INVOLVING FRONTLINE STAFF IN PLANNING YOUR FUNDRAISING STRATEGY - WHY BOTHER, AND HOW CAN YOU DO IT?
One of our main areas of work involves helping organisations to develop a new long-term fundraising strategy. Often the same question comes up early on when planning the process: who should we involve?
For reasons that we've shared before, our process is very much not to sit in a room alone and write a fundraising strategy using a template. Instead we take a collaborative approach, facilitating a series of workshops to involve as many people as possible in the challenge of making fundraising more sustainable and successful. This involves mapping out key barriers and opportunities, developing clear strategic priorities, and identifying how the whole organisation can pull together better support good fundraising.
So far, so good. But who should be involved in that process?
Traditionally it’s the fundraiser(s) themselves, the senior management team, and representatives from the Board. All these people do indeed have a crucial role to play in making then enacting the key decisions. But if you stop there, you’re risking limiting your perspective, therefore creating a weaker fundraising strategy.
The aim of this blog is to convince you that involving your frontline staff in developing your fundraising strategy is important. So what are the benefits?
1. Frontline staff are closest to your service users, so can better articulate their views and needs
Depending on the nature of your work, the people that you support – and their families – can be a real engine when it comes to raising money, advocating for your work, and opening crucial doors for fundraising. But how might they want to be involved? What are their concerns and barriers? And what do they need from you to feel equipped to play a role?
Answering these questions will help you to plan fundraising activities and decide how to resource them. While it probably won't be practical to involve these people directly in your strategy process, your frontline staff do have a good relationship with them, so will know how best to gather, represent and respond to their needs and wishes. They'll certainly be better placed to this than your management, or even your fundraiser(s).
2. Frontline staff bring crucial insights about your work
Developing a fundraising strategy in isolation of your service delivery means you’ll miss out on crucial "crossover" observations. For example, how well your services are performing – and how you’re collecting impact data – directly impacts your ability to secure grants. The activities that you run, and the spaces where you run them, can provide an untapped opportunity to raise money, recruit supporters and develop new earned income opportunities.
It's easy for management and fundraising staff to make assumptions about what your key opportunities and barriers are. But if these assumptions are wrong, you’ll make the wrong decisions, and invest time and money in the wrong areas. Again, your frontline staff can provide essential insight.
3. If frontline staff are involved in planning your strategy, they’ll be better advocates and ambassadors for your fundraising
We all struggle to get on board with a strategy that we haven’t contributed to or been asked about. It’s just an abstract document that, at best, we read then forget about. But when people are involved in the process and can understand your decision-making, and the need for better fundraising to safeguard the future of your organisation, they’ll be naturally more engaged in making it a reality.
I’ve seen it so often - a CEO says that frontline staff won’t want to be involved in the fundraising strategy, won’t have anything to say, won’t have time to contribute. But when you involve them, they’re enthusiastic about being able to share their perspective, buy into what you’re trying to achieve, and become more motivated about their own role (even if it’s a small one) in making your fundraising more successful.
But how can you realistically involve frontline staff in your fundraising strategy process, when they don't have any time to spare?
1. During your first strategic planning session
Our strategic planning workshops always follow a similar pattern: the first session(s) focuses on “discovery” – with everyone getting all their ideas, observations and concerns out in the open, then the later session(s) are dedicated to decision-making using that information.
While your frontline delivery staff may very well not have the time or appetite to participate in the full process, asking a few representatives to come along to the first workshop – even just for the first couple of hours – may be a handy compromise approach, to ensure their views are factored into your thinking.
2. Requesting their views via their line manager
We’ve worked with organisations who have gained really helpful insights by asking their Service Manager(s) to coordinate gathering feedback and ideas from their own particular team. This can be done during regular team meetings, one-to-one conversations or a dedicated short workshop session.
Managers can then collate feedback and share a summary with whoever is leading the fundraising strategy process. While this approach may only capture a few headline ideas, it’s a helpful light-touch option where frontline staff are stretched to capacity already.
3. Creating an online survey
Similarly, you can collect brief feedback by asking frontline staff to complete a five-minute survey. I’ve seen organisations gather surprisingly helpful insights by asking just a handful of carefully-worded questions, such as “What is the biggest thing that holds back our fundraising?” or “What do you think is our biggest missed opportunity with fundraising?”
While it'll require a few reminders to ensure enough responses, it’s worth the effort. Even a single-page summary of collated ideas can be a valuable input into your fundraising strategy process.
