The Real Business of Raising Funds
It is worth starting by saying we have an incredibly vibrant, strong and diverse charitable sector in the UK. It delivers an unbelievable amount of social and environmental good. And, of course, this is only possible because the sector continually raises funds in a myriad of ways — which is in itself further testament to the ingenuity and dedication of the sector and its workforce.
It would be an understatement to say that this isn’t easy — after all you have hundreds of thousands of small to medium sized charities all fighting for much the same pot of cash.
And I think it’s also clear that this ongoing need to raise funds has precipitated many of the challenges that the sector faces. The relentless drive for donations — coupled with the entrepreneurialism and passion for change that fires the sector — creates a situation in which fundraisers do whatever they need to do to get the funds in.
This means writing proposals to meet what the funder wants to hear (whatever that might be), committing to ring-fence spending (even if it’s not around the area that is actually in most need), and focusing on short-term, monetary needs and funder aims (without being able to build securely for the medium and long term).
This happens in politics and business too — you’d be hard pushed to find a politician who didn’t try to say what they thought people wanted to hear, or an entrepreneur who didn’t promise the earth. But there are also some big differences between these two sectors and the charity sector.
In politics it’s largely explained by the fact that when a politician gets into power they seem to consider it their right to ignore the promises they made!
But businesses also tend to have far more leeway to pivot direction in order to reach an end goal, and more freedom with their funds in general.
And that’s in part because the way funds are raised in the business sector follows a different model, and this as some inherent advantages:
Firstly, in the business sector, funds are generally raised on the basis of a vision of what might happen — and management can then use the money in the way they see fit to help achieve that vision — rather than being stuck paying for specific outputs along the way.
Secondly, business investment works in specific, time-bound funding rounds, where the business is in control of the process and the timing. It brings together a number of funders at one moment to join together in investing towards the shared vision.
Finally, it is based on a total cost and return model — and anticipated future values which often way outstrip and balance sheet realities or the price of delivery.
So can the charity sector move towards a more vision-based investment model that borrows some of these attributes?
Could we invest in the organisations themselves, not the programmes? Could we create financial models that factor in the genuine potential value charities can deliver to humanity?
The business sectors is by no means perfect (in fact, it is depressingly imperfect), however I do believe the ability to raise finance to achieve objectives is one of the things that it is good at. And, as we witness an explosion of more purpose-led businesses and impact investment opportunities, it is clear that people increasingly want to achieve more than simply make money.
This suggests the possibility of a new wave of potential funders — who are more accustomed to the business world’s funding approach. And where better to invest this than in one of the most vibrant, engaged sectors in the world––the charity sector?
