Good Innovation founder, Kevin Waudby, adds his thoughts and reflections to the, at times surprising, results of our recent Innovating in Uncertain Times Pulse survey.
Having taken the pulse of fundraising teams pre and post covid, and given the current ‘cost of living’ climate, it felt like the right time to once again understand their pressures and priorities and how they are impacting charities ability and willingness to innovate.
For the past year it’s felt like ‘uncertainty’ is the word that was repeated most in conversations I had across the sector. And uncertainty seems to remain the main prospect for the foreseeable future. For instance, reports of charities making redundancies seem to be weekly news at the moment.
It got me wondering. What are the biggest challenges such uncertainty creates and what impact will it have on innovation? Or can innovation help navigate these uncertain times? Because without innovation fundraising will stagnate and be ill-equipped to navigate the inevitable changes that are heading our way.
So I talked to the team here at Good Innovation. And I wrote about the biggest challenges we were all hearing across the sector, with some thoughts about how to address them. But I wanted to understand from more Fundraising Directors if the insights we’d identified resonated with them. And, more importantly, how their teams were tackling them.
I sent a survey out to 40 Fundraising Directors to gather their insight. And what follows is what I heard.
1. Natural Optimists
I said it in 2022 and it’s worth saying again, Fundraising Directors are natural optimists. When I took their pulse back then, immediately after a global pandemic, they were concerned but not worried. They felt they’d weathered that storm and survived, so they could get through anything. But with inflation having subsequently reached the heights of 10%+, did their optimism survive?
In short, yes! I asked Fundraising Directors if they were confident in delivering income targets over the next year? Over 84% were confident, with just over half very or extremely confident.
Asked about the delivery of growth over 3 years, the answer was just as positive, with 75% very or extremely confident.
I’ll be honest, this level of confidence surprised me. Accepting that the fundraising landscape is a very mixed picture with some charities continuing to deliver impressive growth (particularly for causes that are front-of-mind with the public), I’m curious about where this optimism comes from. And how it seems to conflict with the general perception of fundraising teams being tasked with delivering more income with less resources.
A few thoughts and possibilities.
Quite practically, the fundraising budgets and targets that kicked-in in 2023 were set in 2022 when it was already becoming evident that the economy was heading for a tricky period, and inflation was heading towards 10%. Perhaps targets were set at realistic and achievable levels, despite increasing costs?
There is always hope for growth from ‘getting the basics right’, e.g. creating the right focus, the right brand, increasing efficiencies, and - the holy grail - having the right systems (particularly CRM) to improve, for instance, supporter journeys. Perhaps it was hoped that all the hard work that was going into getting the basics right would begin to pay dividends?
In the pulse I took with Fundraising Directors pre-pandemic, I heard how being a Fundraising Director is a tough gig, particularly as they were tasked even then with seemingly unrealistic income targets. So I wonder if optimism is a prerequisite for a job with so many pressures and (unrealistic?) expectations attached to it?
2. 'Dash-for-Cash'
Where do fundraising teams see growth coming from in the near term? My conversations suggested that there’s been an adjustment of focus for innovation investment and effort to more known income streams. And our survey indicates the same.
When asked if teams have refocused investment within their portfolio to tried-and-trusted income streams and fundraising products, over half said yes.
However, this isn’t true across the board, and of those who said they hadn’t already done this, most said they had no intention of doing so.
With rising costs in the short term driven by generationally unprecedented inflation, and the need to increase income quickly, the ‘dash for cash’ that has led to innovation generally being refocused on incremental improvements to existing fundraising products, or new product development within existing income streams, is not surprising.
A couple of watch-outs from pursuing this strategy:
With so many charities refocusing their innovation investment into existing income streams and audiences, it will inevitably increase competition for income in already saturated markets. Competing in this space will probably involve buying market share, which will squeeze ROI’s.
Failing to balance investment in new income streams and / or new audiences is potentially saving up problems for the longer term. As we’ve seen again and again in the fundraising sector, markets, channels and audiences can become overwhelmed with charities all chasing the same income (FaceBook events?). Spreading your bets with longer-term investment to secure income in the longer term will help future-proof your fundraising efforts.
How an organisation innovates, and where it puts its priorities is always context specific, so it’s difficult to generalise. But certainly creating a blended mix of near and longer term investment and effort is more likely to deliver both short-term income and future-proof the charity against longer-term change.
“We are pursuing a mix of [short, medium & longer term innovation], albeit I have the luxury of being in an organisation that has committed significant investment in a new fundraising strategy and has given me the freedom and autonomy to grow and innovate.”
3. De-risking Innovation
Pre covid and post Olive Cooke and GDPR, I heard from Fundraising Directors about their ‘palpable sense of excitement’ and an ‘overwhelming need and willingness to explore new and different possibilities.’ A willingness basically to take some risks and innovate to explore higher risk income possibilities.
What we are hearing now is that the need and willingness is still there, but the ability to take perceived risks has decreased significantly. Product innovation for nearly half of our respondents is limited to existing income streams for current audiences, e.g. new mass participation events and IG propositions for audiences who are already giving.
