The Royal Voluntary Service Fund Raising Mix: An Analysis
Charitable organizations were established to address specific problems in the society by providing services or sustenance to those who are in need. The fundamental role such institutions encompass promotion of volunteerism in which the organizational members are working together to make a difference in the society. However, managing an organization that relies of contributions and donations are struggling to meet the financial demands of its activities given the extent of the social problem that the organization intends to address (Nonprofit Research Collaborative 2011). This is when fundraising becomes critically important in continuing the objectives of the organization. Having to spend significant amount of money to sustain the requirements of a particular program pushes the charitable institutions to create fundraising strategies that will enable them to gain revenue necessary to sustain the financial need of the organization’s charitable endeavors (Network for Good 2012). The discussion encompasses an analysis of the funding strategies employed by the Royal Voluntary Service based in the United Kingdom and conduct charitable works in Scotland. In addition, the discussion will focus on identifying the fundraising mix and other different sources of income that the organization is using to raise funds. The choice of fundraising strategies will be analyzed in terms of viability and the capacity of the chosen fundraising fix in generating income for the organization. Lastly, recommendations will be provided at the end of the discussion on how to improve the fundraising mix. Early assumptions on the fundraising mix employed by Royal Volunteer Service suggests that its chosen strategy is working as intended because of the large amount of money accumulated by the organization in supporting its charitable works.
The Royal Volunteer Service is a UK based volunteer charitable institution with charity projects conducted mostly in Scotland. The organization provides support to the senior population to get more out of their remaining years. In addition, the Royal Volunteer Service also aims to improve the lives of the less fortunate citizens and initiate projects aimed to alleviate suffering, poverty, and distress. Furthermore, the organization also supports the provision of social services towards the various sectors of the community particularly on the victims of natural disasters and emergencies. The Royal Volunteer Service is currently registered at the Charity Commission of the United Kingdom under the registration number 1015988.
According to the last accounts of the annual returns and revenue declared by the Royal Volunteer Service received on December 24 of 2014, the organization has generated a total income of £71,028,000. However, the declared spending total for the organization accounts to £79,933,000 in the same year (apps.charitycommission.gov.uk 2014). Currently, the organization has a total of 35,000 volunteers, which accounts to £3.53 million while the rest of the income comes from charitable activities. The bulk of revenue from charities and donations amounts to £64.76 million for 2014 (apps.charitycommission.gov.uk 2014). The rest of the organization’s income was obtained from trading, investment, and other activities. In terms of spending, 95% of the organization’s revenue is being allocated towards charity projects while the rest of the expenditures were allocated for income generation activities and administrative costs.
Preferred Fundraising Mix
The volunteer organization uses a combination of several fund raising approaches. The primary income driver is the charitable activities where donations reach an annual total of £64.76 million. Volunteer membership dues of £3.53 million in one year are the second biggest contributor to the organization’s revenue. There are other sources of income such as investments amounting to £430,000 and other fund raising activities, which contributes about £200,000 to the total annual revenue. The rest of the income for the Royal Volunteer Service was generated from the organization’s owned assets amounting to £6.3 million. The £430,000 annual revenue from investment is the resulting yield of the investment assets owned by the organization that is worth £20.51 million. Other assets such as exhibits, office buildings, and other tangibles held by the Royal Volunteer Service for at least 12 months are included in the mix of fundraising methods employed by the organization to generate revenue.
Fundraising Mix Analysis
One of the basic methods of raising funds in a charity institution is volunteer fees or membership contribution. The advantage of using the strategy is that the revenue can be projected because it only involves counting the number of members and the amount that each members need to contribute in a given time (vvsc.ca n.d.). For example, 200 volunteers multiplied by yearly contribution of £100 will give the organization a revenue expectation of £20,000. In the case of the Royal Volunteer Service, it has 35,000 volunteers and provides a total contribution of £3.53 million annual income. This means that each volunteer member is contributing an average of £101 a year for the RVS. Volunteer membership fee is a sustainable source of income for any charitable organization because the limitations of the revenue will depend on the increase and decrease on the number of volunteers (minnesotanonprofits.org 2013). In addition, the approach is easier to maximize because in order for the organization to get more funds through membership fee is to register more volunteers.
The second and most common source of fundraising revenue is through donations. Charitable institutions are often the center of philanthropic works by much larger organizations both in the private and public sectors (Cowbury 2014). For RVS, donations obtained from charitable activities makes up 90% of its annual revenue. This means that the strategy is working effectively to the organization’s financial advantage (Clark 2014). However, the downsides of relying on donations are that the amount of donation and pledges is difficult to determine (Triner 2013). In addition, there exist several uncertainties on the part of the charitable organization’s management in terms of whether or not the regular donors will still be able to continue their financial support. At any given moment a donor may just quite giving support to the organization for a myriad of reasons. Consequently, losing donors translates to a reduction on the organization’s annual income (Brooks 2014).
Another common fundraising strategy employed by the Royal Volunteer Service is through investments. In charitable institutions operating to support the underprivileged members of the community, sustainability of funds is critical in ensuring the achievement of all its objectives. Achieving sustainability in charitable institutions such as RVS would mean creating a business opportunity where income gains can be ascertained. The problem with this strategy is that business ventures are susceptible to economic conditions (Killian 2009). This means that when the economy is unstable, the charitable institutions will need to work more to support those that were affected by the crisis, which means the organization needs bigger funding. However, with the economic crisis at hand, gains from investment are likely to be affected as well. Currently, the investment made by the Royal Volunteer Service is only contributing less than 5% to the total funding requirements of the organization, which means if RVS rely solely from investment gains, the amount will not be sufficient to sustain the financial demands of the organization’s charity works.
Fundraising Mix income Versus Expenditures
It may appear like the Royal Volunteer Service is doing a great job in their fundraising mix strategy, until it was compared against the organization’s expenditures. RVS allocate about £5.7 millions for generating funds and governance of the organization. The amount appears to generate the majority of the donations as RVS conduct activities such as benefit dinners, concert, and other fundraising events to get potential donors. However, based on the organization’s financial records, its income is short of £8,965,000 versus the total expenses of £79,993,000. The total charitable expenses of the organization is £74.76 million, which when compared to the total income is also short. This means that the organization is spending too much on its activities and allocate less on increasing the funds. In addition, numbers also reveals inefficiencies of the fundraising mix that the organization employs to sustain the financial demands of its charitable activities (Shaw n.d.).
Fundraising Mix Recommendations
Just like any other nonprofit organizations, the Royal Volunteer Service is engaged in nonprofit operations, but with the current situation of its financial health, the organization needs to pursue alternative fundraising sources and never become reliant on the fundraising mix described herewith. The general rule fundraising for nonprofit organizations and charitable institutions is to not rely or receive 30% of its total funds from a single source (Framjee 2013). Therefore, the organization should diversify its funding options. In the case of the Royal Volunteer Service, the majority of its funding sources appear to come from donors. Without the donors and considering the unpredictable position of the donors in terms of providing financial support, RVS will be in an extremely vulnerable situation. As a solution, the organization should consider revising its current fundraising structure in order to maximize the funding potentials (Foster et al. 2009).
Aside from the volunteer contribution, donations, and investment gains, the organization should also consider an inter-organization partnership with much larger organizations (Toal 2013). For example, the Royal Volunteer Service could partner with USAID, RED CROSS, and the likes for additional funding support. The way partnerships can help the RVS with funding is by tapping into the other funding source supporting the aforementioned bigger organization. For example, if RVS needs resources for medical and rescue activities during disasters, instead of procuring their own equipment, a partnership with Red Cross for instance will allow RVS to save significant amount of money by requesting for the needed resources be it medicine, medical personnel, and supplies.
Upgrading the existing programs for awareness would also enable the Royal Volunteer Service to attract more members and prospective donors (Bray 2014). In this age of technology, the utilization of the available technological resources is critical to the fundraising success of any organization (Waddingham 2014). It is apparent that RVS is already engaged in social media for funding and awareness of their cause. However, the online environment requires high traffic in order to maximize its potential. As a solution, RVS could integrate a few more technological resources to increase funds. A few example of the aforementioned technology is the use of web tools such as chipin.com, helpattack.com, givemeaning.com, and several other similar websites that provides widgets and web tools that can be integrated to the social media account to increase awareness about the organization (Mulvey 2011). In addition, the Royal Volunteer Service could also conduct more charitable activities to generate funding where more individuals can participate and donate. For example, health and lifestyle trends are giving emphasis on Fun Runs, which is also a good fundraising strategy (Anderson 2014). Leveraging on the current social trends is one way for the Royal Volunteer Service to substitute its funding requirement with collective programs inspired by technology and other social paradigms (Viñales and Rodriguez 2013).
Effective fundraising mix enables a charity organization such as the Royal Volunteer Service in delivering its intended purpose in the community. On the other hand, creating an effective fundraising mix should take considerations of which funding stream will support sustainability and leverage on social trends to attract more prospective funding source.
List of References
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