It’s easy to skip gathering input from frontline staff, assuming they lack either the time or knowledge to help. But finding ways to involve them in the initial stages of a fundraising strategy process will help you to gather invaluable ideas and perspectives, and ultimately develop a more successful and achievable fundraising strategy.
By the way, while we've focused on fundraising in this blog, many of the same principles apply for an organisational strategy too.
We’ve facilitated fundraising strategy workshops and consultation processes for hundreds of charities and social enterprises. If you think we could help you, don’t hesitate to get in touch.
It’s been eight years since we started providing trusts fundraising support to charities and social enterprises, alongside our strategy work.
In that time, we're thrilled to have raised millions of pounds in grant funding. We've had projects that have been a huge success, and projects that haven’t quite gone to plan. We’ve learned loads about what it takes to secure funding in a hugely competitive landscape, and what we need from an organisation to our job well.
Summer usually provides a rare opportunity for some down time to step back and gain perspective - whether that's while having a long walk in the sunshine (lesser spotted in 2023) or bobbing around in the sea on holiday (my personal favourite). So, this summer, we're reflecting on our top tips on how charities and social enterprises can work best with a consultant - whether that’s us or someone else.
These tips are focused on trusts fundraising, but many of the general principles apply to other types of fundraising too.
1. Be clear why you need consultancy support in the first place - is it capacity, expertise, or both?
It sounds obvious, but a consultant or freelance fundraiser can provide different things - they might bring valuable expertise or perspective that you don’t have in-house, or they might primarily provide extra 'hands-on' capacity at a time when, for whatever reason, you don’t have a staff member who can lead on the work.
Our work with charities and social enterprises can take many different forms. For example:
Asking yourself what you actually need - and how it fits with your existing capacity and expertise - will guide how long you need support for, the rate you should pay, and the exit strategy you’re working towards (see below). It may well save you money, if you realise that you only need expertise to help you with a very specific piece of work, or short-term support to address a capacity gap.
2. Understand - and provide - what we need to do a good job
When working with an organisation, particularly longer-term, it's so helpful to be able to roll your sleeves up and really immerse yourself in their work and previous trusts fundraising efforts.
It's vital that we can spend time looking through project summaries, budgets, impact reports, previous funding applications, complete records of all submitted applications (successful and unsuccessful) and end-of-grant reports. This helps us piece together an organisation's strengths, weaknesses to address, and key opportunities to focus on. If we're missing information, we won't know key questions that we need to ask, and risk duplicating work that you've done previously.
When you start working with a consultant, give them online shared access to as much relevant information as possible, and ask them what they particularly need to do a good job, and how far back in time it's helpful to go. If necessary, you can always redact sensitive information or ask them to sign a specific non-disclosure agreement.
3. Keep us updated on key developments
Sharing information at the start of a project is important, but inevitably your plans will change as time goes by. For example, winning or losing statutory funding can have a key budgetary impact, service user feedback may change how you intend to deliver a project, unexpected developments might bump a capital funding need way up the priority list, or meeting a funder at an event may open up a big new opportunity.
As external consultants, we may not be regularly involved in staff meetings - particularly if we’re working remotely - so it can be easy to forget to pass on important news to us. That's a missed opportunity, because we'll often be able to offer advice or adjust our approach in response.
4. Trust our judgement, but give us guidelines and even red lines
Specialist trusts fundraising consultants bring expertise on how to 'package' a project, present information in a budget and phrase things in applications. It's very likely that our approach will be different to your own, and may initially make you feel uncertain or even uncomfortable.
If you're paying for specialist expertise, you should avoid undermining that investment by micro-managing the work or shutting down new approaches. We've previously worked with organisations where unfortunately applications became vastly more time-consuming to write, not to mention weaker, because of well-intentioned meddling. As a result, we raised less money.
However, that’s not to say you should give a consultant complete freedom, particularly if it compromises your ethics and values - for example the way you portray your service users, use photos in applications, or who you're willing to seek funding from.
I'd recommend having an honest and open conversation about this at the start, being clear about any “red lines” that mustn't be crossed, and sharing written information about your values and ethical fundraising policy if you have it. As well as reassuring you, this will also give your consultant confidence and freedom to work within those limitations.
5. Always keep oversight and ownership of our work
One basic principle of good consultancy is to ensure that the organisation receiving support is in a better position by the end than they were at the start. Yet this isn't always the reality - we’ve seen organisations end up in a real mess when a previous consultant walks out the door, losing access to application content, records of applications submitted and even key contacts at funders.
This is why you should always ensure that you “own” - and have continuous access to - all the content and information produced on your behalf. Agreeing a regular meeting cycle, including key information to be provided in updates, also helps. A good consultant should appreciate the importance of this - for example, we always like to make sure we’re working out of a shared Google Drive or Dropbox folder, and encourage organisations to check files regularly and ask questions or voice concerns at any point.
Try to have a clear exit strategy in mind, for example, aiming to recruit and hand over the work to a staff member after 12 months. When are you expecting your relationship with a consultant to come to an end, and what do you need to know, have and feel confident about by this point?
6. Ensure you remain front and centre with funders
As well as owning your information, it's equally important to own your relationships with funders - they are funding you, not a consultant, and investing time in strengthening these relationships will help you raise more money in the long run.
When working with a charity, we'll always encourage you to take the lead on making introductory calls or attending meetings with funders. We'll tend to work in the background - briefing you on what you might want to ask or tell a funder, and supporting at meetings when requested - not because we don’t enjoy speaking to funders ourselves, but because we think that (with support) you’re the best ambassador and advocate for your work, and the right person to build that relationship. This ensures there's no disruption whenever you're ready to move on from working with us.
If you're speaking to a consultant who boasts about having brilliant relationships with funders themselves, always query how this has come about, and check that it's not at the expense of the grantee organisation being front and centre.
Are you a consultant or charity / social enterprise with your own tips on making things work well? Share your ideas in the comments below.
WHY DEMONSTRATING DIFFERENCE AND AVOIDING DUPLICATION IS VITAL WHEN WRITING TRUSTS & FOUNDATIONS APPLICATIONS
One of the topics that I currently find myself talking about frequently - when working with organisations on funding bids or delivering trusts & foundations training - is the need to differentiate your work and avoid the perception of duplication.
Why is differentiation so important when applying to trusts & foundations?
This isn’t a new issue, but is perhaps more important than ever. With such high demand for funding, and trusts & foundations so overstretched, one of the ways that funders can maximise their impact is by being really careful and strategic about not funding very similar organisations or overlapping services. From their perspective, if one organisation does something well already, where’s the benefit (or at least urgency) in funding another organisation to do it too?
Often, this is an explicit decision-making criterion for funders. They will assess your application not simply based on the quality and impact of your own work, but in the context of how many similar services exist - or they have recently funded - in any given cause area or geographical area. I've seen this frequently cited in feedback given by the National Lottery Community Fund, for instance.
While this makes sense, the issue is whether a funder's perception of the similarity of your work to others is really accurate. The last thing you want is to see a key application rejected because there are some key differences and nuances in your work that you haven’t explained properly.
So differentiating your work is important. And in a more general sense, being able to clearly and confidently explain your place in the local landscape - in terms of which service gaps you meet, and who you partner with or take referrals from - will always inspire confidence. This will not only increase your chances of securing funding, but also help funders to learn more about the complexities on the ground in your area of work.
Being different doesn't mean being unique, or better than other organisations working in a similar space
Firstly, differentiation doesn’t mean being absolutely unique. Nobody realistically expects you to be the only employability service in Lancashire, the only organisation educating young people about climate change etc.
What’s important is demonstrating why your service or approach is more accessible, more appropriate and more impactful for the specific people that you support.
This isn’t about trash talking what other organisations do. There may be perfectly good reasons why your user group would face additional needs and barriers when trying to access more generalist support offered by another organisation, or a specialist service set up for people in a different situation.
To give some examples from my own previous work, there may be a clear need for:
With all the above projects, there’s a risk that a funder could incorrectly perceive them as being surplus to requirements, or already covered by existing service provision. But a compelling case for support - clearly explaining how you're different and situating your work within the existing landscape - will significantly increase your chances of securing funding.
Building your case for support: how can you demonstrate that your work is different and urgently needed?
Firstly, it helps to have a curious and critical mindset. Put yourself in the shoes of a funder with no prior knowledge of your work and ask how they might perceive it. Why do you deliver activities in a certain way? What other services could the people you support choose to access? And why aren’t those services accessible or appropriate for their needs?
Once you've asked the right questions, seek out convincing evidence of how your work is different:
Centre the perspective of the people you support. Make liberal use of testimonials, case studies and survey data from your service users. Enabling them to talk about their own experiences, needs and barriers - and the value they see in your work - in their own voice will always be more powerful and compelling.
