Entrepreneurial Inclination and the Marketing of Very Small Charities: Implications for Fund-Raising Performance

Article excerpt

ABSTRACT

One hundred and forty-seven directors of small UK charities responded to a mail questionnaire designed to examine the relationships between entrepreneurial inclination, marketing orientation, planning, organizational flexibility, and the capacity to cope with change. Well established and validated instruments (the Myers-Briggs Type Inventory and relevant sections from Belbin's Team Resources Questionnaire) were used to identify three categories of person likely to be in charge of small fund-raising charities: idealists, pragmatists, and entrepreneurs. It emerged that individuals high in pragmatic inclination were more prone than others to engage in forward planning, to adopt a marketing orientation and to manage their charities flexibly in order to exploit emerging opportunities and benefit from change. Pragmatism correlated positively and significantly with entrepreneurialism. Relationships between the three types of manager and the relative fund-raising performances of the charities they controlled were also examined.

INTRODUCTION

In 1999, the United Kingdom had nearly 200,000 registered charities with a collective income of about £18.5 billion per year (Charity Commission, 1999). Roughly 125,000 of these organizations were general charities, i.e. not educational institutions, trade unions, clubs, societies, or religious organizations, and, according to the 1997 UK Office of National Statistics Survey of Charities (HMSO), the overwhelming majority of them were very small: 90% had annual incomes below £100,000 in 1996/97. The total income of these small charities in 1996/97 was just under £2.8 billion, this aggregate having increased in real terms by an average 6% per annum in the mid-1990s. Arguably the main factor encouraging the proliferation of small charities in the United Kingdom has, in the words of Dahrendorf (1997, p.7), been "the withdrawal of the state from more and more obligations that it undertook in the past, with a widening gap between need and provision." Also, the long-term rise in UK unemployment over the last quarter century has, Dahrendorf noted, released a greater number of people willing to devote their time to charitable pursuits than in previous decades. As well as expanding in size, the charitable sector has become increasingly marketing orientated (Bennett, 1998). Advertising by UK charities has risen sharply. According to the UK Advertising Association (1999), the charity sector's media spending grew from £6.7 million in 1983 to £46.6 million in 1997 (including a 71% increase between 1990 and 1995). This rate of expansion placed charities in me top four UK product categories for 1990's speed of growth of advertising expenditure. The rise in the charitable sector's use of direct marketing was equally dramatic: by 1996, charities were responsible for 11% of the volume of all UK direct mail, second only to catalogue selling companies (13%), and well ahead of both life insurance companies (7%) and banks (4%) (Bird, 1997).

Overall trading activity by UK charities grew by between 11% and 12% per annum in the mid-1990's (Pharoah, 1997). For decades, UK charities have been involved in the sale of products such as Christmas cards, T-shirts, coffee mugs, key rings and other low cost items as a means for raising funds, typically via mail order brochures and catalogues. By the late 1990's, however, charities were increasingly selling non-traditional items, including adventure holidays; insurance, savings and equity investment policies; branded music CDs; funeral plans; and flowers-by-post gift services (see Carter, 1997; Ramrayka, 1998). Sargeant (1995) has suggested that two major factors helped explain these commercial orientations: (1) greater competition for donations consequent to the recent creation of so many new charities, and (2) the example set by high-profile large charities which, through skillful image-building and highly professional approaches to marketing, had boosted their incomes substantially over the previous fifteen years (with rises exceeding 10% in real terms annually in some cases). …