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Funding the fundraising

by Shaun Horan | Jun 14, 2018 | Fundraising

When I began my career in fundraising, the accepted mantra was that people would not give significant gifts to support salaries for professional staff. They would give to buildings, they would give to research programmes, they would support a professorship, but they would not be interested in the salaries of support staff. Still less would they invest in supporting the salary of a fundraiser.

The joyful thing about fundraising, as in so many other walks of life, is that accepted wisdom becomes wrong over time. Technology changes things, there are generational shifts in attitudes. As consultants, we work with many more organisations and donors who take a very long view of the impact excellent fundraising can have.

And some of them are becoming interested in funding the fundraisers. This is particularly true for those who come from a Private Equity background, where they are used to investing in capacity in order to get a better long-term outcome.

We worked with a donor in the Arts & Culture sector who not only invested in the salaries of the fundraising team, they also invested in us as consultants so that the team could hit the ground running. And of course, I am bound to say that is particularly enlightened!

Donors who want to fund the fundraisers are usually highly entrepreneurial; interested in ROI and impact; ready to be convinced by an excellent plan with measurable goals and clear stages. Sadly, they are also usually less interested in publicity, possibly for obvious reasons.

Of course, there is another way to make this happen too – by introducing a gift ‘tax’ – whereby donors pay a percentage of their gift to support the fundraising office. This happens in the USA, although certainly not everywhere and the amount of this ‘tax’ varies considerably[1].

This effectively happens in the charity sector as a matter of course, where the cost of administration (i.e. raising the gift) must come out of gifts. Gifts are, after all, the main source of income for most charities. That is easier when you rely on mass fundraising.

But if you are trying to increase your major gift work, might this gift ‘tax’ be a barrier? Universities have been working in major gifts very successfully for some time. One of the key arguments they use against introducing this idea is that, at present, major donors can be reassured that 100% of their gift will go to the project they are interested in.

Paying such a percentage could be voluntary, but that isn’t a reliable plan for the future.

I think that, as fundraisers, we need to start having more sophisticated conversations with donors on how to fund fundraising. This probably needs to start with the right type of donor, who could be excited by the idea of pump-priming a team that could then go on to raise much more money.

So how do you find such donors? Firstly, I can assure you that they are out there. The only way to find out if your donors might be interested in doing this is to ask them (at the heart of all good fundraising is excellent relationships, where honest conversations can be had).

By encouraging and educating donors to challenge the ‘accepted wisdom’ of how fundraising has traditionally been funded, a tremendous opportunity for change – and a new way of thinking – presents itself. And that is something we should all be excited by.

[1] See Strategic Fundraising, Universities UK, p 13