Calculating targets

Photos: Matthew Henry and (insert) Thought Catalog, on Burst

This page was written for very experienced people. I wrote this site assuming that beginners wouldn’t calculate their own targets – but for beginners this page may help.

Introduction

I’m not going to go into great detail about this area, as there’s a great target setting course run by Bill Bruty, which refined the way I like to do it. If I were to give a thorough account, it would basically replicate his course, which would be a bit unethical.

As a result, what follows is really “get you by” instructions to put together reasonable targets.

The fundamental underpinnings of targets 

Targets are normally based on aggregating something called “expectation values”, which is the chance of getting a grant, multiplied by the value if you got it:

So, how do you calculate those two figures?

1. Grant size

• When trying to identify the grant size each trust, I’d start with their typical grant size for that area of giving in their accounts. There’s usually a range of sizes.
• You might decide to go up or down from that average size within their range of grants, if your project is particularly large or small (trusts can be influenced to give more, or less, by wanting to make a significant contribution)
• You might go up or down within the range to take account of the size of your charity (again, people can give more to bigger charities)
• For existing funders, if it’s a typical grant that they give you, you can just use that grant size. If their giving has varied, you’ll have take that into account. 

1. % chance of success

• If it’s a cold or lapsed application, you should have an idea what your success rate is, based on past experience
• You can potentially work the same out for warm trusts and that’s the best way, as you have your own unique strategy which will have its own success rate. It’s clearly a mistake to just assume they’ll all give again. Years ago, Bill published some assumptions on the Trusts Special Interest Group site, which I’ve personally used and found were close to the truth for us:
  • 40% of one-off givers will give again in the following year
  • 60% of people who’ve given twice will give a third time in succession
  • 80% of people giving three times in succession previously will give a fourth time
  • Above that, I tend to put 100% unless I know better

You can use that approach for the different sub-headings in your budget (big and small trusts, different Services areas, etc) and especially for the budget as a whole.

The smaller the number of funders involved, the more “rough and ready” and the less reliable this approach becomes.

Likewise, it doesn’t deal very well with huge applications. You’ll have to do something different for them. I personally discuss them with my manager and we agree on something that works for the Department / my Trustees. Bill bruty has some good ideas, which I’ll leave him to explain to you.

What to do if you’re handed a target of “last year plus inflation”

I have been handed this down on many occasions. It’s simply not a reflection of the real world though and just reflects organisational convenience:

• In my latest role, I surveyed the accounts of charities of roughly our size in my field of work over the course of five years (for another purpose) and found that income typically fluctuated a decent amount. 
• That’s hardly surprising, when you think of the variation in opportunities we have from year to year, as well as the percentage that the biggest grants are of the whole.

If I get a target like that, it doesn’t necessarily mean that we urgently need to raise that or the charity is in trouble. From a Senior Fundraising Manager perspective, there are various sources of income and variations might balance out more than that.

My priority is my internal relationships. I’ve been given an unrealistic target and whilst I’ll do my best, they need to know that and be okay with me. (If you’re any good, you’re not getting fired over a missed target. However, you do want your managers to think well of you.)

My response is therefore:

• “My version of the target was carefully calculated, using practice recommended in the sector. You’ll see it’s quite different.”
• “That reflects the realities of trust fundraising – income does fluctuate”. You can regurgitate the points above – an evidence-based approach is much more effective at this moment than a pure assertion.

As the year goes on, I do a decent reforecast and keep speaking to my manager about the level of realism of hitting the target.

Resources

As mentioned above, Bill Bruty does a great course on this, which goes into greater depth than I have here. I thoroughly recommend it.