks Daryl
Upsall, chief executive of Madrid-based international consultancy
Daryl Upsall Consulting International.
Think’s Elischer believes benchmarking also helps attract
and retain fundraisers. “Benchmarking can motivate your
employees and make people feel good about being
a fundraiser,” he says. “No fundraiser is going
to want to stay in an organisation where fundraising is not
cost-effective.”
It is difficult to benchmark based only on publicly available
data alone, even if this can be useful in some ways. For example,
the NCVO/CAF annual giving reports provide information on
the incomes of the top 500 charities, and that can supplement
information coming out of a full benchmarking exercise. But
benchmarking, whether carried out by a group of organisations
that decide to share data, or organised by a third party,
offers participating charities much more detailed information
about the effectiveness of each part of their fundraising
strategy, although usually anonymously.
Participating organisations can then compare relevant parts
of a fundraising strategy with those run by other organisations
of a similar size, or similar structure, or age, or with a
charity working in a similar field.
The best established of these benchmarking initiatives is
Fundratios, run by the Centre for Interfirm Comparison and
the Institute of Fundraising. It has been operating for almost
20 years and is now used by more than 40 charities each year,
including some with turnovers of less than £2 million
and also some of the largest charities in the country. A number
of the charities always participate, while others benchmark
at longer intervals.
“It’s only a snapshot: you’re only ever
benchmarking against the year you’re in,” concedes
Megan Pacey, director of policy and campaigns at the Institute
of Fundraising. “But it helps you assess your own fundraising
effectiveness, productivity and growth. It enables you to
evaluate the success rate of activities against those carried
out by other organisations.”
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For example, an organisation might choose to see how well
they had performed in terms of the cost/income ratio for legacies,
corporate donations, direct marketing, local or community
fundraising, or trading. The report only provides these ratios,
not actual figures, and does so on an anonymous basis, with
each charity knowing its own code number, but not those of
other participating charities.
The homelessness charity Emmaus, a federated national charity
with an annual income of about £6 million, used Fundratio
last year and may do so again in the future. “Fundratios
does give us a useful overview and some helpful comparisons
of key income streams,” says Kieran Kettleton, head
of fundraising at Emmaus UK. But he is aware of its limitations.
“The variables that are involved make direct comparisons
quite difficult,” he says. “If you think about
a charity that in this particular year has invested heavily
in recruitment, they will have higher costs against their
income. But the charity investing in recruitment will see
the benefit of that in two, three or more years’ time.”
While he believes it is a worthwhile exercise, he also thinks
careful internal monitoring of cost/income ratios is more
important.
The Alzheimer’s Society has used Fundratios annually
for nearly ten years. It is a significantly larger organisation
than Emmaus, with annual turnover of about £42 million,
and 1,400 staff, including a central fundraising team of more
than 40, plus an army of local fundraiser volunteers. Ideally,
says Swinhoe, the Society would be benchmarking against organisations
of similar size and general breakdown of income and also,
to some extent, of a similar structure, with a nationwide
network of local fundraising groups.
“So it isn’t a straight line, it’s more
of a matrix,” she says. “We do it to make sure
that we’re making the very best use of donor’s
money that we can.” She believes the process should
form a key part of the charity’s planning processes:
“Fundraising has to be seen as part of the whole income
picture.”
Think tank and research consultancy nfpSynergy has also been
involved in a number of benchmarking initiatives. Its first
major experience in this field came from a benchmarking exercise
commissioned in 2004 by a large charity keen to find out how
well it was performing. The organisation is currently working
with 126 charities on a new benchmarking study, research from
which will produce a legacy fundraising benchmark and then
possibly also one for corporate fundraising.
Chris Greenwood, managing director at nfpSynergy says the
organisation has learned from its previous work in this area,
in particular from an unsuccessful attempt to follow up the
2004/2005 study with an international version. “We asked
the same set of questions, but because the language doesn’t
translate it just became too complicated,” he says.
“We had about 400 organisations that were interested
in taking part, but in the end only a handful did.”
Upsall was also involved in the project. “We were asking
for too much information,” he agrees. “It was
an online questionnaire – of 40 questions – that
people had to answer and they all required a degree of technical
knowledge for the answers. So people pulled out because it
was too difficult to get hold of the figures. The lesson to
be learned there is keep it simple. Try to ease people into
benchmarking slowly, so they’re within their comfort
zone. Don’t ask for data that is so complex that the
time spent getting it outweighs the benefits.”
The number of different ways that organisations can now share
ideas also continues to grow. For example, Think Consulting
runs a community fundraising forum which is designed to help
organisations keen to improve the effectiveness of community
fundraising. “We’ve got 14 charities who subscribe
to a common forum and exchange data, so they can now answer
questions like: ‘what is the typical income of a community
fundraising group?’” explains Elischer.
So why isn’t everyone benchmarking? “I don’t
think that many established charity brands are consistently
doing it,” says Greenwood. “Some do it every year,
but I think it’s not so prevalent as you might expect.
It may be that people think their organisation is distinct
enough as to render benchmarking unhelpful.”
In some organisations there may be a less innocent reason.
“I think there are individuals who don’t want
to benchmark because they don’t want to show up their
weaknesses,” says Elischer. “If a charity isn’t
benchmarking I think you have to ask why not? What have they
got to hide, or have they just not got the skills to understand
why this is important?”
Upsall believes fundraising departments are sometimes too
complacent, and may set themselves overly easy benchmarking
targets. He believes more effective benchmarking based on
a freer exchange of information would make that much harder.
In the end, then, benchmarking can be useful, but becomes
more valuable when carried out alongside other data collection
methods – including informal meetings with fundraisers
working elsewhere – and when the organisation has a
clear understanding of the true significance of the figures
produced.
“You have to be very clear about why you’re doing
it, and you have to try to keep it really simple,” says
Greenwood. “That’s one of the funny things about
benchmarking: you want it to be complex, but it only works
if you make it simple. And you have to really want the information.
It’s surprising how many organisations don’t want
it.”
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