How to create a charity fundraising strategy

As the number of people giving to charity in the UK has fallen by around six million over the past decade, leaving a smaller pool of donors for charities to reach, a strong fundraising strategy can help improve the likelihood of securing donations. Whether you are funding day-to-day operations or launching a new project, a detailed strategy can help you to plan ahead, prioritise resources and focus on the activities that are most likely to deliver results.

Continue reading our guide below to understand how to create an effective fundraising strategy and the key elements to consider.

What is a fundraising strategy?

A fundraising strategy is a long-term plan that outlines how your charity will raise money to support its activities and achieve its objectives. A strategy identifies fundraising goals, potential income sources, target audiences, key activities including marketing, community outreach and events, and measures of success.

An effective strategy aligns fundraising activity with your charity’s mission and resources whilst helping to reduce reliance on any single source of funds. It should aim to provide enough structure to guide decision-making while remaining flexible enough to adapt to changing circumstances and opportunities.

The importance of a fundraising strategy

Without a clear strategy in place, fundraising can become reactive, with charities pursuing opportunities inconsistently rather than focusing on opportunities that support long-term goals.

A fundraising strategy can benefit charities by helping them to:

• Set realistic income targets
• Prioritise fundraising activities
• Diversify income streams
• Allocate resources effectively
• Measure fundraising performance
• Identify risks and opportunities
• Motivate staff and volunteers
• Build stronger relationships with donors

A strategy can also provide trustees and management teams with a framework for monitoring progress and ensuring fundraising activities remain aligned with the charity’s objectives.

How to create a fundraising strategy

There are several steps you can follow to create an effective fundraising strategy document, which are outlined below.

Step 1: Audit past fundraising processes and current position

Before setting fundraising goals, it is advisable to assess how past fundraising efforts performed and your charity’s current situation. Review where funds are coming from, which activities are generating the strongest returns, and your realistic budget going forward.

Consider the time, resources, and expertise required to deliver each fundraising activity, and whether these align with your charity’s current financial performance.

You may also want to consider:

• Which fundraising methods work well?
• Which activities deliver the best return on investment?
• Are any income streams declining?
• How many current supporters donate regularly?
• Does the charity rely too heavily on one source of funding?

Understanding your starting point can help you to identify strengths to build on and weaknesses that need to be addressed. Remember that fundraising strategies can change over time, especially as social media trends evolve and AI increasingly becomes part of the way donors engage with organisations.

Step 2: Set clear fundraising objectives

Rather than setting a broad goal, such as ‘raise more money’, clearly defining specific and measurable objectives that can be evaluated can be more likely to succeed.

An illustrative example of such objectives could include: increasing annual income by 15%, recruiting 100 new regular donors, securing three new grants, or raising £25,000 for a specific campaign (appropriate targets will depend on your size, resources and funding model).

To determine guidelines and goals for a new campaign, decide on the direction for a specific period and establish key dates along the way, such as external events and funding milestones. Design the objectives to support the charity’s wider goals and reflect what is realistic with your available resources.

Step 3: Understand your supporters

Effective campaigns typically begin with understanding the profile of who is most likely to donate to your charity and making the case for them to provide financial support.

As different audiences respond to different fundraising approaches, consider whether to target existing donors, local residents, service users, businesses, corporate partners, or trusts and foundations that align with your charity's mission and goals.

Conducting prospect research can help you to identify who the right potential donors at the right time, and in turn can indicate your likely sources of funding. Data can provide valuable insights into how supporters interact with your charity and where there are opportunities for improvement. Reviewing the performance of your charity’s website can help you to identify whether visitors are finding donation pages easily, which content generates the most engagement, and where potential donors may be leaving the process before submitting a donation.

Examining income trends, fundraising costs, and the return generated by different campaigns can help you decide where to invest resources. It can also be useful to look outside of your own organisation, as sector reports and charity benchmarking data can highlight emerging donor trends and changes in giving behaviour.

AI can help you analyse donor data to identify patterns in supporters’ behaviour and highlight opportunities to strengthen engagement, such as through personalised communication and social media.

Ensure any use of data and AI tools complies with applicable data protection laws and donor consent requirements.

Step 4: Diversify your income streams

As many charities face financial pressure when they rely too heavily on any single funding source, creating a balanced mix of income streams can help to reduce risk.

Regular individual donors, one-off gifts, and membership schemes can provide a reliable source of unrestricted income, while charitable trusts, foundations and government grants can provide substantial funding for specific projects and programmes.

Community fundraising through sponsored events and local campaigns can strength engagement with supporters while generating income, as can sponsorship and employee fundraising from corporate partnerships.

This diversified approach can help to ensure that your charity is not overly exposed to changes in donors’ behaviour or financial priorities. To learn more about funding, read our dedicated article which explains how to write a successful funding application.

Step 5: Choose the right fundraising channels

Once you have identified your target donors and income streams, you can decide the best ways for your charity to reach potential supporters.

The most effective channels will depend on your audience, resources, and objectives. These can include:

• Social media campaigns
• Charity fundraising platforms
• Email marketing
• