Implementing new ideas always involves risk, but doing nothing could be even more deadly, says Lucy Gower
In a fiercely competitive marketplace, facing increasing demand for services and public sector spending cuts, charities have no choice but to diversify funding streams, reduce costs and deliver outstanding services to both supporters and beneficiaries if they are going to survive.
Charities, at their most basic level, exist to drive change for their beneficiaries. Yet charities are not typically risk-takers. How can this be? If charities do not take risks, how can they develop new ways to fundraise that enable them to make a bigger difference?
Playing it safe
Change involves doing something new, and if something hasn’t been tried before there are no hard and fast guarantees that it will be successful. Indeed many charities are paralysed from taking action through fear of failure and fear of the unknown.
Undoubtedly, it is easier to continue to do the same activities that bring in a reasonable return than to challenge the way things are done. When we consider the scrutiny that charities are under regarding how they invest their money, it is not surprising they prefer to make safe decisions. Coupled with all the talk about economic doom and redundancies in the sector, fundraisers feel anxious about the security of their roles and understandably feel it is safer to keep their heads down.
However, while trying something new isn’t guaranteed to be successful, there are no guarantees that what you are currently doing will continue to work either. In a rapidly changing world, it is at least as risky to stay the same.
The governance structure of charities drives a culture of risk aversion. Trustees have the ultimate responsibility for the running and management of a charity, and with this responsibility comes a degree of caution. Sometimes this manifests itself as not taking any risks at all.
However, trustees are recruited for the skills and experience they bring – good operational and commercial management, sound financial planning and intelligent appraisal of risk. Does the fear of failure and accusations about wasting donors’ money mean that trustees should abandon the very skills they were recruited for?
Fast-moving world
Donors’ and beneficiaries’ needs and expectations are changing. Technology has changed the way we communicate, and the growth of social media has had a huge impact on how we broadcast and share information. The world moves quickly; what is relevant today may be obsolete tomorrow.
Charities, like any other business, must invest in understanding the changing needs of their customers and the market environment, and develop products and services to meet those needs.
Consider Kodak who, despite having invented digital photography back in 1975, didn’t respond quickly enough to the growing demand in the market and were forced to declare themselves bankrupt in January this year. The same will happen to the charity that does not respond to market trends and customer needs.
Failure = practicing for success
The single biggest reason why organisations and individuals do not take risks is fear of failure. However, failing is an important part of learning, development and progress.
Thomas Edison famously said about his quest to invent the light bulb: “I have not failed. I've just found 10,000 ways that won't work.”
We must work hard to reframe failure as a learning exercise, a dress rehearsal for ultimate success. Accept that your new idea might not work. You should take steps to manage risk, and lead by example and share what you learn from your failures to encourage this behaviour in your team.
Look outside
Fundraising teams should look outside of their organisation and the sector for inspiration, to discover new ways of raising money and working more effectively to increase net income. It is also their responsibility to help each other, and charity trustees, to understand their fundraising challenges.
Remember your new project doesn’t have to be totally new. If you do not have a regular giving, face-to-face, major donor or events programme and you choose to develop one, then that counts as new and therefore can be perceived as risky. Even if other organisations are doing it successfully, it may not work for you.
The important thing to remember is not just to copy someone else’s good idea. You have to work hard to understand why it worked for them and their donors at that time, and apply the principles that made it work to the context you are working in.
Most corporates have an R&D budget as part of their growth strategy to develop new products and services. In the corporate world, if 10 per cent of new product development is a success it’s a reason to celebrate.
Charities have a completely different approach. Very few charities have a budget for testing – especially when there is no income target against it.
Additionally charities are expected to make a new product a success in year one. When Amazon started up it didn’t make any profit for six years – and it’s stakeholders viewed this as totally acceptable. Imagine how different your fundraising could be if the expectation shifted from showing success in year one to a more long-term view?
In the current tough environment – which let’s be honest is the new ‘normal’ – charities have been forced to be short term in their thinking, chasing immediate funding opportunities, desperate to survive from month to month with no time or resource to invest in longer-term strategies.
Unless charities start to think more about how today’s activities will bring returns in the mid to long term, they will remain trapped in a vicious cycle of short-term, reactive fundraising. This approach will ultimately not deliver the best results.
Life = taking risks
Driving new fundraising ideas can be challenging. In a fast-moving marketplace, staying the same becomes the equivalent of going backwards. Unless organisations and individuals take risks nothing will change. And as fundraisers you must take risks because it is your responsibility to change the world.
Lucy Gower is an independent fundraising consultant and trainer
This article first appeared in The Fundraiser magazine, Issue 18, June 2012
