Taking the plunge on long-term growth activities - why it pays to invest in regular giving and legacy fundraising

Many fundraisers and small charity leaders that I speak to are under pressure to close a significant funding gap or meet a daunting fundraising target this year.

This feels natural, especially in the current climate. But it's also likely to be holding back your growth potential.

What if I told you that raising less money this year might be the smartest thing your organisation could do?

When we're under pressure to raise funds quickly, we turn to tried-and-tested tactics. Such as writing a few more funding applications. Or searching for opportunities to secure another local authority contract.

These tactics, when successful, give trustees and management a sense of security and progress - an extra zero on a financial report, a new project launched, a new staff member recruited.

But how much security and progress does this really bring? By the following year, you're back in the same position, needing to close the same funding gap to avoid scaling back. Running to stand still. Having to work just as hard to raise the same amount, if not harder given the ever-increasing competition for funding. No breathing room or flexibility to respond to unexpected events or costs.

It doesn't always have to be like this. Some income streams offer you the prospect of a higher return on investment, more flexibility and more security further down the line, if you take action now and can get that far.

When we’re working with a charity or social enterprise on their fundraising strategy, we always encourage them to cast the net a bit wider and consider the potential of other income streams that aren’t immediately on their radar. Two income streams in particular.

Investing in regular giving and legacy fundraising will help sow the seeds for future income

Regular giving and legacy fundraising - what are the benefits?

​Regular giving can be tricky and slow to grow, and may require a culture change if you've only ever previously relied on grants. But long-term, the return on investment can be significant, and the benefits huge. 

It generates unrestricted income that you can spend as you wish. Also, dependable income: if you start a financial year with 100 direct debits, you can be pretty confident of broadly how much you’ll raise and when, which is great for cash flow and financial planning. Plus regular giving is a great springboard for other opportunities: people who donate regularly and are engaged in your work may shout about you to others, unlock corporate fundraising opportunities with their employer, or become future major donor or legacy prospects.

Legacy fundraising, while similarly slow to develop, potentially has an enormous long-term return on investment, partly because there’s very little to actually spend money on - just a small up-front investment in some resources and strong messaging to drip-feed to your supporters via email, social media etc.

A very small outlay may bring a game-changing windfall down the line. I’ll never forget visiting a family centre in Gloucestershire the day they’d been contacted by a solicitor to notify them of a forthcoming unrestricted donation of £150,000 - a former service user had sadly passed away and generously promised them a percentage of the proceeds of their house sale. A joyful moment and totally transformative for their future work.

Persuading people to leave you a gift in their will could be transformative for your organisation

Given this potential, why don't more organisations take the plunge and invest in long-term income streams?

​Firstly, there are a couple of good reasons.

​Some organisations are fighting to keep their doors open in a thankless financial climate, and simply don’t have any possibility of waiting for a return a few years down the line. Others are operating in a disadvantaged local community where these income streams simply aren’t a good fit, because they have little or no opportunity to reach people with the ability to donate.

However, other organisations have somewhat understandable, but much less justifiable, reasons for writing off these income streams:

• They've discounted them without ever discussing the long-term value of increasing unrestricted income and building a donor network
• They only ever look one year ahead when creating financial projections, so don’t see the potential benefits 3-5 years down the line
• They’re put off by the unpredictability and difficulty of tracking future income - if we can’t confidently say whether a legacy will arrive in Year 2, Year 5 or Year 10, does it really have any value to us?
• They see immediate service delivery as the be-all and end-all, so aren't willing to delay launching a new service (or even, if necessary, scale back an existing one) so they can shift focus away from short-term fundraising
• They're risk averse - or at least too focused on the risk of a new fundraising activity failing, and not focused enough on the risk of never trying

​This last point is a really crucial one. In trying to steer away from activities that risk not raising as much as hoped, many organisations steer into the greatest risk of all: becoming over-reliant on ‘safe’ income streams that gradually dry up over time, then hitting serious financial difficulties because it’s too late to react and try something new.

I often use a plane analogy here. If you were flying a plane that you knew was steadily running out of fuel, the risk of attempting an emergency landing might feel daunting. In different circumstances, you wouldn’t dream of trying it. But the alternative option - carrying on flying and running out of fuel mid-air - is actually guaranteed to fail. So an emergency landing, while more drastic, is comparatively lower-risk.

Investing in new fundraising activities can feel as risky - but necessary - as landing a plane

In conclusion - invest if you possibly can

​It’s true that many organisations aren’t in a position to easily invest in high-potential, slow-burn activities like regular giving and legacy fundraising. But this isn't an issue with the income streams themselves. The problem might be that nobody took the plunge and invested in them ten years ago.

If your organisation does have a comfortable level of reserves, or can otherwise take action to create some breathing space, I’d strongly recommend exploring how you can diversify your fundraising activity and invest in long-term growth activities. In 5-10 years, you’ll likely be extremely grateful for it.

Even if that means raising less money this year, it could be the best decision that you ever make.