Draw on your own lived experience. Did you establish your organisation in response to a specific unmet need, or to prevent others from going through the same experience as you? Do your senior leaders, project staff or volunteers have lived experience that enables them to intuitively understand and address the gaps in local service provision?
Describe what is happening on the ground in your area. Did your local authority previously provide more accessible support that has been lost in recent cutbacks? Has the closure of another charity impacted the needs of the people you support? Has another organisation approached you to address a need they know they can’t meet?
Describe the evolution of your own work. Perhaps you've learned through experience that a different type of service is needed. Can you show how previous feedback and evaluation data has enabled you to hone and improve your work over time, and become more collaborative with other local services (e.g. through referral pathways, strategic partnership working)?
Cite independent research. You might be absolutely convinced that your work is different, but do you have third party evidence to back it up? Look for independent studies or local data that highlight gaps in local service provision, or examples of other organisations working in a different region that have successfully achieved impact by tackling a similar issue or gap.
Remember that your work doesn’t need to be completely unique or mind-blowingly innovative to be different and valuable. But don't take it for granted that a funder will understand that - you need to build a compelling case for support that clearly explains why your work is vital for your own particular service users.
In a world where funding is ultra-competitive, spending time carefully situating your work within the wider delivery landscape - and avoid perceptions of duplication - is an investment well worth making.
Our consultant Charlotte Chilvers shares her tips below on how small charities and social enterprises can increase their income from social media. Before joining Lime Green, Charlotte used to deliver social media training for small charities for Macc, Manchester’s voluntary sector infrastructure support organisation.
With statutory and trusts funding becoming even more competitive post-pandemic and with the current cost-of-living headache, you may be revisiting your fundraising strategy and considering where else to find pots of money.
Social media may seem to be an ambiguous source of income, but with over 84% of the UK population actively using social media, many organisations have found it to be a successful tool for fundraising. Although you’ll need to input some time (another precious resource) to research which methods would work best for your organisation, we’ve done some of the legwork for you below...
First up, what can social media do over grant funding?
Ignoring the endless number of cat videos, social media has some clear advantages over income from statutory or trusts & foundations funding:
It's unrestricted income - this should light up pound signs in your eyes immediately. However your fundraising strategy incorporates social media, one of the clear benefits is that in most cases, the money raised is unrestricted and can be spread across your organisation’s projects and overheads. Despite a recent shift in that direction from some funders, grant funding is still rarely unrestricted.
It’s a free resource - we’ll start with a caveat. Yes, you will need someone to set up social media accounts and manage them, which may be a paid staff member. However, with a bit of time and input at the start, such as establishing a social media strategy, and utilising free scheduling tools such as TweetDeck and Buffer, your online fundraising can build up nicely. Alongside this, you’re easily able to raise awareness and promote activities and events.
Social media can support your grant applications - your content can help tell the story of your organisation, service users, and donors. Comments on your posts and events can also contribute to your grant applications - feedback from diverse networks (e.g. service users, community members, donors) are perfect for monitoring and evaluation and building your case for support.
Now that’s swayed you, how can you fundraise on different social media platforms?
One of the key benefits for not-for-profits is their ‘Fundraisers and donations’ dedicated section for charities looking to raise income through public donations. Whilst success can vary, organisations have been able to generate income through promoting events and ticket sales, ‘birthday appeal’ donations from users, sharing direct links to Fundraising pages, as well as launching poll-voting for donations (similar to community supermarket tokens).
This can be done by a simple personal account in the organisation’s name, or by a ‘business page’ which gives a greater breakdown of traffic and interaction with your posts. The beauty of social media means your posts and activity promote your organisation and raise awareness, whilst requests for donations can then be shared by other online users. This external virality opens up opportunities for income from a wider audience, allowing you to (hopefully) sit back and see some pounds coming in with little time and effort.
Alongside this, there are no limitations on character counts, which means you can really show off what your organisation does through storytelling and demonstrating your evidence of need. Funders will often request your social media links, so it’s worth very clearly demonstrating this through your account through photos, short videos, infographics, blogs, articles, events, etc. Depending on your privacy settings, publicly available posts can also be used for gathering data/quotes for impact.
Top Tip: Go with the trends: so many viral fundraising activities have grown from Facebook (17 million posted an ‘Ice bucket challenge’ video in 2014 alone) so direct your fundraising posts to relevant trends, use hashtags, and share widely!
Unlike Facebook, Instagram pages need to be highly visual - content is primarily made up of photos and videos. In terms of generating income, like Facebook, there is the option to set up a business account to sell tickets, items, merchandise, and other products, as well as link to your fundraising page.
As part of Zuckerberg’s Meta world, Instagram also has a non-profit fundraisers section, which outlines how best to maximise donations. For example, utilising hashtags, adding links to 24-hour ‘stories’, and live-streaming either from your organisation or from donors. Lastly, the group fundraiser option is a brilliant way to collaborate and raise money with people you may already be connected to, such as public figures and people who have successfully raised funds for you before.
Due to the visual nature, Instagram is a great way to show off what you do and connect people with your work. This also offers a different route to storytelling. For example, live streaming videos during events, service user/staff/volunteer "takeovers" to show how your organisation benefits them, infographics with quotes, and photo/video posts all provide a very clear impression of what you do, and why users should donate.
Top tip: Make your fundraising request post visually appealing, headline it with a catchy title, and use compelling images to show the impact of people’s donations.
Twitter posts are limited to 280 characters, meaning you’ll need to be creative in how to fit information in short tweets and threads. This means your message or donation request has to be clear and to the point.
Tweeting your donation links can build up momentum to your organisation’s fundraising needs, particularly when utilising hashtags and tagging relevant organisations/people/pages to start campaigns or conversations. Twitter is a brilliant way to connect, influence and build networks locally and nationally with other organisations, funders, local councillors etc. Your content can be easily shared through retweets, hopefully widening your reach to more potential donors.
With Elon Musk's Twitter takeover, many organisations are reviewing their own standpoint on Twitter, as well as considering alternative platforms. If that's you too, here are a couple of articles by Charity Digital to help: Should charities stay on Elon Musk's Twitter? | Exploring the alternatives to Twitter
Top tip: Keep your message brief but comprehensive, and use Bitly to keep your website links short and within the character limit!
Look no further than our podcast episode with the brilliant Nana Crawford, talking about how the British Red Cross was one of the first charities to successfully start fundraising on TikTok, and how they made it work.
This all sounds great, but how do I get started?
This is a guest blog by Yasmin Glover, who runs The Olive Training and Consultancy and is a fellow member of the Small Charity Friendly Collective. Yasmin supports small charities and social enterprises to become more efficient, purpose-driven, and impactful.
"Internal comms" can often be brushed aside as something only relevant to bigger organisations - or at least, those with enough capacity to dedicate to it. But with increasing demands on our small teams, we can’t afford not to keep them engaged, supported, and working as efficiently as possible.
Remote and hybrid working models have become the norm for many organisations, and whilst they can offer so many positives - among them, more work-life balance for some, greater inclusion, and more flexibility - they often present additional challenges for team dynamics. However, if we are able to address the teething issues experienced during this transition, we can integrate greater choice and options for our people, and remain competitive as these considerations are increasingly front-of-mind for existing and prospective team members.
In this blog, we’ll explore some of the difficulties in creating and maintaining internal cohesion alongside remote working, why it’s important that we persevere, and some practical, tangible tips for how to go about this vital task.
"My organisation feels increasingly fragmented. Why is it so hard for us to feel like one team?"
Spontaneous and chance opportunities for connection and sharing no longer pepper the everyday, and some of us may never even have met our colleagues in person. In a sector which champions community, this distance and lack of personal interaction can feel very jarring. Measures to support staff through the cost of living crisis (such as increased working from home, and flexible hours to enable travel and childcare savings) may exacerbate this phenomenon (but could also present opportunities to overcome - more on that later!).
Increased demand on our services due to national and international pressures can lead to feelings of guilt or conflict when even considering dedicating resource to anything other than direct beneficiary work. This can lead to the training, development, and cohesion of our staff teams being neglected, at the very time they are needed most.
This exceptional demand also results in teams becoming more and more stretched, diminishing the time we are willing to allocate to team building.
Such pressures on time and capacity, as well as the dramatic shifts in ways of working, make it really hard to prioritise internal dynamics.
Why prioritising your team is necessary to delivering for your beneficiaries
In a recent survey by Agenda Consulting and Charities HR Network Group, a third of respondents reported a challenge with maintaining levels of collaboration in their current balance of office and home working, with difficulties connecting within and across teams and increasing silo working.
In a sector which has often struggled with the effects of silo working, if left unattended, remote working threatens to further entrench unhelpful practices. Teams that are at risk of burnout, and unable to work together to find the most effective and sustainable ways to support beneficiaries, are not going to be delivering the highest quality services possible. United, supported teams are.
