Comments

We need to ‘reframe’ cost of fundraising (and administration). In annual reports we can say something like: ‘Of your $1 donation, 20% goes to ensuring the long term future of by being used to raise another dollar, 5% goes on recruiting and training the right people to help, 5% goes on costs to ensure we are legal, have the right software, efficient computer systems, licences, secure databases to protect your information, and transparency. Finally, around 4% goes on quality control and measuring the impact of your dollar. We can do much more good with 66c in the dollar when it is spent wisely than 99c with ineffective support systems.’ Generally, worrying about cost of fundraising is distracting and although people say they worry about it, donors rarely have an idea of the cost of fundraising of their favourite charities. Try <a href="http://www.seantriner.com/2008/10/cost-effectiveness-could-be-end-of-your.html" rel="nofollow">this old exercise</a> on your board or SMT.

I agree with Garth. The biggest cost of fundraising is donor acquisition and a disaster is the lowest cost donor acquisition (sorry for sounding callous). This report has chosen some interesting base years. 2002 and 2007 both at fundraising peaks and low donor acquisition costs, the latter due to the tsunami. A better idea would be to go back another 10 or 20 years. Most of the data needed is in ACFID annual reports. I looked back 50 years but not cost of fundraising which is a very cyclical figure and as such hard to draw patterns (or conclusions) from

Hi Garth, Obviously I don't know for certain, but that seems like a very plausible explanation to me. cheers Terence

If you look at the graph on page 3 in my book 'NGOs and Political Change' the current fundraising levels are back to the long term trend as % of GDP (.02-.03%) and a little up on the 1990s fundraising in constant dollars so it is not all doom and gloom. A 2% real growth in fundraising is also not a shabby result in the long term (glass half full or half empty dicussion). These things depend on which year is chosen as the base year. The early 2000s even pre the tsunami were a growth time in NGO work, probably in response (by the public) to the harsh cuts of the Howard government. It is disasters that have given a boost to fundraising, which has a follow-on effect for a few years. The tsunami follow on went for a little longer maybe six or seven years. The other issue I take issues with is to have public education and advocacy as an expense. It is a legitimate NGO development activity (which dates back to the 1960s when the UN and the likes of Sir John Crawford encouraged it), and it is accepted as such by government through its recognised development expenditure (RDE) calculation, which in turn determines the subsidy amount in the ANCP. While the small group of public choice theorists in the IPA see it as fundraising ploy, most people in the international development do not. From the report there has been a 50% increase in public education (which was not separated out for some reason) which to me is a good thing, and might be a first step back to the glory days of development education and the consequent public support for aid of the 1970s. Six per cent is very low for development/global/public education and in the past here have been policies among some NGOs that it be much higher. Ashlee mail-outs occur because they work. Most NGO donors are of the pre-digital revolution generation and generosity increases with age. They would be fools to give up on mail-out and they generally are not fools. Those that do (reduce mail-outs) quickly re-instate them. Most NGOs have an strong on-line presence but that is for building a supporter base and advocacy and less for fundraising, but all do have online fundraising it just does not deliver heaps.

This book has been nominated for 'The People's Book' prize and you can support it by voting for it <a href="http://www.peoplesbookprize.com/book.php?id=1352" rel="nofollow">here</a>.

Thank you all for this interesting analysis. Using the data you provide, the fundraising to donation ratio overall is: 2003 17.8% 2004 17.0% 2005 11.7% 2006 14.1% 2007 12.7% 2008 13.4% 2009 14.9% 2010 16.7% 2011 17.3% 2012 18.1% 2013 18.8% The Indian Ocean tsunami in late 2004 dramatically boosted fundraising and acquisition of donors. Do you think it is possible that the increase in fundraising ratios since 2006 is largely the result of the tsunami's impact on donations and the gradual drop out of those new donors acquired in 2005?

Very nice analogy Glenn and Gerard. I would like to suggest that you could also consider one of the more influential aspects of the game - the laws of rugby. Unlike soccer, the laws of rugby are often seen as being numerous, confusing, ambiguous and interpreted differently by referees. I can easily see the parallels here to how donor rules are applied to development. And sometimes the referee decisions (aka donors!) are not fair... PS: The ‘set pieces’ example was classically shown in the World Cup by the 2nd Japanese try against the Springboks (scored by the fullback Goromaru)...a beautiful example of set piece perfection...only if development set pieces could be so pure!

I certainly agree Ashlee that it is important to try to keep up with changes in the audience but it is my experience that most of the big charities do try to do that. If you look at the aid charity sector there is a large range of styles, messages and strategies - none seem to have found a way of unlocking much greater support. I also agree that income pressures are part of the issue as well as other society-wide factors including level of participation in formal religions, materialism, social trust, xenophobia and individualism. It's these bigger issues that I think will largely determine how much is given in the future, not the efficiency of fundraising which is already quite innovative and knowledge-based.

Hi AJ For the best remedial measures, PNG's people can look to lessons from its own past. PNG has demonstrated it has the strength to get itself out of this type of situation before - but it will be hard. The type of policies put in place in the late 1990s to deal with the economic crisis should be re-considered. These were not limited to just fiscal adjustment, but went deeper to build the framework for sustainable development. Personally, I am very hopeful for PNG's long-term future - lessons from its own past can be adapted to the current challenges. Paul

I think this could be part of it Garth--but I also think that the methods having always been annoying, having always used mailouts etc, could also be a sign that it's time for a rethink. The methods haven't really changed--but perhaps the audience has. In this era of 'innovation', perhaps this is a space that actually needs it. One thing that would be interesting to know, on your point of whether we have hit a fundraising wall, would be the age profile of donors. For younger people, particularly in cities, there's a lot of housing and rental cost pressure, there's childcare cost pressures, there's educational debt from undergraduate and higher degrees. A lot of people I know would like to give more, and they support international development and NGOs in principle, but when 40% or more of your take-home income goes on rent or a mortgage, it can be hard to free up more resources for giving.

The economic trend is all doom and gloom, downward spiral to 2020. Skimming through this article, I question - what is the best 'remedial measure' this government or the next can do to rescue the economic situation of the country. I wish academics and writers could 'foresee' or give 'pediction instead.

That's good to hear! Really should get back onto Facebook one day...