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How to manage your fundraising risk

As we all know, fundraising has its risks and so it is important for Fundraising Managers and CEO's to be aware of these and take action to mitigate them. So what are the main risks and what can be done about them?

  1. Lack of a fundraising strategy (so that fundraising is conducted ad hoc with no targeting of investment in the most promising areas). The antidote here is to develop a costed fundraising strategy, linked to your organisational business plan.
  2. Overdependence on a few income sources (e.g. too much funding from statutory sources). The answer to this is diversification, as discussed in our last Fundraising News. It can take time, but is usually possible.
  3. High staff turnover. It is not often recognised that this can be very damaging for your income, as new staff take time to learn about the organisation and possibly to develop their skills. Departing staff also take their contacts with them. If your organisation is affected, find out why people are leaving and seek to win greater loyalty - it will pay for itself in the long run. If you have an effective fundraiser, do try to keep them at all costs.
  4. Data loss. If you rely on a database of donors and funders, is this regularly backed up and have you tested retrieving it recently? How would you cope if you lost all your data? Would your organisation survive? Don't take risks with your data!
  5. Accounting problems. If your accounts show a recent deficit or high reserves, this can damage your chances of support from institutional funders, such as trusts, the national lottery and statutory funders. If there are such issues in your accounts, have you explained and justified them? It may well be possible to overcome them, if you get it right.
  6. High fundraising costs. Are you aware of the benchmark ratios of return for the different fundraising techniques? If so, how does your charity compare? If you have unusually high costs, some funders and donors will spot this and you will miss out. It may be worth having this reviewed by an expert, so talk to us if you are concerned.
  7. Bad publicity. Not directly a fundraising issue, but it will damage your income if you hit the headlines for the wrong reasons. So is your organisation prepared for the worst and able to react quickly to deal with bad news?
  8. Growing competition. There is not much you can do about competitor risk except to make sure you are staying ahead of the game. E.g. are you up to speed with new developments (such as new media fundraising?).
  9. Lack of training. In a recession it is easy to cut the training budget but, to be effective, your fundraisers must keep up to date, otherwise their skills will become stale and your income will suffer. Money spent on training really is an investment when it comes to fundraising!
  10. Lack of ownership of fundraising. Some charities miss out on valuable income because the management and trustees take no interest in fundraising and delegate it all to the fundraising staff. This attitude risks missing out on opportunities, particularly in corporate, trust and major donor fundraising.

The way to tackle risk in fundraising is to carry out a risk audit and identify what steps need to be taken to manage your risks effectively. Do talk to us if you need help with this or in addressing any of the issues you identify.

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