Prioritising internal development will, therefore:
"We don’t have a lot of resource or time to invest in this. Where can we start?"
1. Acknowledge the problem, and ask for input
Nobody is expecting you to have all the answers, or for the transition to be without hiccups. Many organisations introduced remote and hybrid working as a necessity, and adapted based on immediate circumstances. Making a choice to continue with this approach long-term has more consequences for working practices and organisational culture, and there are lots of different aspects to consider in making it work for the whole team.
As a leader, acknowledging this difficulty with your team and inviting their input may help to ease the tension - they’ll already know what’s not working, and working towards solutions together will help to show they are trusted, and will already start to bring you together.
As a team member, being able to share your own needs in a constructive way with ideas or suggestions will help to fill in the gaps around what is missing in the new model, and get the ball rolling on ways to address these gaps.
You could vote on ideas for connection, and trial the top three as suggested by your team.
Ideas for social connection include:
Ideas for collaboration include:
2. Prioritise and model relationship building practices
Seeing these behaviours modelled at all levels of the organisation signals the acceptability of making time for each other as individuals, and helps to embed them into the organisational culture.
Building relationships with each other so that we connect as people, not just as our roles, can help us to understand each other and work more collaboratively - utilising people’s expertise and tailoring our approaches to them. We mentioned earlier that some measures to support staff through the cost of living crisis may exacerbate the challenges, however others, such as car sharing, or bring-and-share lunches, may actually help.
Other ideas include:
3. Agree clear protocols and expectations
With any change, sharing information and reasoning as much and as early as possible is key, as well as establishing clear processes to support the changes, and clear lines of communication for anyone who is struggling with any aspect. Sharing your hopes and expectations around hybrid working, as well as the challenges you expect to face and reassurances for dealing with them, is a good first step in supporting your team.
On a more day-to-day level, consider everyone’s different communication preferences and assumptions, and different demands on their roles. Some people just want to email, while others are delivering in community settings with rare opportunities to check their emails.
Agree and commit to ways of communicating in different situations to reduce this tension. For example:
"If we need an answer same-day, we will call, leaving a message if they don’t answer, and we will respond to/return phone calls on the same day. If it’s less urgent, we will email with a clear action and deadline, and we agree to check our inboxes at least once a day so we don’t miss things’"
With so many demands on small charities at the moment, it’s easy to understand the overwhelm and ‘firefighting mode’ that many organisations are dealing with. We want to do the best and the most we can for beneficiaries, while juggling our own pressured lives.
Stepping out of the urgency to put in place systems and practices across our team(s) can feel like an indulgence or an impossibility, but is necessary to building effective, sustainable organisations.
When we remember and make time to see each other as people, not just ‘enablers’ to our current task or answers to our problems, we open ourselves up to greater opportunities and ways of working - improving the lives of our own team members, and strengthening our offer to beneficiaries.
This blog is written by our Director, Mike Zywina, to share some tips for organisations that have high reserves or are in an unusual financial position for any reason.
In a cost-of-living crisis, it feels strange to be sharing advice with organisations that have the perceived luxury of having *too much* money. I know that the reality is very different for most charities and social enterprises in the current landscape. But some organisations are in a much stronger financial position (on paper at least) and this presents its own set of unique challenges. We've worked with several organisations with high reserves recently, so I wanted to share a few tips from a fundraiser’s perspective.
Firstly, why might a charity or social enterprise have high reserves?
Frustratingly, many funders still seem to insist that holding anything above 3-6 months’ running costs in reserve is inappropriate. Some organisations very prudently aim for unrestricted reserves that are a bit above this level. But for the purposes of this blog, by "high" I mean organisations that are sitting on - or are perceived as sitting on - substantially higher reserves, for a variety of reasons.
The first and most obvious reason is that they simply do have very high reserves. Maybe this has accumulated over a prolonged period due to excessive caution or even mismanagement by the Board, or maybe there’s a good reason why it’s prudent for a specific organisation to hold substantially more funds in reserve.
High reserves can also be circumstantial. A charity could have recently enjoyed a large unexpected fundraising success, or received a significant legacy, and hasn’t decided how to spend the money yet. Perhaps they’ve been saving up for major capital work, the launch of a significant new programme, or something else that can't be actioned yet. In these cases, while the high reserves might be temporary, they can still raise a red flag for a funder, especially if unexplained.