Only 17% are looking at new income from new audiences, involving higher risk bets. But they say this is a ‘critical’ new revenue stream for them. Similarly 17% are focusing mostly on improvements to existing, tried-and-trusted propositions, less willing and able to take risks.
Several Fundraising Directors told us that they’re taking a balanced or blended approach to innovation and, while focusing the majority of their efforts on existing products and audiences, were also making the space to experiment with new.
Playing it safe is not always the best course of action in a market where generally, with the exception of legacy fundraising, traditional bankers are either static or in decline, or producing marginal growth. In this case, playing it safe can lead to stagnation, demotivated staff and missed opportunities.
An alternative is to take small bets, streamline go/no go decisions, and spread your risk. And doing this with the support of AI tools can mean you’re able to keep budgets relatively small, and focus instead on removing barriers to innovation that we know are often the most insidious cause of expensive failures.
4. Rebalancing Supporter Engagement
Similarly with supporter engagement, in times of uncertainty and a dash-for-cash, the temptation may be to focus on short term financial support rather than longer term engagement, possibly reverting somewhat to the pre-Olive Cooke attitudes (if not practices). But what we heard was that whilst the majority of Fundraising Directors need to manage risk by balancing short term financial support with longer-term loyalty, a smaller, but not insignificant % continue to pursue strategic development of longer term relationships to secure support in all forms: money, time, and voice.
“We’ve got work to do here. We have experienced donor fatigue and need to engage better with our supporters in all senses. Not just financially. We need to be more strategic about how we engage.”
Has the sector learnt the lessons of Olive Cook? Two crises in quick succession - the pandemic, followed by the cost of living crisis - have brought pressures to focus on short term income. This has inevitably created an environment in which investment in the longer-term ambition of true supporter engagement has come under pressure.
The survey would suggest that there is a balance emerging in which fundraising teams are seeking short term financial support with longer term loyalty. Is this longer term loyalty defined, however, in mostly financial terms or is there still a genuine appetite and belief in the potential of supporters to help charities deliver their mission by lending their time and voice?
Our survey doesn’t provide the answer to that question, but certainly whilst Covid and the cost of living crises may have warranted a short term approach, and as instinctive as that approach might feel, charities need to stay focused on longer and deeper engagement if they’re to deliver their missions.
5. Team Stress
Uncertainty can be unsettling and fundraising teams have had to deal with an unprecedented amount of uncertainty over the perma-crisis of the last five years.
The survey reveals that increased anxiety is amplifying stress levels. A third of respondents say stress levels are higher than they were a year ago - and despite over half saying they are the same as a year ago, anecdotal evidence suggests that’s because a year ago they were already worryingly high.
This is somewhat confirmed when we asked Fundraising Directors how worried they were about the stress levels in their teams, with 75% saying they are very or exceptionally concerned.
With the perma-crisis of the past five years and the changing priorities it has inevitably encouraged, it’s unsurprising that anxiety levels are high.
In the context of a charity's ability to innovate, stress is generally unhelpful. It detracts from a clear focus on what’s required, encourages people to double-down on what they know, reduces their willingness to take risks and generally creates a flight to certainty because in certainty is safety.
The reasons and solutions to team stress are far too complex for this survey to provide any answers, but for those we have spoken to, one of the biggest contributing factors to stressed-out teams is too many competing and unclear priorities. So one possible solution is for leaders to encourage a ‘less is more’ mindset, which can be kickstarted with clear prioritisation of what’s important, and what’s not.
“Morale is low. People are stressed by budgets not being met despite good growth, a long to-do list and a slightly chaotic unfocused approach. I’d say it was low morale rather than stress.”
In Summary
I think it’s encouraging that from both the conversations and the survey we’ve undertaken innovation is no longer a ‘nice-to-have’. Overwhelmingly what we’ve heard is that investing in innovation is crucial to delivering fundraising growth strategies. And that’s despite the roller-coaster of change that fundraising teams have weathered over the past five years or so.
The nuance is in where that investment is focused, and what that says about a fluctuating appetite for risk and the shifting needs of charities navigating the cost of living crisis. Certainly, since the pulse I took pre-Covid in 2020, the dual crises of the pandemic and cost of living have definitely encouraged a focus on investing in innovation for shorter term cash, and a reducing appetite to take risks. This is probably true in both product innovation and supporter engagement terms. There appears to have been a rebalancing of effort and ambition around both.
Given the headwinds that Fundraising Directors are having to navigate, that’s understandable. But one consequence of this approach is an inevitable focus on tried-and-trusted income streams whose performance in many instances is already subpar. And a longer-term unpreparedness for the changes that are heading in our direction.
A blended approach to innovation is generally one that addresses both the short term need for growth and the longer term need to take risks. But given the increasing stress felt by fundraising teams generally, both should be approached with a view to creating focus and an understanding of what’s important and what’s not.
Over the past decade charities and their fundraising teams have faced what feels like an unprecedented level of change - from the challenges of GDPR to a global pandemic and now the cost of living crisis. Throughout it all, what’s incredible to observe is Fundraising Directors unwavering commitment to innovation. This will pay dividends, particularly if it’s pursued proportionately.
But regardless, one thing is certain, Fundraising Directors’ innate optimism will withstand whatever is thrown at them!