Fundraising Fundamentals, Section 2.2

ROI: The Level of Returns That Can Be Expected

Most people want to know about the return on investment (ROI) for fundraising – how much it costs to raise each £1.

Each year, for the past 10 years, the Ross-CASE Survey has been collecting data from UK institutions about the scale of their advancement activities and the income those activities generate. Whilst return on investment in other countries may differ in values, it is likely that they will share similar traits.

In the last survey to be published, that from 2010–2011, UK universities (151 surveyed) secured £693 million in new philanthropic funds (new cash gifts, pledges and gifts in-kind) from 204,250 donors (up from £608 million and 184,945 donors in 2009–2010).

Overall, the median value of UK universities fundraising investment per pound received in 2010–2011 was 22 pence, maintaining the trend of offices becoming more cost effective as they mature.

Universities with established fundraising programmes (i.e., those established before 2000) secured a median of just under £3.5 million in 2010–2011, compared to a median of £1.1 million amongst those with developing programmes (i.e., those established between 2000 and 2006).

Overall, the median cost per pound raised declined from 32 pence in 2007–2008, to 27 pence in 2008–2009, to 22 pence in both 2009–2010 and 2010–2011.

It Will Take a While

Philanthropic income will not begin to pour into the institution from day one. It takes a considerable length of time to identify, cultivate and solicit donors, whether they are giving small amounts on a regular basis or major donations. Like many fledgling businesses, your new development office may take up to three years before it begins to generate a return on your investment.

That said, there are commonly some modest ‘early wins’ from prospective donors, already committed to the institution, but these returns may be erratic the first few years (e.g., a major gift in year one and then nothing significant in year two). Manage your expectations accordingly.

Don’t Just Focus on the Money

Whilst it is important to understand how your fundraising costs relate to your income, you should not lose sight of the wider benefits to your institution:

• Enhanced public profile (local, national and international),
• A wider network of ambassadors,
• Engagement with influential individuals and networks,
• Alumni engagement,
• Shift in culture toward being externally focused,
• Better developed external relations strategies,
• Stronger governance structures and
• A well-developed case for support.

Action Item

• Ensure your expectations and benchmarks, as well as the case you present to others, reflect realistic short- and long-term ROIs.

You Might Also Want to Read:

Investing in the office
Reasonable expectations
Measuring and managing performance