Alternatively, a charity may have high reserves because of the specific way it was set up and operated. Some organisations are established with a large endowment (i.e. gift of money) that can be relied on to keep funding its services for decades. However, eventually the trustees may realise that if they continue this way, they’ll eventually run out of money. So they want to start securing grants from trusts & foundations, but are in a tricky position - essentially not wealthy enough to continue on the previous trajectory, but too wealthy to look like a compelling cause for grant funders.
Finally, some organisations may just appear wealthy because they own property or major assets. Perhaps this has been the case for a very long time, or maybe they’ve recently been gifted property. Often this gives them vital stability and fit-for-purpose premises to run their services more effectively, and they’re extremely reluctant to sell up. While owning the property is completely different to having high unrestricted reserves, in my experience some funders will only glance at a charity’s accounts in a simplistic way and may still perceive them as being wealthy, even if it doesn’t translate into having money available to spend on services.
What can you do if you have high reserves or are in an unusual financial position?
1. Write template content to explain your financial position
This will be especially helpful if you're set up in an unusual way, own high-value premises or are temporarily holding significant funds in reserve, as explored above. Bear in mind that while more proactive funders may query anything unusual with you, others will go ahead and make a decision about funding you simply based on the information that is publicly available.
Think through any particular concerns or misconceptions that a funder might have when looking at your annual accounts, then explain the reasons or rationale why the organisation is in that position. For example, is there a specific reason why a large amount of money has come in but not been spent yet? Would selling property have a damaging impact on your service delivery? Use plain English and once you've drafted something, show it to others (including those with no finance or fundraising expertise) to check that it is clear.
One key learning point for Boards and management teams during the pandemic was how quickly an organisation can become financially vulnerable when a major external event cuts off several income streams. Many organisations now feel that having higher reserves is a strategic necessity to ensure stability for service users and staff. If you've made changes on this basis, this is something to explain concisely to funders.
You can then use your template copy in funding applications, either in response to specific questions or in those ‘Anything else that you want to tell us?’ boxes. If there’s something that you want to tell a funder but you don’t know where/how to include it, don’t hesitate to contact them and ask. You should also consider using any template copy in your annual accounts (see below).
2. Apply a fundraising perspective to your reserves policy and annual accounts
In my experience, organisations rarely think about grant funders when putting together their annual accounts, even though funders will request, download and examine the accounts more than most other audiences. Despite this, the process of finalising your accounts and writing explanatory notes is typically done by an accountancy firm in collaboration with an organisation’s finance manager and/or treasurer - people who collectively may not have any fundraising experience themselves.
The result of this is that your accounts may well unintentionally raise an avoidable but damaging red flag for prospective funders. For example, I've seen organisations show a significant level of unrestricted reserves on their accounts when in practice that money has been (or is in the process of being) restricted or designated for a specific purpose. Nobody has queried the decisions made about how to allocate reserves and how to present that information in the accounts, because nobody is considering it from a funder's perspective.
I'm absolutely not saying that you should write your accounts solely with funders in mind, or present information in an intentionally misleading way. But involving your fundraiser(s) in the process can be very helpful, particularly if your financial position is a little unusual.
3. Explore making contributions out of reserves to part-fund projects
While taking the time to clearly explain the reality of your financial position helps, sometimes you need to think about changing that reality too.
We're operating in a crisis funding landscape, with funders scrambling to respond to urgent social needs exacerbated by the cost-of-living crisis, having had no time to recover from overspending during the pandemic. They receive urgent requests for support every day, so they’re unlikely to find it very compelling to fund you over another organisation for work that you could easily afford to do yourself.
One way to turn your high reserves into an advantage is by pledging to match fund any grants received. For example, if you’re fundraising a six-figure sum to refurbish your main building, could you pledge to make a contribution from reserves to cover 50% of the cost, with the remainder funded by grants? This requires careful discussion with your Board, but it might boost your application success rate, and open up funders that will only consider making a grant once part of the funding is already in place.
4. Consider the timing of your applications carefully
One challenge for fundraisers is that our organisation's financial information will always be out-of-date, due to the time it takes to finalise and file a set of accounts. If you’ve taken some of the steps above to reduce your reserves or structure/explain them differently, it may be some time before this is reflected in the information published on the Charity Commission website.
Where funders accept applications on a rolling basis, it might be prudent to hold off submitting a key application if your new accounts will be published soon. You might also be able to work with finance staff to finalise those accounts more quickly, where the new information is likely to have a major impact on how funders will perceive you.
We wrote this blog in response to questions asked by our mailing list subscribers and training participants. If you've got a topic that you'd like us to consider writing about, get in touch.
