Managing Fundraising Risk
Fundraising can be a risky business and so it is important for fundraisers and trustees to be aware of these and take action to mitigate them. So what are the key risks and what can be done about them?
1. Lack of a fundraising strategy - (so that fundraising is conducted ad hoc with no real targeting of investment in the most promising areas). The answer here is to develop a costed fundraising strategy, linked to your organisational business plan.
2. Over reliance on a few income sources - (such as too much funding from statutory sources). The answer to this is diversification, which can take time but is usually possible and make your organisation more sustainable.
3. High staff turnover - 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 can 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, try to keep them at all costs.
4. Compliance issues - In recent years especially, data protection has been a major hygiene factor for fundraising charities, so it is imperative to have someone who understands your obligations in handling personal data. GDPR is here to say, regardless of Brexit.
5. 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!
6. Accounting problems - If your accounts show a recent deficit or high reserves, this can limit your 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.
7. 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.
8. Bad publicity - Not directly a fundraising issue, but it will hit your income if your image is tarnished in the media (think Oxfam and its sexual abuse scandal). So is your organisation prepared for the worst and able to react quickly to deal with bad news?
9. 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 in digital fundraising?
10. Lack of a fundraising culture - 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. So try to foster a climate where everyone takes responsibility for representing your organisation externally and for helping bring in the funds. This takes support from the top, so try to make friends with your trustees if you can and engage them in fundraising.
The way to tackle risks in fundraising is to carry out a risk audit and identify what steps need to be taken to manage your risks effectively, then build the solutions into your fundraising strategy. If you need help with this or to address any of the issues above, please call us for a free chat on 01785 663600