How to put an end to poor charity fundraising practice

As charity fundraising practices fall into question, Australia’s charity sector needs to do more to avoid wide-scale scandal, writes Good2Give CEO Lisa Grinham. 

Street fundraisers were recently criticised by a Sydney City Councillor for deploying tactics considered emotionally manipulative. Border-line bullying.

Irresponsible fundraising and use of donor funds is a conversation that we’ve had time and time again. It makes local headlines every few months, and just recently reached unprecedented scrutiny in the UK.

In the wake of charities reselling donor information, UK charities are now on the brinks of heavy-handed government regulation to rebuild public confidence. “Charity done bad” inherently has disproportionate impact in the media – spreading like wildfire and undercutting trust in a sector that needs it more than ever.

The Australian Charities and Not-for-profits Commission (ACNC) addressed this issue head on last month. Meeting with charity colleagues and academic experts from Australia, Canada and the UK, the ACNC discussed how we can best manage fundraising costs and practices.

Setting national standards

The obvious solution is to set national fundraising standards that can be applied across the sector and uphold a reasonable standard.  These initiatives are expensive and complex to devise, heavy handed to enforce and face a dispute in accounting for the great deal of diversity that exists in our charity sector.

But the main concern? A regulated approach caters to a conversation that primarily reviews charity activity first, and community outcome second. Pressured to increase outputs and reduce fundraising costs – we see charities time and time again race to the bottom to meet unrealistic donor expectations.

Prioritising charity impact

They not only cut associated fundraising and marketing budgets, but operational expenses such as staff training, permanent contracts and IT capacity. Charity boards also become too scared to invest in medium or long-term strategies that may redirect donor funds to service scalability, rather than immediate community activity.

Stanford University refers to this as the Starvation Cycle – a process that undercuts charity productivity and its resilience for tomorrow. The detrimental impact that donor expectations have on charities are seen time and time again.

In essence, we needn’t be concerned that Shane Warne’s foundation only distributes 12 per cent to its charity purpose. Though what we should be outraged by is that the foundation has no credible strategy for creating lasting change on people’s lives. The heartbreak lies in the community outcome, not the output.

Time to reset fundraising expectations

This is an exciting time for our sector. With increased focus on donor dollars and alarming media headlines – there are tangible reasons for Australia’s charity sector to take control of this discussion and reset public expectations.

Presenters at the ACNC forum strongly warned against Australian charities waiting for public scandal before action. International experience tells us that government regulation in response to media hysteria is rarely proportionate and rarely appropriate. There was strong agreement among presenters that developing an alternative assessment model that shifts the debate away from fundraising costs is an important step forward.

Measuring impact is expensive, challenging, and importantly, it requires a culture change. But it is well worth the effort. As Dr Bob Wyatt commented on Canadian fundraising, “I am sick and tired of hearing ill-informed people judge charities on the basis of random financial measures.” Notably it’s charities’ responsibility to initiate this culture change.

Charities, share your social impact!

This means investing in strategy, ensuring programs are evaluated, and effectively educating the public on your purpose and your reasons as to how your achieving this. There is no doubt in my mind this is what donors actually crave. In our experience, they want to know they’re giving to charities who are clever and strategic with resources.

In our recent research Workplace Givers Revealed, over 80 per cent of employees donating through workplace giving programs wanted to further their relationship with selected charities, and 50 per cent would give more if merely provided with further justification.

Let’s wrap-up the fundraising debate that we have on repeat, and lets raise the bar to a more important discussion on impact. Not just for the PR of Australian charities, but for the communities who deserve better and the donors who want more.