Was the Icebucket Challenge just the tip of the Iceberg ?

(14 Nov 2014)

The recent “Ice Bucket Challenge” has already raised €1.4m in 2014 for the Irish Motor Neuron Disease Association (IMNDA). For an organisation whose total expenditure in 2013 was €1.6m, this will enable the charity to advance its mission to support the 330 people in Ireland with motor neurone disease and their families and carers as well as fund research. The challenge that IMNDA now face is how to build a meaningful relationship with even 1% of the 500,000 donors who took part in the challenge in order to create a more sustainable and long-term funding base for the organisation,  because relationships are key to success in fundraising.

In 2012 61% of the €852m of philanthropic income of Irish not-for-profits involved the donor having a relationship with the charity. This is according to the Fourth Annual Fundraising Performance Report published by 2into3 and supported by charity insurance specialist, Ecclesiastical Insurance along with Focus Ireland and St. Patrick’s Mental Health Foundation. 2012 saw the third year of growth with a 7% rise on 2011 and, while 2013 might see a slowdown due to recent controversies, philanthropy is playing a growing role in funding the provision of a wide range of public benefits in Ireland. For a charity selecting how to fundraise and investing in what works, the research shows that appeals such as the ice bucket challenge, while important for the particular charity benefiting from them are not representative of the market as a whole.

Fundraising initiatives such as the Ice bucket challenge are categorised as local or community fundraising. That form of fundraising accounts for 5% of funds raised by Irish charities. The unsolicited letters you get in the post and other similar campaigns represent a further 23% while all the visits to charity shops and raffle tickets add a further 2% of funds raised. Combined, these methods of fundraising are very popular with Irish charities yet together they account for only 29% of all giving in Ireland. They are attractive because they are often quick to get off the ground, don’t involve a prior relationship before a donor gives and appear to cost less. They also seem to be what everyone else is doing.    

The accounts filed by charities in Ireland rarely reveal the methods (and costs) used to fundraise so it has been impossible up to now to demonstrate what the more informed fundraisers already knew. Our research now shows that some 61% of funds are raised by Regular (usually monthly) giving; Major Donors; Trusts & Foundations; Corporate Donations and Legacies. These methods do take longer and do involve building a relationship with the donor before a gift can be secured. What is even more striking is that relationship fundraising provides double the return of investment for those organisations using them than the more popular methods like community fundraising, appeals and selling something.

The average cost to raise a €1 in 2012 was 31 cent for all organisations while those raising more than €5m per annum had some scale benefits and could do so for 23 cents. For these larger organisations relationship fundraising cost between 2 cent for legacies and 23 cent for corporate gifts whereas community fundraising, appeals and selling something cost over 40 cent for every €1 raised. With such differences in the return on investment and scarce resources the selection of which method or methods to use is key decision for a Charity.      

Currently per capita giving in Ireland is some €185 per annum or 0.53% of GDP. Reports regularly argue that we are a generous nation yet per capita giving in the U.K is €289 and in the U.S is €781. There is no doubt that the greater personal wealth levels in those countries accounts for some of the gap but charities in those countries have also been investing in relationship fundraising methods for some time and that may also explain some of the difference. That difference was worth €436m in 2012 so it is worth pursuing.

The not-for-profit sector is an important part of the economy and accounts for most of the provision of Health, Education and Social Services in Ireland. It is also significant in Culture & Recreation, Housing, Advocacy and of course International Development. Greater investment in relationship fundraising by these organisations will pay dividends. It is more about looking for the Iceberg than reaching for the Ice bucket.

Dennis O’Connor is a Director of 2into3 and co-author with Amy Power and Sinead Kelleher of Fundraising Performance: The Fourth Annual Report on Fundraising in Ireland. The full report can be found on www.2into3.com 

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