Approaches to Fundraising

Forming a roadmap and strategies to secure non-government support

Approaches to fundraising

Frank Howarth

Let’s start with what philanthropic fundraising is not. It’s not a process of begging, of asking for a few crumbs from the table. It is also not a process of saying: This is what we do; we think it’s important; so you should give us money.

So what is fundraising? It’s a process of finding someone who shares your objectives so that together you can solve a problem.

There are a number of sayings about fundraising. One of my favourites is ‘People give money to people they like for causes they care about’. On a different tack, one of my other favourites is ‘It’s amazing what you don’t get when you don’t ask’. The overriding guide to effective fundraising is to find those people who care about your cause, and to ask them for their help so you can jointly address that cause. This sounds deceptively simple, but the process of getting there is a mixture of art and science. In this article I want to talk a bit about that process, and how you can apply it to your particular cultural ‘cause’.

I learned about fundraising on the job. When I took over as Director of the Royal Botanic Gardens and Domain Trust I knew nothing about fundraising. If anything, I had the typical Australian attitude that asking for support was effectively begging, and anyway I didn’t know how or whom to ask. Through the process of establishing the first fundraising foundation at the Royal Botanic Gardens, and the second foundation at the Australian Museum, I learned a great deal. Since then, I’ve been applying my accumulated knowledge of fundraising to helping other organisations in the culture and environment sectors position themselves to make successful asks for support: from individual donors, philanthropic foundations, and corporate partners.

Another myth in fundraising is that people in cities are more generous, and it’s easier to raise money philanthropically in the big cities. In fact, Australian Tax Office figures indicate that on a per capita basis, people in regional Australia are more generous than those in the cities, likely through a greater awareness of their local community and particular needs. Regional Australians spend a greater proportion of their income on philanthropy than those in cities, so if you are located in a country town, fundraising is still a good option for you.

First, some fundamentals. There is a change in motivation in the spectrum from individual donors through to corporate partners. I’ve summarised this in a diagram (below, left).

I should note that it’s important to remember that while corporates are more motivated by achieving corporate objectives, the people you deal with from that corporate body are human beings with human motivations and passions. Bear in mind that saying I mentioned earlier — about people giving to people they like for causes they care about.

There are three key elements in establishing an effective fundraising program. First, you need to have a clear strategic direction for fundraising. Second, you need to set out what your cause is, in a problem-to-solution form. Third, you need to have the people, systems and processes in place to operate a fundraising program.

Good fundraising always needs a good strategic underpinning. Your fundraising strategy needs to be anchored in your corporate strategy, so that you only fundraise for things you actually want to do, and you can demonstrate to a potential donor or corporate partner that you have a clear view of your future and where each element of your fundraising fits into a larger picture. A savvy donor will only support an organisation that knows where it’s going, is well managed, and is viable.

Once you have your organisation’s priorities established, it’s really useful to take a step back and look at how you would set out the purpose of your organisation in one overarching, problem-solution ‘cause’ statement.

For some organisations this is easy. An environment organisation might say that ‘our overall priority is to reduce biodiversity loss through establishing more private conservation reserves’, or ‘by making our rivers cleaner’. For cultural organisations the task of mapping defined goals may seem harder, but it’s just as important. If you were to summarise the purpose of your art gallery, regional museum or historical society, how would you frame that in one or two sentences, and most importantly, in a problem-solution form? Mission and vision statements should give some guide to this task, but they are often phrased as solutions only. If your mission is to inspire people through contemporary art, what ‘problem’ does this address? It’s useful to start by distilling your mission down to a statement like: ‘Our purpose is to solve/address a problem/challenge/crisis/opportunity through educating/exhibiting/teaching/training’ — or similar.

It’s also important to ensure that you have an appropriate legal framework in place for fundraising. The legal issues around philanthropy can be quite complex, and if you’re not sure about your charitable status you should have this checked by your legal advisor. It’s also worth noting that gifts in wills are not tax-deductible to the donor (since the donor is deceased). While personal tax deductions also don’t apply to gifts from corporate partners and sponsors, some companies will look for your charitable status as a test of your bona fides, so it’s worth making sure that everything is in place.

