How the Fundraising ineffeciencies in the UK can have a positive outcome

Regular visitors to the blog  may know that at Miratel we provide key expertise in assisting nonprofits with fundraising activities via our range of call-center services. Therefore when a major fund-raising story breaks it captures our attention even if it’s in the UK. It goes without saying that a major story being researched and released by the BBC for a popular news program Newsnight is of great interest.

We pride ourselves on our ability to provide excellent results combined with superior cost effectiveness in the services we provide to some of Canada’s largest nonprofit organizations. It seems that some nonprofits in the UK could do with similar services.

The BBC story highlights that some of the largest UK charities are seeing much of the donated funding being overshadowed by the costs of seeking new donorship. Even on the surface the story highlights the major inefficiencies in just how some nonprofits are operating. The use of subcontracting firms in the UK to actively seek new donors seems to be quite prevalent however the report stresses that the cost of finding these donors is completely out of line with the success rate and in many cases wiping out the amount donated by a new supporter. Many nonprofits conduct via the third parties door-to-door or street campaigns which are approved and completely legal, however these third-party costs are far too often outweighing the benefit of new subscribers to the extent that in some cases the charities themselves are actually paying out as much as they bring in. This method is a large part of fund-raising in the UK, with more than 750,000 people choosing to donate this way during 2009.

Image courtesy bbc.co.uk

While this is obviously a very alarming story and may have significant ramifications in how the UK public perceive fundraising I think there’s a positive story to be found within. The actions of the BBC as a watchdog are both valuable and ultimately necessary it would seem. Indeed many of these nonprofits that are under the microscope should further examine their fundraising methods to ensure that more of the donated funds are reaching the targeted causes. In North America independent organizations such as Charity Navigator provide great information to the public regarding the efficiency of a charitable organization. I dare say similar methods exist in Europe but perhaps this is the most high-profile report concerning just where the system is not working well. The economics of the matter are highlighted within the BBC report for example the British Heart Foundation incurred costs of £161,000 pounds to recruit 1,180 new donors which equates to £136 pounds each (about $200). The average donor pays £90 pounds per year therefore the charity is faced with 18 months of support needed from the donor to cover the initial sign-up fee.

With all such stories a balanced approach in consideration of the facts must be brought to the table. For every nonprofit with inefficiencies highlighted in the report there are many others that have used and will continue to use professional fundraising to great effect. The reality is most likely that the efficiency is not quite as dramatic as portrayed, or at least as widespread as these exposé type stories can infer. Why I think this is can end up being a very positive story is that it will almost force nonprofits to do two things. First they should re-examine and then constantly monitor the effectiveness of their fundraising approaches to ensure the process is as transparent as possible and also resourceful, modern and flexible. Secondly it should heighten a commitment to the demonstratable value of providing very clear information to the public to help them with their decisions when it comes to supporting a nonprofit that matches their values and needs.

That reaffirmed attention to transparency and fiscal prudence can only help the nonprofit sector ultimately and while stories like this bring attention for all the wrong reasons the outcome should be a large charities become more effective and efficient.

To read about the BBC story that will appear on Newsnight please follow this link.