Investing in gold

My experience of Regular Giving.

May I talk you through this chart?

I worked with a researcher to look at the performance of Regular Giving, over time, and using a basket of different charities. 

[It was over ten years’ ago, of course, and specifics will have changed. The advent of digital has transformed many aspects of fundraising. But not the fundamentals.]

This graph shows the real-world result.

It takes into account:

• Recruitment costs.

• The marginal costs of future communications – if we assume you already have an RG programme, there are no additional core costs.

• Attrition rates over several years.

• Recruitment income.

• Ongoing income from regular gifts.

• Regular requests to upgrade the monthly amount.

• And occasional cash gifts, for example at Christmas.

• Finally, of course, lots of stewardship. Essential – I assume you’re doing it already.

Assume, to keep things simple, that you take £1m out of reserves, and spend it on recruiting new Regular Givers on day one.

If you’d kept that £1m in the stocks and bonds market, you would get the blue line – many charities have ‘Investment Committees’, working to improve this performance by a few percentage points.

Investing that £1m in recruiting Regular Givers seems far more risky.

• A loss in year one.

• A further loss in year two.

• By year three, you might cover the costs of the last three years.

Many charities would see that as a risk and be unwilling to take it. It seems like a long time before the investment covers its costs. Trustees Boards thinking with a short-term view might reject that out of hand.

Except that the risk is actually very small indeed.

What happens in years four to ten? The red line continues to grow, and is still growing in year ten.

Any fundraising director who can persuade their Trustees to invest in fundraising with a three-year time horizon, and who doesn’t have an established regular giving programme, should think very seriously about creating one.

Note 1
As I’ve said, this chart is a few years old. Both blue and red lines will be different, today. But the area between the blue and red lines will still be huge.

Note 2
As Ken Burnett reminded me, this doesn’t include any future Legacy income. This is likely to be a hugely significant addition.

Note 3
Please feel free to use this chart. It is my copyright so I’d be grateful if you’d credit me.

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