Hospices face significant challenges in generating more income to cover this latest wave of cost increases outlined in the Autumn budget. But how realistic is it for fundraisers to magically create more income with limited resources and diminished budgets?
Now is the time for hospices to stabilise their financial position by focusing on operational efficiency and reducing waste.
The more income mindset
Here’s an extract from a job description for the Head of Fundraising, which you can find on a main hospice job board for anyone interested. There’s nothing special about this job description, and I would wager it’s ‘The Standard’ in the sector and has been for years:
The successful candidate will shape and execute a plan to grow income, aiming to expand our fundraising capacity and achieve long-term financial sustainability.
I’ve checked the full job description, and in the 1,861-word document, I can’t find any reference to words such as:
- Reduce / Lower
- Improve / Review / Optimise
- Process / Procedure
- Efficient / Efficiency
For a sector that’s been hit hard by NHS pay rises, NI contribution increases, and is constantly searching for long-term sustainability, there appears to be no requirement for this Head of Fundraising to improve the hospice's financial position by reducing waste and improving value.
So, if the Head of Fundraising isn't accountable for ensuring that the highest possible proportion of income goes to delivering care, then who is? Who is responsible for calculating how much (or little) of a typical donation will provide meaningful care, and what proportion of their gift is swallowed up by third-party commissions and operational inefficiency?
More income, but at what cost?
Chasing more income is folly if your overheads scale at the same rate. We all understand the concept of profit in the commercial world, but it seems to be a dirty word in the NFP sector, and this needs to change if financial sustainability is to be achieved.
Does your hospice know how much it costs to process a typical £15 donation? Has your hospice tracked and traced a standard donation through your organisation to ascertain the proportion that goes to delivering care?
Let's not forget that 89% of all the donations processed by hospices each year are for nominal amounts with an average value of £15. These donations typically make up less than 10% of fundraising income but are subject to high-cost levels to process and fulfil.
The time to change is now
I would argue that a highly effective way to achieve financial sustainability is for the sector to start cutting its cloth according to its pockets. Ultimately, this means relentlessly pursuing operational efficiency, especially around fundraising processes.
And let's be honest about this: Behind the scenes, it's a mess, isn't it? Processing payments, handling GDPR-sensitive data, and sending thank-you correspondence (if any) is chaotic and inefficient, severely diminishing the positive effect of generating more income.
Slices of a diminishing pie
Over the last 10 years, most hospices have elected to use a broad church of third-party vendors to deal with the hassle of handling donations and event bookings all of whom are eager to take their slice of the pie.
However, with confusing price models, varying commission rates, and data management complications, many hospices find it impossible to truly understand the costs of generating more income using this model.
Sending donors off to third-party websites to take donations/event bookings and paying commission for the privilege doesn't make sense. Having to download GDPR-sensitive data from third-party websites and then handball them into a CRM system doesn't make sense. But this is the reality for most hospices, and it needs to stop.
- How much commission does your hospice pay out to third parties collecting Gift Aid on your behalf each year?
- How much does it cost your hospice to sell LUAL tickets through a third-party vendor?
- Can this position be improved?
I've sat in a Hospice board room and suggested to a Director of Income Generation that they should evaluate how much Gift Aid commission they pay to Just Giving each year. They responded:
"Well, it's just easier to let them handle that for us."
A time and place for growth
An organisation that grows its income or reduces its costs is said to improve its bottom line. Most commercial companies improve their bottom lines by simultaneously increasing income and improving efficiency. More money and less waste equal positive outcomes.
There's no doubt that the sector needs more money, but it needs to get its ducks in a row first and cut out waste. Job descriptions for Head of Fundraising positions should place far more emphasis on profit, value, and operational efficiency rather than a fixation on more income, more overheads, and more mess.
Human resources (staff) are especially effective in forming personal relationships with high-yield income sources. Conversely, they are mainly ineffective (high cost) when managing menial tasks (such as data entry) that technology can solve.
People are trying to help
I've made it my business to tackle the issues this article raises head-on. My company is passionate about improving the efficiency of income generation processes for charities.
Our fundraising KPI measurement system is a powerful tool that identifies areas for income, retention, and attrition improvement. Priced at just £100 per month, it's a cost-effective solution that can significantly enhance your fundraising efforts.
I often see hospices recruiting for 'data analysts, ' but after recruitment fees, a six-month probation period, and a twelve-month resignation, what has been achieved, and at what cost?
Our website solution is a comprehensive platform that handles online donations and event bookings, providing real-time data to CRM platforms and sending personalised thank-you notes to supporters. From £300 per month, it's a cost-effective way to streamline your fundraising operations.
Unfortunately, there appears to be a deep-rooted reluctance in the sector to embrace innovative change or, at the very least, to question the status quo.
So, we arrive back questioning how sustainable more is.
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