This week I had conversations with two very different national charities looking to increase their fundraising income. Using approximate figures, one had an annual turnover of £1 million, 100% of which came from public donations; the second was a very large entity with a turnover of £100 million, of which 1% was from public donations, the rest from contracts.
Now, both need to raise £1 million a year from fundraising, yet which is the more deserving? Both charities do great work – each would pass the public benefit test and both are accessible to the whole spectrum of society, so no issues there.
You could argue that the very commercially minded £100m charity could just put up its tendering prices to cover the £1m funding gap, yet that doesn’t take into account that their contractor pay masters covering the £99m won’t budge. To compound the problem, adopting the Living Wage will dramatically increase their costs, meaning that their current £1m funding gap is expected to increase 10-fold over the next few years. Their story is not unique.
We are used to £100m+ turnover charities in the sector and sometimes gripe at their success, yet there is great respect for the incredible work and the scale of the problems they face. There is also acceptance that the vast majority of the money they use (excluding DFID grants) is donated or fundraised, so we are all in the same boat.
So what happens when this new breed of behemoths enter the market, targeting the very same donors as the £1m charity and the many more £100k charities? At Money Tree Fundraising we are very used to talking to charities raising £100k to £10 million, all looking to improve their fundraising, but I am a bit of a loss as to how to give advice to these ‘commercial’ giants.
Social Enterprises have their own category; part charity, part business – either commercial to transfer profits to good causes, or community-minded in their day-to-day operations, yet these organisations have not chosen to follow this route, for a myriad of reasons.
It made me question whether there should be some banding within the sector. Surely the public should be able to see more easily whether a charity is 99% funded by contracts or 99% funded by donations without examining accounts on the Charity Commission website? Is it time for Category A/B/C charities or similar?
We keep talking about being Donor-centric, but are we really ready to show donors who we are and what we are? If we don’t publicly categorise charities, then donors are not just comparing apples and pears, they are comparing acorns and oak trees.