Any strategy for change needs to be framed around a core vision. Samuel Sims explains how Teach First used this principle to achieve income diversification

Teach First works to break the link between low family income and poor educational attainment by raising the aspirations of children from low socio-economic backgrounds, and improving their access to opportunities. In its first eight years, our charity had attracted investment from a range of organisations, enabling us to grow annual voluntary income six-fold. By spring 2010, our small but highly successful fundraising team was generating a remarkable ratio of funding against expenditure. Our challenge then was to accelerate the momentum of the charity’s meteoric growth.

That spring, met with the weight of expectation that accompanies consistent success, we began devising a strategy to realise fundraising targets that assumed rapid income growth. Our first mistake was our greatest: accepting targets based on desired expenditure, as opposed to realistic expectations based on comprehensive feasibility analysis. Sound familiar? Worse still, our traditional income streams were reaching maturity and comprised those institutions most affected by the economic downtown, whose philanthropy was starting to wane.

Since Teach First’s operating model had required the buy-in of the corporate world, we had originally sought financial backing from this market, which meant that we had focused our fundraising on markets that make up less than 20 per cent of the philanthropic landscape. We had the remaining 80 per cent on which to set our sights.

But there is something truly galvanising about ambitious targets. It was exactly this approach to our vision that no child’s education should be limited by their background that had fuelled the growth of Teach First. Whatever the means – and we knew they would need to be diverse – we had a clear idea of where we needed to get to.

Preparing the ground

Our vision was that the charity would equip itself with a diversified and sustainable income model. But to start our journey, we needed a plan. What followed was a sustained period of research involving, among other things, portfolio and income stream life-cycle analysis and market segmentation. This research continues today.

But this is just the easy stuff. A fundraising team can only achieve so much in isolation, and we learnt through experience that a culture of philanthropy must exist at an organisational level. The collated analysis enabled us to write a three-year plan, which was first circulated throughout the team, then to senior leadership, and finally was presented to trustees at a board meeting. This process of consultation was beneficial for three main reasons:

• it developed awareness of and support for the considerable long-term financial investment required;
• it provided a forum for us to discuss with each group of stakeholders what their role was within the plan; and
• it served to highlight issues and risks, allowing the plan to evolve accordingly. For example, a number of trustees felt that our expansion into regular giving should be started sooner and they challenged the substantial set-up and administration costs we presented. 

Armed with a clear rationale and solid research, we worked hard to convince our colleagues to share our fundraising vision. While time consuming, we knew this was absolutely the right path for us to take. But it wasn’t easy, and in hindsight our plan would have been more palatable if we’d enlisted some outside help in order to corroborate our findings and recommendations.

Defining the formula

Our plan was to undertake a process of income diversification, building on the things we knew we did well, and based on being more things to more people – having different appearances for different audiences.

We tested our marketing material on different stakeholder groups through meetings, email surveys and focus groups, and found that one size did not fit all. The messages that had helped to stimulate significant support from businesses failed to inspire individuals. We needed to be flexible, while remaining consistent and honest. Working with our communications team, we developed a case for support that could be adapted to demonstrate the impact of a £10 donation as clearly as a donation of £100,000.

Our simple formula was based on two underlying principles: innovation and continual improvement. The formula itself is comprised of two core strands: maximising value from existing income channels, and realising new opportunities – first establishing a strong business case for a new activity, then testing before analysing results and sharing outcomes and recommendations with trustees.

This built-in business review ensures that we are always enhancing and developing; enabling us, for example, to make informed decisions about when to expand an annual fundraising event or stop doing it altogether.

These two strands are broken down into four sub-strands:

• Exhausting the potential within existing income streams. This means continually pursuing large, multi-year grants and contracts with large foundations and corporates. 
• Diversifying within our established income streams, and understanding how they can be approached differently. We now apply for small grants, awards and contracts, pursue ‘charity of the year’ partnerships with businesses and invest significantly in developing a regional operation to fundraise more effectively on a local level.
• Developing greater flows of predictable income, primarily through regular giving and trading activities. On the downside, this requires significant investment while incurring substantial administration costs against modest returns. On the upside, regular givers will provide a pipeline for future higher-value donations. The ability to predict flows of income, even as a small proportion of total revenue, is invaluable for a growing charity.
• Opening up appropriate new fundraising streams. Our most significant undertaking in this area was introducing a major donor programme in late 2010 focusing exclusively on high-net-worth individuals, which is already producing results. As another example, over 3,000 people will run 10k through London on 23 September to raise funds for Teach First –one of a new series of challenge events we have recently kicked off. 

Putting your people in the frame

We have all asked or been asked at interview the question, ‘how much money have you brought in yourself?’ We often struggle with the answer, and with good reason. No team’s success is down to a single individual; sustainable fundraising necessitates a multi-stakeholder approach. At Teach First we have worked hard to recruit creative individuals with exceptional communication skills, who either already possess or seek to develop a solid grounding in prospect research, donor cultivation and stewardship methodologies. Crucially, we recruit people that understand and share our fundraising vision, who see the bigger picture and how they fit within it, so that we are all travelling in the same direction.

Good news and bad news

The bad news is that we have not completed the diversification of our income; not even close. Growing within existing markets and expanding into new avenues is a process of evolution. If you pursue a period of reactionary change you’ll have probably started without a clear vision of where you want to get to, setting a course that is not ultimately in the organisation’s best interests. You’ll also very likely find yourself juggling lots of balls without knowing how to cope or which to drop first.

As fundraisers, we enjoy the thrill of short-term success but eventually we learn that nothing in fundraising is ever truly complete – it is just the first step on the next stage of the journey.

The good news for us at Teach First is that once we came to terms with this, we realised that what we needed was a fundraising vision, and I would urge you to do the same.

Sam Sims is associate director of development at Teach First

This article first appeared in The Fundraiser magazine, Issue 17, May 2012