All fundraising has a cost (even volunteer tin rattling, because you have to buy the tabards and collecting tins and pay the salary of the volunteer manager) and all fundraising methods have a breakeven point. So in this sense, signing up a donor in the street has a cost and it will take some time before the cost of recruiting a donor has been covered by the donation they have given. 'Chugging' is by no means exceptional in this regard.
So how much F2F fundraising costs is a really difficult question to answer because there are a lot of variables:
- The monthly amount the donor gives
- How long they give for
- How much the F2F fundraiser is paid
- How many donors the charity recruited in that campaign (general cost-efficiency questions)
- The type of charity (it’s much harder – and therefore more expensive – to raise money for mental health charities than for cancer charities, for instance)
A ballpark figure with a margin of error built in is that it could cost between £80 and £160 to recruit a new donor via F2F. This means, if the donor gave £10 a month, it would take between eight and 16 months to ‘break even’.
Across the entire campaign, a charity can expect to break even (i.e. recoup the whole cost it spent on fundraising) in about 26-28 months.
But, as we have said, all fundraising has a cost – whether done by an agency or in-house – and all donor recruitment methods have a break even point. F2F is not exceptional in this respect. Most charity telephone fundraising, direct mail, and press and TV advertising, as well as F2F, is carried out by third-party professional fundraising organisations (PFOs) or marketing agencies.
The question should therefore be not how much does street fundraising cost or where the breakeven point is, but does it represent value for money? In this respect, street and door direct debit fundraising are extremely efficient and cost-effective methods of recruiting new donors, especially compared to some recruitment methods where the campaign breakeven point is upwards of four, or even five, years.
Charities are aiming to recruit donors who will stay with them for four or five years, so what is important to the charity is not where the breakeven point is but what the lifetime value (LTV) of the donor is. If you can recruit donors at £10 a month who will stay with you for five years but take 18 months to break even, then you have recruited donors who will give you £600 at a cost of £180. That’s a return on investment of more than 1:3.33. Most business would bite off your arm if you offered them that kind of return.
Although this is a rather subtle point, as a financial transaction, all a donor’s money goes directly to the charity in that it is never held by the PFO at all. The PFO does not take the money, deduct its fees and then pass the rest to the charity. The money usually goes into the charity’s unrestricted income stream (i.e. not allocated or restricted to a specific project; F2F is rarely used to raise money for restricted income for specific projects). The charity then pays the PFO its agreed fee from its fundraising budget.