Nine different ways to fundraise for your charity
ALL the options on a plate
Today’s article…
is frankly enormous.
It’s an introduction to the different types of funding available for charities. Because before we talk about strategy, we need to be clear on what the different options are.
We hope that all of you find it useful, however we expect that it will be most helpful to you if you’re:
A trustee or CEO who wants to learn more about the choices available to your charity.
A fundraiser looking to expand their knowledge beyond a single discipline.
A fundraising leader who wants to be able to assess different options.
Buckle in because it’s quite a long one…
Tony and Caroline
p.s. Thank you so much for being here! For a weekly Nest Egg fix, please consider upgrading your subscription today (if you haven’t already)
Nine different ways to fundraise for your charity
by Caroline Danks
Picture description: colourful sweets in jars on shelves
A strategy is about using data and information to make intentional choices which will inform your activities.
It’s not a to do list.
It’s about choosing one path over another so you can focus on the things which will get you to the place you want to be.
It’s also permission to actively de-prioritise everything else.
To make intentional decisions, you need to know what your options are. This article is a quick (ish) guide to the most common types of income generation for UK charities / non-profits.
Next week we’ll get into the most common ways to bring these together in a range of different business models.
There’s a lot to get through. Let’s go...
1. Statutory fundraising / grants and contracts
Government money given to charities in exchange for specific outputs and outcomes.
Delivery of services which are the responsibility of the state, e.g. healthcare, homelessness services, drug and alcohol rehab services.
Contracts are often re-tendered every few years via a competitive, open process with participation not limited solely to charities.
We also tend to think about Lottery funding in a similar way (both the Community Fund and the Heritage Fund).
Most contracts cover only the basics (though evidence presented last year by New Philanthropy Capital suggests that the majority of contracts cover only 2/3 of the actual costs of delivery – less than the basics).
Activities may include:
Identifying opportunities.
Mobilising an internal team to prepare and submit tender documents.
Writing funding applications.
Reporting, reporting, reporting (down to the penny).
Building relationships with local authorities, government departments and Lottery representatives to demonstrate impact.
Great for?
Charities already delivering contracts where the terms fit well with your day to day work. Contracts / statutory grants tend to deliver large sums and a good ROI, reducing the need to diversify income (which is great so long as your contracts are stable and cover your costs).
In theory they’re also great for charities delivering the work of the state; for example, an employability charity supporting women who have experienced multiple disadvantage to get back into work. Or an accident prevention charity looking to educate young children about how to be safe around traffic.
There should be money for this kind of stuff right?
The problem is that contracts seem to be reducing in their availability as well as their value. The state feels like its shrinking and we’re all being left alone to get on as best we can.
Steer clear?
It should be obvious, but contracts are only going to be an option if your charity is delivering the specific targets set out by the relevant tender document. Their role as a funder is not to support you to meet your objectives; rather it’s your role to meet the very specific targets and outcomes set out in the contract.
Contracts probably aren’t the best option for charities operating in a crowded and competitive sector. Preparing tender documents is a huge undertaking so you want to be as confident as you can be of success.
If your record keeping isn’t brilliant and / or if you lack capacity to report against agreed outcomes you’ll find it stressful to meet the requirements of the funder.
Similarly, if you’re small / new / lacking a strategic plan, you may find grant funding to be too restricting or too complex.
2. Trusts and Foundations
Grant making trusts / charitable trusts / foundations are charities which are set up for the primary purpose of giving money away to other charities.
They do not directly serve beneficiaries. Rather they act as enablers by giving grants (and occasionally professional advice, support and networking opportunities).
Apparently, there are around 61,000 in the UK, with 8,000 of these actively distributing funds.
There is a trend at present where large funders are closing their doors (apparently temporarily) to ‘reassess their strategic direction’ (code for ‘figure out a different operating model because we’re receiving way to many applications’).
Additionally:
Competition is increasing with success rates decreasing
Gifts are often restricted to specific projects / activities
The number of open grant programmes is reducing (and reduced significantly in 2024), especially for medium sized charities (£1m - £10m)
Perception of high reserves can stop some trusts from making donations
Despite all of this, trust fundraising still delivers a comparatively high ROI, if you do it well.
Activities may include:
Careful research to determine suitability (for goodness’ sake don’t skip this bit)
Writing a template proposal and covering letter / email
Filling in application forms
Building relationships with funders, hosting visits and having conversations
Impact reporting
Great for?
Charities with time to spare or resources to invest. If you have a trustee or volunteer willing to do the research and write the applications, you may be able to achieve some success. Getting a first gift is the hard bit; getting repeat gifts is easier so long as you take time to look after your donor relationships and report back on the difference a donation has made.
If you’re using volunteers though, think about how you’ll fund this work in the long term. Trust fundraising isn’t a one-and-done activity (though what type of fundraising is?) and if you want to keep raising money, you’ll need to put time and effort in regularly.
Like many types of fundraising – who you know matters so if your trustees have connections to the individuals sitting on boards of trusts and foundations, you’re more likely to succeed.
Trusts and foundations are also a good way to secure short term or one-off project funding, so long as your expectations are realistic.
Steer clear?
If the only way you can do this is by spamming every charitable trust in the UK with an AI generated letter, then it’s probably not for you. Funders can smell a ‘round robin’ from a mile off, especially one crafted by an environmental-drain of a US based robot.
Don’t try it if you have very limited capacity or wildly unrealistic expectations about what can be achieved. Keep it small at first and focus only on those funders who seem like a great fit.
3. Corporate partnerships
Often cited as a panacea by people who don’t know much about fundraising but who want to offer some ‘helpful advice’, (Have you tried corporates???’), corporate partnerships can actually be lucrative if they respond equally to charity and company needs.
Remember that corporates exist to make money for their shareholders. With that in mind, there might be better places to look for funding.
However, most corporates, keen to build trust amongst staff and customers, may be interested in shoring up their local communities and will have some kind of corporate social responsibility or sustainability policy which often includes donations.
According to CAF’s 2024 Corporate Giving Report, we’re missing out on ‘billions’.
Where you’re striving for a joint mission, a high value partnership can help both charity and corporate to achieve this.
Examples of what I mean by ‘joint mission’:
A charity preventing accidents in children partnering with manufacturers of laundry capsules
A cereal company partnering with a charity that provides breakfast clubs in schools
A chocolate company partnering with a charity that protects indigenous farmers from exploitation
Activities may include:
Mapping the types of corporate that might have some vested interest in your success.
Researching relevant corporates.
Writing proposals, preparing pitches.
Building relationships.
Delivery and reporting.
Great for?
Charities with a clear mission and strong alignment to the objectives of specific corporates.
If your board are engaged and supportive, then they might be able to unlock corporate funding from their own workplaces.
Steer clear?
Corporate partnerships tend to be more time intensive than some other types of fundraising so if you’re a small team with very limited fundraising capacity, then maybe do something else first.
You also need sufficient resources to be able to respond to the questions, enquiries and ideas coming from your corporate partner who will want to extract maximum value from their investment. It can be quite reactive work. The best partnerships need time and effort from both sides if they are to develop in a mutually beneficial way.
4. Community Fundraising
Community Fundraising involves securing gifts from people and community groups, often based in your local area. Income is often driven by individuals keen to make a difference and may take the form of:
Fundraising events (anything from bake sales, fitness events to sponsored challenges) organised outside of the charity.
A fundraising element added to a corporate event (10% of tickets sales go towards X charity)
Fundraising activities organised by faith groups to coincide with the religious calendar
Fundraising by schools – think mufty days, Summer fayres, carol concerts and a favourite event at my daughter’s school which involves teachers, wet sponges and buckets of water (like the poor teachers don’t have enough shit to deal with..)
Done well, over time community fundraising will result in income from multiple streams (and ultimately gifts in wills). It will also deliver income which is completely flexible / unrestricted (unlike most funding from grants, trusts, corporates and major donors).
There is lots of crossover with events and corporate fundraising and I recommend not getting too hung up on tracking individual streams of income.
Activities may include:
Getting to know supporters, thanking them, building relationships and encouraging repeat fundraising activities
Being present in the community, working from corporate offices / cafes / gyms and inviting the public to talk (Glasgow Hospice reached a £21m capital fundraising target by “going to everything and speaking to everyone”)
Researching community groups, understanding their events calendar and getting to know those who are doing the organising.
Being active on social media and creating video content to thank supporters and raise awareness
Great for?
Charities who are financially solid and who have some extra resource to invest in a new area. Return on investment for this area is low. However, lifetime value is high (and income is unrestricted).
It’s best for those that are in it for the long haul, where immediate returns aren’t needed or expected.
Community fundraising also works well in charities with a strong fundraising culture – anyone can represent a cause close to them at a community event, so if your staff team, volunteers and board are game then it makes sense to build community networks and make ‘high visibility’ a feature of your strategy.
Strong co-ordination with marketing and communications colleagues is a must, as is great branding and consistent messaging, which will have a direct impact on the amount you can raise.
Steer clear?
If you’re in a hurry to raise a lot of money very quickly. Community fundraising can be slow to build and because of the small sums involved, can take time for a high ROI to be realised.
If you’re a bit niche* you might also find this type of fundraising hard going.
‘*A bit niche’ is a euphemistic way of saying ‘unpopular’ or ‘hard to sell’, for example, a rape crisis centre, domestic violence shelter, refugee service or a place which helps people trying to overcome addiction. Horrible isn’t it – that traumatised people tend not to be as well served because of the philanthropy popularity contest we’re forced to operate within?
5. Events
What I mean here is events organised internally, rather than events led by members of the community where your charity is the recipient of funds. Many local charities will have one or two signature events that you’ll likely be familiar with (Men’s Day Out, Rainbow Run, Midnight Walk, Annual Gala Dinner) and larger national charities have led the way with some instantly recognisable events, e.g. MacMillan Coffee Mornings and Cancer Research’s Race for Life.
Obviously, organising something yourself takes a lot more time and effort and specific knowledge on how to deliver something which is enjoyable, atmospheric and safe for participants (anyone who has seen THAT inflatable 5km / broken ankle episode of ‘24 Hours in A&E’ will know what I mean…)
There are external companies you can use to outsource things like event delivery (e.g. overseas events and skydives), leaving you to focus on recruiting participants. You can also buy places in large scale multi-charity events (London Marathon being the obvious example), again enabling you to focus on recruiting and stewarding your supporters (rather than worrying about drinks station, portaloos and whether or not you can cajole enough family members into acting as stewards).
Events are often a fun, first encounter between individuals and charities and they can be the initial step in a long relationship between supporter and cause.
Picture description: Small girl aged 10 before her first Midnight Walk for our local hospice. She walked 15 miles - it was incredible.
Activities may include:
Deciding on an event and making a plan from conception to execution.
Recruiting participants.
Building relationships with external event providers, securing places for your charity, working together to provide a satisfying supporter experience.
Outsourcing elements of your own events to free up your time and ensure you have the expertise needed to deliver a professional and safe event.
Creating fundraising resources to help participants raise as much as possible (downloadable packs, merch etc)
Getting to know supporters, thanking them and giving them suggestions on how to exceed their sponsorship targets
Creating a web page / pages to promote each of your events
Remember to start from where you’re at and to try something small in the beginning. A local charity with only a handful of supporters won’t be able to re-create the Great North Run in a hurry. Be realistic and don’t overstretch yourself.
Great for?
Charities that are starting to build their fundraising and who have a small but growing group of enthusiastic supporters ripe for something fun and social to get involved in.