It’s been nearly five years since we first shared some tips on creating an ethical fundraising policy, and 2-3 years since we really embraced the complex debate about problematic philanthropy. To kick off 2023 on a thoughtful note, this new blog brings together those ideas - and some new ones - for anyone looking to create an ethical fundraising policy.
Problematic philanthropy - not as clear-cut as it seems
Summer 2020: the statue of Edward Colston makes its journey from high-profile city-centre plinth to horizontal resting place in a Bristol museum, via a swim in the River Avon. The charity sector is awash with talk about the issues with accepting grants and donations linked to historical figures involved in the slave trade. There’s a clear view – philanthropy can’t be used to excuse or whitewash the injustice of how wealth was first made.
Spring 2019: the Sackler Trust halts grantgiving in the wake of the Purdue Pharma scandal. The US pharmaceutical company, closely linked to the Trust, is accused of fuelling the US opioid crisis that killed almost half a million people, having spent years aggressively pursuing legal action so they could continue selling their highly addictive drugs. Slowly, UK cultural institutions like the British Museum and the National Portrait Gallery begin distancing themselves from the Sackler name.
Clear-cut cases like this make us all understand the need to swerve “bad money”, and make the process of writing an ethical fundraising policy seem pretty straightforward. Except that (mixed metaphor alert) once you open this can of worms, you get hit by about a million grey areas.
Consider the following examples:
Despite the Colston backlash, there are plenty of other links between the slave trade and the charity / arts sector hiding in plain sight. Here in Bristol, the Society of Merchant Venturers continue to donate £250,000 per year to local causes. In London, the Tate Galleries continue to take their name from Henry Tate, whose Tate & Lyle sugar company was fundamentally connected to the slave trade.
Many UK charities happily receive small-scale income via the Amazon Smile programme, despite Amazon being associated with a raft of harmful practices including “extreme tax avoidance, poor working conditions in factories, slave labour in their supply chain, and catastrophic environmental impact” (source: FRIDA).
And how many charities have received grants from household name corporate foundations like the Lloyds Bank Foundation, Santander Foundation and the RBS Skills & Opportunities Fund? Yet consider this quote from a 2018 report by Ethical Consumer magazine:
“The UK's big five high street banks [Barclays, HSBC, Lloyds, RBS and Santander] are hindering the sector's efforts to tackle climate change by continuing to profit from some of the world's dirtiest fossil fuel projects. [...] The UK's mainstream banking industry has involvement with virtually every ethical ‘problem sector’ from factory farming through to nuclear weapons.”
The case against philanthropy - and the dilemma for charities and social enterprises
None of this is about passing moral judgement on the specific names above, merely to demonstrate how much more complicated things are than Edward Colston and the Sackler Trust. An uncomfortably high number of philanthropists and foundations have clear links with the slave trade, climate damage, tax avoidance and damaging employment practices - all of which actively harm the very people many charities exist to help.
As we argued in 2020, philanthropy buys a seat at the table for a very specific audience - wealthy, privileged, usually white and male. Through their decisions on what they do/don't fund, their roles on Boards and advisory groups, and their status as thought leaders, they gain disproportionate influence in implementing their own vision of equality, social change and climate justice - a vision that is probably very different from your own.
This gives rise to some important questions about what criteria should you apply when evaluating donations:
Given this moral and philosophical minefield, how do you go about creating an ethical fundraising policy?
Firstly, here’s how not to do it…
Don’t go out and find a template ethical fundraising policy, copy and paste in some organisational details, and tick it off your to do list. As is usually the case, an honest, thoughtful discussion is a prerequisite to any good policy or strategy.
Don’t base your decisions on the sum total of people’s personal beliefs, what you’ve seen other organisations do in the past, or what the loudest voices are saying (whether that's your senior leadership, trustees or existing donors). And don’t over-react to any specific recent event in the media.
If you do, you’ll be basing your decisions on the wrong criteria, oversimplifying complex issues, and setting yourself up for trouble. You may later find yourself facing pressure to turn away a donation that technically contravenes your policy in an unexpected way, or facing criticism for accepting a donation that has implications you hadn't considered.
The first step is to organise a structured discussion or workshop, involving people at all levels of the organisation. Start by explaining the context, giving some examples of problematic donations to consider, and outlining the risks of getting your policy wrong. Feel free to share this blog with everyone in advance.
The vital context for any good ethical fundraising policy is YOUR specific work and mission. You should look to identify types of donor or donation that might: