Why Charities Don’t Grow
Thursday, 12th February 2015 at 10:08 am
The simplest decisions can be toxic to charities and stifle their growth prospects. Marketing and fundraising specialist Sean Triner explains how to avoid some common mistakes.
Working with many charities, I have narrowed down the common reasons charities fail to grow in such a buoyant market. Or I least why I think they fail.
This is based on Australia and New Zealand data, two countries that are more buoyant in growth than many markets. However, I bet the reasons apply in other countries too.
Even in tough markets we see some charities flourish – look at what Charity:Water achieved during the US recession.
Charity:Water Income Growth | http://www.charitywater.org/about/financials.php
Founded in 2006, the charity ignored the recession and grew to $35m.
Clearly, it is possible to grow despite the economy. So why is it that some charities don’t grow? I think that a single decision can stop growth. Usually it’s an internal, well-intentioned decision that ends with negative consequences.
Here are some decisions charities make that can stifle financial growth:
- A specific decision not to grow. Perhaps this decision is made because the need is met. Although I have never come across this justification, it is theoretically possible – but most decisions not to grow are not so positive.
- A decision not to invest in fundraising, which can be based on two main reasons. The first is that they may have no cash, which is fair enough, and probably the right call (though you could borrow in some circumstances). Or, a crisis may have put the charity into survival mode (though this is when they should invest in fundraising).
- Unrealistic expectations. Fundraising growth is more expensive than most boards or senior management expect. Furthermore, new fundraising tactics may be less effective than previous tactics that simply couldn’t be scaled up anymore.
- Cognitive dissonance and prejudice. For example, face-to-face has driven growth, yet many charities won’t do it because they don’t believe it could work, or could damage their brand. Other things that decision makers often don't understand include long letters, frequent communications and positive asking. These things may seem wrong or uncomfortable, but they have been proven to work time and time again. Much of fundraising is counter-intuitive
- Artificial constraints. One key example is the board who demands a low cost of fundraising during a growth phrase. It is almost impossible to grow strategically without significant investment.
- Trying to invent the next big thing before the charity is working well on the proven current thing.
- Investing in brand awareness at the expense of fundraising.*
- Hiring the wrong people to lead fundraising. In particular, success in fundraising growth rarely comes from leaders without direct marketing understanding. When you look at the big, growing charities, they are much more likely to have an experienced direct marketing expert who also has fundraising experience than charities who are not performing well in fundraising.
For most who have been able to grow, there would have been significant struggle against some or all of these, or other barriers.
But it is essential to go through a process to identify them. Pull them out in the open, examine them objectively and then work through a step-by-step process to remove the barriers/ issues one-by-one.
Some may simply need to see the evidence/data and make what may be the most difficult, but the best, decision they have ever made.
I speak to a lot of charity board members and CEOs these days and share with them the data we have and the case for growth. Nothing makes me happier than when they make that transformative decision to go for growth.
So, is your charity struggling to grow? Do you think it can be attributed to one or more of the reasons I have just outlined? Or have you worked through these issues and transformed your organisation, and your beneficiaries through fundraising growth?
I’d love to hear from you, so please post a comment at the end of this article.
About the author:
Sean Triner is the Co-Founder of Pareto Fundraising, where he offers his skills and expertise to charities who seek help with their fundraising activities.