Once upon a time, arts fundraising worked like this: organisations vied for a mix of state funding and foundation grants. Private sector giving came next, pursued via corporate donations and gifts from wealthy donors; individual giving, though still important, came last via a mass of small donations pursued via labour-intensive appeals, legacy donation campaigns, events, and membership programmes.
All of these approaches remain valid in 2014, but the landscape has changed dramatically. State funding has been slashed, private foundations have raised the bar for accountability, corporate donations are increasingly tied to narrow CSR programmes, and individual giving has been squeezed by shrinking disposable income. It has never been easy to secure donations in any part of the charitable sector, but the challenges being faced by today’s arts fundraisers demand a whole new approach.
The key to overcoming them may be at your fingertips. Regardless of the target group, fundraisers now need to be increasingly transparent and granular in demonstrating how their work benefits society, the community, or the disadvantaged populations they aim to help. Many have inadequate tools for this, or lack the expertise to meet these rising expectations, which can vary widely in scope and detail from one donor to another. Outreach to wealthy individuals has clearly ramped up in recent years, but the success of these campaigns usually proves variable at best. The rebound from the economic downturn has been slow and gradual, and while these potential donors still have the capacity to give, they’re generally expecting to see more in terms of charitable return on investment. In short, they want to know that their money is ‘doing good’.
The untapped potential of wealthy donors reflects a general weakness in small to mid-size charities’ (and arts charities’ in particular) ability to fully understand the motivations and behaviours of individuals. By analysing the patterns behind giving behaviours and the ways in which people interact with an organisation, it’s often possible to identify individuals with a greater propensity to give – either in terms of frequency, the average size of donations, or both.
But how do you identify these people, understand their willingness to give, and still deliver the metrics they require? Meeting and overcoming the demands of funding bodies or philanthropists starts with tracking activity and sharing information in a way that doesn’t deviate markedly from one organisation to the next. Charities need to work towards a sector-wide understanding of ‘what success looks like’, which arguably starts with the essential issue of standardised reporting or results: displaying activity and outcomes transparently, to allow for proper benchmarking.
It’s also important to capture the ‘soft’ benefits of arts organisations in the community that, while outside the core mission of the organisation, still provide demonstrable social value. For example, a theatre’s core mission is to provide local communities with access to quality performing arts. Alongside that, it may put on workshops for children, offer gallery space to local artists, or engage with disability charities to encourage attendance from otherwise marginalised groups. As chief executives look to extend the worth and relevance of their organisations, donors need to know what non-core activity is taking place, and to see it in the context of attendance and impact on the theatre’s financial health. Having the systems and management skillsets in place to capture that sort of holistic data in a meaningful way will soon become essential.
It may be that arts charities will one day move away from annual reports to real-time reporting of their impact in the community. Before that can happen, however, fundraisers will have to raise their game in terms of data management and design, in order to inform donors about the impact achieved by their gifts. While outreach to high-net-worth individuals needs to continue, arts charities must also recognise the potential weakness in their definitions of ‘wealthy’. With the very rich at one end of the donor continuum and what I’ll call the well-to-do at the other, a wide swathe of generally prosperous people in the middle often fall off the fundraising radar. That represents a huge missed opportunity – in effect, asking people for GBP100 (€126) when they may be willing to donate GBP1,000.
Consider this: a 2012 report by Arts Quarter analysed the databases of 126 UK arts organisations, discovering that, on average, 3.4 per cent of the individuals in their databases had a personal wealth totalling over GBP1m (excluding the value of their homes). As might have been expected, the proportion was highest in London (5.4 per cent), but even in the region with the lowest number (North East & Yorkshire), it was still 1.3 per cent. If we apply those percentages to a theatre database of 50,000 customer records, 1.3 per cent still represents 650 individuals. Were you to solicit annual donations of GBP1,000 from just 10 per cent of these, you would be able to secure GBP65,000 each year.
From development to marketing to communications and PR, moving data-driven decision-making to the centre of fundraising strategy is essential for future success – partially because of austerity and the lean funding environment, but also because technology has changed people’s giving behaviours. Some don’t respond well to telemarketing, but are happy to respond to email. Traditional direct mail is disappearing, and we may be moving to a fundraising environment where all donations are made via mobile apps or other digital channels. With the ongoing rise of crowdfunding and youth philanthropy, I expect to see the development of more donor networks comprised of individuals who come together around specific causes, engage in volunteerism, and/or willingly promote the activities of the causes and organisations they support.
Even if the ways people donate do become less structured and homogeneous, one thing will remain consistent: everyone will want to understand how their acts of charity are helping others. One only need look at what Oxfam is doing with its system of regular ‘how your donation is helping’ communications for a clear glimpse of data’s role in fundraising’s future. All in-store Gift Aid donations at Oxfam retail shops are tracked, right down to individual items of clothing, and followed up with an email to explain how that gift is helping someone in the local community. New platforms will arrive that adhere to the latest technologies, trends and user experiences. However, they will need to be seamlessly integrated with existing systems such as CRM in order to provide a complete view of each supporter’s history of engagement with your organisation.
Ultimately, the future of arts fundraising lies in better use of data and technology to support the real reason we do what we do: promoting the joy, exhilaration, sense of fulfilment, and the discovery of the deep and enduring meaning that results from supporting the art you love. Given how much of political and commercial life has been denuded in recent years, the timing for all this could scarcely be better.
Michael Nabarro is co-founder and managing director of Spektrix.