Thursday, 12 November, 2015
By Dan O'Toole, TSE Consulting
For the majority of modern sporting organisations, sourcing funds is a shared and continuous headache.
While these organisations often engage in a significant amount of selling leading to revenue generation, they are also frequently reliant on the sourcing of funds from other external parties such as international federations, private donors, governments or other public bodies, for example. This is especially the case across smaller sports and national-level sports bodies.
This presents a number of challenges. Such funding sources are often volatile in the medium term, making planning and forecasting difficult. Furthermore, as they are not selling anything or providing specific tangible consideration, sporting organisations are usually in a weak position at the bargaining table. As a result, there is an element of uncertainty about how best to deal with these counterparties that are providing these critical resources.
So what can sporting organisations do to improve their chances of staying on the favourable side of these funding sources?
A good start is to consider what the individuals behind these effectively unilateral funds consider when parting with their money. What traits do they seek in a recipient? What decision criteria to they consider when assessing how much is appropriate?
A recent piece by Howard Stevenson in the Harvard Business Review concerning successful fundraising may provide some food for thought in light of these questions. Mr. Stevenson himself is a globally recognised entrepreneur and philanthropist. In his piece, Stevenson puts himself in the shoes of the donor and this can provide some interesting insights for sports organisations to assist them in their dealings with potential sources of new funds.
Stevenson maintains there are 4 critical questions that donors consider when making decisions about where to put their money.
- Does the organisation do important work?
This is probably the most obvious question, but not necessarily the easiest to answer. It can be taken for granted that not everyone wants to invest in sport generally. Further still, some may prefer to invest in sports that are more active at grassroots as opposed to funding high performance programmes of elite athletes, for example. Sport organisations should have a clearly articulated mission for the funds they are seeking, and should look to align these with the known interests of the prospective donor. This could begin with only targeting donors whose values and goals match those of the organisation in question.
- Is the organisation well managed?
People are less likely to give money to an organisation that they feel is untrustworthy or run poorly. They want to know that their money is in good hands. Recipient organisations should therefore emphasize their good governance practices in structures in dealing with prospective donors. They should also focus on demonstrating their efficient and effective use of resources with examples, where appropriate.
- Will my funds make a difference?
This is effectively looking at what the funds will be used for once received. It helps to be able to clearly trace a line between the receipt of the funds and their exact use and to demonstrate this to the donor. Again, it is even more beneficial if this use is closely aligned with their personal or organisational interests.
- Will the experience be satisfying to me?
This is the emotional part of the transaction. The more you can illustrate that their giving of funds will make them emotionally better off, the more attractive the proposition will be. It helps to be highly grateful, and to recognise as much as possible the individual or organisation in question. This could be by mentioning their contributions in communications material or as part of a symbolic gesture such as naming an award or programme after them, for example.
Sports organisations should consider how convincingly they believe they answer yes to each of these questions. The more conclusive the ‘Yes’ to each, the greater the likelihood of generating lucrative and long-lasting partnerships with donors.