Benchmarking analysis is a very important tool for cultural organisations, particularly when writing their fundraising strategy. The Private Investment in Culture Survey can help as one element of a benchmarking exercise.
It’s important to benchmark your organisation against relevant peer organisations. You can find their Annual Accounts either on the Charity Commission website, or, if they are not a registered charity, on the Companies House website. However, aggregated sector information is also a great benchmarking tool. Firstly, think about your overall income model. Most arts and cultural organisations will have a three-stranded income model, to reflect their inter-related roles as a:
- Company:
generating earned income; - Charity or social enterprise:
seeking private philanthropic support; - Public service deliverer:
funded by the Government to provide a service to the public.
The Private Investment in Culture Survey shows this income model broken down across four scales of organisation, depending on levels of turnover, as well as a regional and artform breakdown.
Those responsible for fundraising need to benchmark their organisation by scale, location and artform, and then consider why there are variations. Remember that the Private Investment in Culture Survey is not a best practice report showing the optimum levels of private investment, it is simply reporting on the sector’s current performance.
So, your organisation may well be exceeding the levels given for similar organisations in the Private Investment in Culture Survey.
When setting future levels for fundraised income over the next three years leaders of arts and cultural organisations should factor in manageable growth.
So, at the very least aiming for your organisation’s proportion of fundraised income to be equivalent to the median average of your selected benchmarked groups, taking into account that the proportion of fundraised income achieved by these groups will also continue to grow in the future.
Once organisations have their percentage fundraised income targets, they should then break these down further by types of fundraised income. Remember that to grow, you will need to diversify fundraising.
It’s very risky to base growth upon fundraised income in the future solely upon your current fundraised income sources, although investing in the 2–3 areas most likely to achieve success is important when balanced against your available resources.
However, it is also important to focus on growing at least one new area. Fundraising is a difficult, competitive activity, and to maximise your chances of success you need to spread your bets.
These Private Investment in Culture Survey charts show the average changes in profile in fundraised income across three years.
Reading from left to right, (above) it is possible to see that arts and cultural organisations were heavily reliant on income from trusts and foundations in 2012/13, and had, on average, reduced their reliance on this source by almost half by 2014/15. Meanwhile, income from individual giving rose from just over one third of fundraised income in 2012/13 to over half of all income in 2014/15; a much healthier picture.
An increase in the proportion of income from individual giving is good news both because it represents the largest pot of fundraising income available for the charity sector as a whole, but also because it offers more opportunities for unrestricted income than trusts and foundations, which tend to be more interested in supporting activity than paying for core overheads.
So, when setting fundraising targets, organisations need to remember to factor in restricted and unrestricted income, and if they need more of the latter, then they need to start building their capacity to fundraise from both individuals and businesses.
Finally, the Private Investment in Culture Survey offers some perspective on the factors that are holding organisations back in terms of their private fundraising activities. The following chart shows the common factors indicated by participating organisations, ranked in order of frequency and significance.
Many of these factors relate to the external environment. However, the top factor is internal – lack of in-house capacity/time. The allocation of appropriate staff resources must be part of your fundraising strategy. Regardless of whether your organisation employs specialist fundraising staff, fundraising is everyone’s responsibility, and all staff should be allocated tasks as part of the strategy, with this expectation clearly written into job descriptions.
Similarly, if an organisation is struggling to allocate enough staff resource to fundraising, please do ensure that your Trustees are sharing this responsibility. Trustees should not only lead fundraising but should be prepared to help – whether by reading applications, undertaking meetings or helping with prospect research.
So a final thought is to make sure your Trustees are pulling their weight, and that they understand their role in growing fundraising against sector benchmarking too!