Similarly, a burgeoning major gifts programme might benefit from an event or two as a way to meet supporters face to face, galvanise them as a group and / or rally them around a specific campaign.
Brand awareness helps if you need to reach new audiences. If you’re new to this and are relatively unknown, try partnering with a couple of other organisations to spread the risk and the workload.
Charities with resource to invest and an eye on the long term will also do well by trialling their own events and buying spaces in others. It’s a great strategy if you have a couple of other sources of income (which feel pretty solid) and want to expand for the longer term.
Steer clear?
Events can take a little while to break even so if possible, you’ll want to commit to it for at least a couple of years to give it a chance to become established. Don’t bother if you don’t intend to repeat your event after the first year in some guise or another (or at least learn the lessons and have a plan for how you intend to keep participants engaged in your work).
For new events, novelty is often a driver of success. Let’s face it, no-one is sponsoring anyone to run another 5km around their local park, so if you can’t come up with something new (ish) and original (or at least a twist on a classic) you have to manage your expectations around income.
Beware of choosing events over something which feels more difficult (e.g. meeting supporters for one on one conversations). Events can be used as a diversionary tactic because they seem less scary than engaging directly with a potential major donor to discuss a personal gift. Don’t be under any illusion as to how much time and effort events can take up.
6. Individual giving
Refers to a high number of small gifts from a large cohort of individuals (as opposed to Major Giving – see below). Ways to recruit donors and grow relationships have typically included direct mail, face to face fundraising, email marketing and fundraising via social media. Individual giving also includes regular giving, most commonly via direct debits.
Recruitment activities have changed massively since I first started in fundraising 20 years ago. Gone are the days where you could purchase people’s data and contact them out of the blue (thank God). Consent around communication is much more guarded and knowing the rules is important.
Activities may include:
Ensuring your branding, marketing and communications and public presence show your charity in a way that accurately reflects who you are and the impact you make (arguably an important task for all form of fundraising)
Ensuring that prospective supporters can donate quickly and easily via your website.
Writing emails to supporters to thank and update them
Creating campaigns to raise money for a specific aspect of your work – deciding how / where to share campaign materials and over what time period.
(For larger charities) gathering and analysing data about activities, creating a case for further investment for the things which are going well, trying different things to improve an area which isn’t as successful.
Great for?
Anyone really. All of us are going to appeal to someone and its important to make it as easy as possible for your potential supporters to connect with you. Also great for:
Charities with a strong local presence and a recognisable brand (e.g. a hospice, Mencap, Age UK charities),
Charities seeking to mobilise a group of people over a single issue (e.g. the eradication of a specific disease), popular causes (animals, children).
Steer clear?
If your systems and processes leave a lot to be desired (i.e. your accountancy software / CRM aren’t connected or your do everything on a spreadsheet), I suggest sorting these out before embarking on a mission to grow your individual givers.
Similar to Community fundraising, if you’re in a hurry to raise a lot of money very quickly or you’re a bit niche, you’ll need to target new audiences very carefully and manage your expectations.
7. Major giving
Individual giving where financial contributions are:
substantially larger than the average
capable of making a significant impact on the recipient organisation
Where ‘individual giving’ tends to refer to a high volume of small gifts, ‘major giving’ is the reverse, where you’re facilitating a low volume of high value gifts.
Probably gonna come back and edit this bit tbh because I’m tired and I reckon there’s a better way of saying it…
Fundraising from major donors requires a relationship based approach.
Activities may include:
Researching and identifying possible major donors (please rely on your own networks for this and not the most recent copy of the Sunday Times Rich List)
Mapping connections with your board and leadership team
Meeting donors, visiting projects, building relationships and (when the time is right) asking for a financial contribution
Hosting events
Great for?
Charities with long-established fundraising, especially strong individual giving / community fundraising income.
If your trustees are engaged too then what are you waiting for?!
Steer clear?
I actually think that major giving is scaleable for every charity, even if you have no donors and limited networks (yet).
There’s an approach for everyone and of course it differs slightly depending on where you’re starting from.
It’s probably not worthwhile if you’re not willing / able to dedicate some consistent time to it. Major giving requires direct input from leaders and it can be hard to find a regular slot in the diary when other, more re-active tasks feel more pressing.
8. Gifts in Wills
Donations received from someone’s estate after they’ve died.
Also known as ‘legacies or legacy gifts’ there are two main types:
Residuary: A percentage of someone’s entire estate (e.g. 100% of the estate to go to Cats Protection)
Pecuniary: A specific amount (e.g. a gift of £1,000 to go to X charity)
Some key trends (data from 2021) include:
The number of Gifts in Wills has almost doubled in a decade.
1 in 2 baby boomers are putting a gift in their will to charity.
Donors are discerning and will investigate charity finances thoroughly before committing.
Small, local charities are seeing an increase in enquiries.
Two things will move an individual to make a pledge, 1. Personal experience and 2. Brand awareness.
Activities may include:
Creating a series of messages to encourage gifts and to dispel myths about legacy giving (no, it’s not your entire estate or nothing…)
Embedding messages throughout your comms, recognising that people don’t make a will because you made a leaflet. Your reminders need to be little and often and dropped into multiple places (website, shop, in emails…).
Engaging staff and volunteers on the topic. Many volunteers will already have left you a gift in their will – acknowledge this at volunteer get togethers.
Great for?
Charities who know that their mission will require many decades to come to fruition. For obvious reasons, Gifts in Wills take a long time to manifest, so if you’re aiming to close in the short - medium term, this isn’t for you.
Steer clear?
Those who are newly established (or who are new to fundraising) may wish to take some time to feel confident in their impact first. Articulating an inspiring ‘legacy vision’ requires you to know yourself well before you can confidently state the difference you want to make across the long term.
9. Trading / earned / commercial income
Selling goods or services with profits going directly to the cause.
Where there is a commercial offering, it’s usually contingent upon having an asset which naturally lends itself towards monetisation, with retail and catering tend to be the default, charity retail occupies an established place in our national culture and on our high streets) and plenty of room hire.
If not a physical asset, the other examples are of intellectual assets (training / consulting / counselling or coaching) which provide both charitable benefit and have a market value.
Activities may include:
Running a business
Mapping options, trialling new offerings
Complete project management of a totally new site
Analysing data and reports (profit and loss, stock management)
Recruiting and managing staff
Creating / ordering products
Great for:
Charities for whom a commercial offering is obvious.
Heritage attraction with ample space – great, open a shop and / or a café?
Massive meeting room which gets used only occasionally – cool, hire it out
Where your commercial offerings also contribute towards your charitable activities, it can make sense to monetise them (so long as they don’t dilute the impact on your community / those you ultimately exist for.) An example of this could be supper clubs run by beneficiaries or a bakery for women looking to return to the workplace.
Commercial enterprises can take time to turn a profit so be mindful of that before you take the plunge.
Steer clear?
If you’re having success with other forms of fundraising. Trading can have tax / constitutional implications so if you’re doing ok with more traditional types of fundraising, maybe swerve the commerce?
If there’s no obvious commercial venture for you to pursue, then it’s probable that a different sort of fundraising will suit you better.
Similarly, if profit margins are likely to be low it might not be not worth it. A range of colourful, on brand merch is an attractive option, but once you’ve identified a values-aligned supplier and taken into account transaction fees, it might not be worth all the effort.
That’s all folks!
You made it to the end of our directory of the different types of income generation for charities and non-profits.
Also, if you want to suggest any additions or improvements? Please reply to this email and let us know your ideas. We’re not practitioners in every type of fundraising and we know that the sector can move quickly - we’d love your feedback.
Still hungry for more strategy related content (surely not)? Try these:
Emergency appeals (strategy in a hurry)
Charity deep dives - behind the figures of Comic Relief and The Donkey Sanctuary (for paid subscribers)