Who’d have predicted the events of 2016? We’d all love a crystal ball to see what the next few years hold for us all. In relation to fundraising, here’s the next best thing.
In autumn last year I had the opportunity to interview several fundraising and sector leaders, across different disciplines. This was for an international development organisation wanting a three- to five-year scan of the future horizon to inform its planning.
The survey was remarkable for two things. First, that common themes emerged from the conversations. And second, how consistently conversations focused on internal issues that organisations needed to address in order to adapt, or die.
The insights were too good not to share, so with the generous permission of the organisation I did this project for, here are 12 headlines on what will shape future fundraising. A couple of caveats: Interviewees were UK-based, and the project was for an international development NGO. Nonetheless, many of the themes may resonate across other sectors and markets.
Do you agree? What would you add?
1. The future should be positive, though funding is likely to be less predictable, requiring changes to business models. The fundraising environment for the charity sector is in flux, in both of the largest funding streams – statutory income and public fundraising.
2. Statutory funding is changing dramatically. The out-sourcing of social services 10 to 15 years ago saw many charities expand through grants and contracts. That growth is now reversing with wholesale cuts in government budgets. There are more rigid contracts, fewer grants, and more private sector competition.
3. Relationships with individual supporters are being re-defined. Some fundraising techniques have become over-used and brought the sector into disrepute. Organisations have become complacent about individual giving income, taking donors for granted. But this won’t last as supporter expectations are changing. The implications of the UK’s experience of fundraising media scandals and a new era of regulation will spread to other markets, as it stimulates innovation and a fresh awareness and respect for supporters’ experience and needs.
4. Expectations of funders and supporters alike are changing, and are more demanding. They want more evidence of impact, more participation and engagement in decision-making, and more immediate feedback. People’s experience as customers in an increasingly digital marketplace is shaping their expectations of “experience” and “service.” Charities have great stories to tell, but are not so good at gathering them.
5. The age of broadcast and controlled communications is over. Communications channels continue to multiply, attention spans are shortening as information and channels proliferate, and people are seeking out and “curating” their own sources of information that they are interested in and trust. Digital and disintermediation will disrupt charities just as it has media, retail and other sectors, with technology allowing people to find and connect with each other. “Brand management” is a thing of the past; content is king. This has implications for how organisations source quality and relevant content and make it available to people where they are, as they will not come looking for it.
6. The biggest challenges to future fundraising success are internal. Success will depend on the willingness of organisations to accelerate their internal readiness to take advantage of new opportunities, and adapt to changes in supporter and funder expectations, and in their behavior and policies; changes in technology; and changes in existing as well as in new markets. There are opportunities if organisations are prepared to adapt to take advantage of them.
7. The future is not one with increasing unrestricted funds to use at will. Almost all funding streams will be more tightly entwined to programmes, requiring greater flexibility and agility in approach and planning. Organisations will need to compromise on their own institutional desires for flexible funding, to meet the more demanding needs of their funders and supporters, whether statutory, major donor and corporates, or individuals through project-funding products.
8. Focusing on improvements to current practice will not be enough. The big changes will be around supporter engagement and technology, more dynamic (and less certain) funding models, and a willingness to engage with funders more on their terms (partnerships with major donors and new philanthropists, the corporate sector, statutory contracting). This will have implications for internal budgeting, sourcing content, and servicing communications around impact.
9. Fundraising will have to be more integrated into organizational strategy and decision-making than it has ever been. Fundraising needs to be seen as the enabler of growth and change, and board and CEO leadership needs to ensure organisational support is in place beyond lip service. Organisations will need to be smarter about their funding strategy and involve fundraisers in that, not simply demand more unrestricted money from them.
10. It will be more essential than ever to have clear narrative about the charity’s role, and careful positioning that makes sense to people. The power of the brand, and trust in it, will matter more. As funders can “go direct” and individuals can do the same via technology, and with more private sector contractors, charities will need to have a strong and confident case for their added value, their impact, and why they matter. The moral case about being “non-profit” is no longer enough.
11. Adapting for the future will take vision and leadership. The sector at large is not thinking ahead strategically enough. It is still operating in a business-as-usual mind-set — managing business to short-term returns on investment, adapting tactically to changes but not preparing for changes ahead. The sector needs stronger leadership to address the changing dynamic between state, private and civil society sectors, and to shape the necessary culture shift internally.
12. Little is likely to change dramatically in the next five years – funding and income will still be available – but emerging changes and trends are already underway and those that do well will be those adapting to and embracing what is changing. Those trying to maintain a business-as-usual approach to secure stable and unrestricted income on their own terms will ultimately fall behind.
Don’t be complacent. You have been warned. It’s time to face the future and act!