Assuming you have a secure legal framework, a strong strategic focus, and a clearly articulated case for support, the next thing is to ensure that you have the right people and systems in place to operate your fundraising program. For some entirely volunteer-run organisations, fundraising can be carried out at very low cost, although some appropriate IT systems are necessary — which I’ll come back to later. However, for most organisations fundraising costs money, and this is generally looked at in two ways.

First, there are the fixed overhead costs to have a fundraising system, including staff, IT infrastructure, and web and print collateral. Generally speaking these overheads would absorb somewhere between 15% (for large organisations with big fundraising programs) to 28% (for small organisations just setting up a program) of your notional fundraising income. Putting this another way, if your target is to earn $100,000 per year, then you can assume the overheads will be between $15,000 and $28,000 per year if you are paying for staff and IT costs.

The second way of looking at costs is assessing the marginal cost to run any particular type of fundraising program. This is usually expressed as the cost to raise $1. If you’re just setting up, and your first activity is to run a broad-spectrum mail or email campaign to potential supporters, then this initial activity is not likely to recoup its costs. However, once your mailing is more targeted, you can expect the cost to drop to about $0.40 to raise that $1. There are some very efficient areas of fundraising, and these include: ‘peer to peer’ programs, where somebody else asks their friends and associates for support on your behalf; gifts in wills programs; and capital fundraising programs. Each of these should be closer to $0.10 to raise that $1.

The people part of fundraising is crucial. I mentioned earlier that people give money to people they like for causes they care about, so establishing personal relationships with actual and potential donors is crucial. I generally look at staffing in two parts. First, there is the role of leading the fundraising program, working closely with other staff and board members, and spending a significant proportion of time with potential and actual donors. Then there is the other, arguably even more important, role of making sure that all the administrative processes happen. The single most important infrastructure part of a fundraising program is a client relationship management (CRM) system. This tracks every aspect of your contacts with potential and actual donors and supporters, and it is crucial that it is kept up-to-date. Someone in your fundraising team needs to take on that role, plus the other administrative roles. Finally, it is crucial that your fundraising webpages and any print collateral are always up-to-date with correct names, email addresses and phone numbers.

I want to say something about how you locate your donors, whether they are individuals, philanthropic foundations, or companies — a task known as prospect research. Most fundraisers look at three key aspects of prospects that need to be satisfied if they are to become donors. First, you need to find people or organisations that are interested in what you do and share the same goals. If someone’s giving is entirely around medical charities or crisis aid, then it is unlikely they are going to support arts and culture — so don’t waste a lot of time asking them. Second, the people or organisations you’re going to ask need to have the ability to support you at the level you’re seeking. Your ask needs to be matched with the donor’s ability to pay. Third, and most importantly, you need to establish a linkage or connection between the potential donor and your organisation. Typically, people with such linkages might be members, volunteers, board members, former staff, or supporters who regularly attend events and openings.

Finally, I want to mention what is often seen as a difficult area of fundraising, and that is support through gifts in wills, also known as bequests. We are seeing a significant growth in the desire of older community members to have a lasting impact on causes they care about through a gift in their will. We should not shy away from helping those people fulfil their wishes. Gifts in wills fundraising is a major area of potential support. The costs of a bequests program are low, the returns are relatively high, but of course when those returns will be realised is less predictable. As a rule of thumb, if you invest $1 in a bequest program now, you will get that $1 back in four or five years, and 16 times that initial investment in about 10 years.

Philanthropic fundraising is an increasingly important area of income for cultural organisations. Research shows that the growth in philanthropic support for the arts and culture sector is at least equalling reductions in government support. There are potential donors for your organisation out there. You just have to know how to ask them! []

Frank Howarth has been Director of Sydney’s Royal Botanic Gardens and Domain Trust, and of the Australian Museum. Since leaving the Australian Museum in 2014 he formed his own company and provides advisory services in philanthropy, cultural leadership and innovation. He serves on several cultural and tourism boards.

Text citation: Frank Howarth, ‘Approaches to fundraising’, Museums Galleries Australia Magazine, Vol. 27(1), Museums Galleries Australia, Canberra, summer 2018, pp. 18–19.