Much
has been made of the similarities between the economic climate
of the late 1980s and that of today. Rising interest rates,
a housing market teetering on the precipice and huge city
bonuses dominate current news as they did at the end of Thatcher’s
premiership.
Yet, though the gap between the richest and poorest is beginning
to open into a chasm, today’s richest are no longer
holding the 1980s ‘loadsamoney’ culture dear.
Instead, a new generation of philanthropists and major givers
have been spawned.
According to recent figures, the UK’s wealthiest are
actually donating more than the sector realises. Analysis
from think tank NfpSynergy, published in June, stated that
half of the richest households had donated in the previous
month, giving an average of £60. Only 15 per cent of
the poorest households donated over the same period.
The increased appetite for giving is welcome news for charities,
and figures show that there is much scope for the richest
to give more. The average wealthy donor is currently gifting
just 0.8 per cent of his or her earnings.
Yet reaching this money is a real challenge for charities.
In 2003, research from the Institute of Philanthropy found
that charities were missing out on a potentially multi-million
pound pot because they were not meeting the expectations of
the UK’s richest. Judie Lannon, author of the report,
said at the time that charities must take a more professional
and pragmatic approach to their relationships with major donors,
or risk losing them completely.
Managers obviously sat up and listened because, by June 2006,
figures from the Institute of Fundraising showed that major
donor income had grown by 300 per cent over the three years.
Sharon Jackson, head of UK major donors at ActionAid, says
these figures illustrate a change in focus for fundraisers,
responding to the economy and to a growing interest in philanthropy
in general. “We have got a growing economy; the stock
market and the property market are buoyant. We have got more
people with more money,” she says. “In terms of
direct mail, the margins are being squeezed, but with major
donors there’s a lot of room for growth. Charities are
recognising that they have to look at it.”
In general, the UK is giving less as a country than it could.
Rough estimates suggest that UK citizens give half that of
their US counterparts. And the number of people capable of
giving major gifts is also on the up.
Jackson says that the pattern of recruitment in the fundraising
sector is testament to the growing interest in big givers.
“It’s impossible to be able to recruit a major
donor fundraiser
with two or three years’ experience because everybody
wants major donors,” she adds. "There are more
jobs being created than there are people to fill them.”
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Consultancies are stepping into the gap, advising organisations
on how to secure the richest as supporters. Jackson says that
building individual relationships with big givers can be difficult
because they want to be engaged with the charity, offering
their expertise as well as their funds.
Despite their good intentions, this can be problematic for
the charity. ActionAid, for example, uses local volunteers
and consultants to assist with its work overseas. The infrastructure
is not in place to start bringing in the additional help of
rich givers. “We find it very difficult to use their
skills in a meaningful way,” Jackson says.
Nevertheless, developing close relationships with rich donors
is a lucrative business, and as with all relationships, getting
it right requires a certain amount of compromise. Charities
may have to adapt the way they work in order to continue to
secure large gifts in what is now a very competitive funding
market.
Angela Cluff, former deputy director of fundraising at the
NSPCC and now principal fundraising consultant for The Management
Centre, said this is the key thing charities get wrong. “The
first thing is about really listening to, understanding and
then responding to what the donor really wants to do. It sounds
easy but too often fundraisers are driven by their and their
organisation’s needs – primarily for money –
and don’t really do it. Particularly they don’t
build from the other forms of help, such as professional expertise
that are offered,” Cluff says.
The consultants also warn that charities must not rely on
individual relationships between fundraisers and donors, but
cultivate a broader organisational relationship, otherwise
donors could be lost as staff move on to other jobs.
Action Planning was one of the first suppliers to identify
the appetite for recruiting major donors, and had launched
a service called Wealth Intelligence which gives charities
access to information about the UK’s richest individuals,
including their disposable wealth and how to reach them.
“Is there a growing market? Absolutely. You just have
to look at the Sunday Times Rich List to see that,”
says Kerry Rock, director of research at Action Planning,
responsible for the development of the service. “As
competition for funders gets stronger, people have to look
for new avenues. People are seeing new opportunities and a
lot of people who are wealthy are also looking for new opportunities
to give.”
Rock says the service is useful for major donor fundraisers
because they use it to make informed decisions about how they
approach the rich and at what time. Nevertheless, she warns
that fundraisers could overwhelm themselves if they attempt
to approach too many givers at once. Fundraisers should identify
between 10 and 50 people to concentrate on, as it can take
three years to develop a fruitful relationship with a major
donor.
“It’s going to take a lot of good, hard work and
individual approaches,” Rock says. “Firstly you
need to research what makes that person tick, who their networks
are. You need to find the right person to make the ask.”
Get givers giving more
Part of the job of securing a portion of the wealth of the
richest population is finding existing supporters who may
have the potential to give a lot more. As yet, there is
little in terms of best practice and guidance in reaching
and retaining major donors, and converting regular givers
into big financial contributors. Fundraisers are, however,
developing networking groups in order to support each other
and improve the sector’s performance.
“Fundraising from major donors or highest net worth
individuals is perhaps the most fluid and ungoverned area
in all of fundraising,” says Ruth Mantle, membership
manager for the Institute of Fundraising’s Major Donor
Special Interest Group. “In such a climate, it is
important to share knowledge and good practice to ensure
those coming up the ranks are adequately supported by those
who have been there and done that.”
Such groups can help to establish a support network that
advises and trains other fundraisers, the aim being to make
the donor experience ‘flawless’.
City bonuses show no sign of decreasing in size, but while
the notion of ‘loadsamoney’ might be consigned
to the archives of recent history, new forms of giving and
engagement with the third sector are on the rise among big
earners. To keep up with the growth of venture philanthropy
and major donors, the sector will have to present a united
front to secure the gifts of the richest.
Paradoxically, charities will only remain competitive in
this new market if they work together.
The seven steps
Consultancy Fisk Brett recommends a seven-stage approach
to major donor fundraising:
1. Identify – who are the people most likely
to give large gifts?
2. Research – what are their interests and
connections?
3. Plan – what is the best way to get in
touch with them?
4. Engage – get them interested in your cause
and involved in your work
5. Ask – not just for their money, but also
for their time and their connections
6. Resolve – record their gift and other
responses, positive or negative
7. Thank – the most important stage if you
wish to retain major donors (for the Charity Times article
on donor care click here)
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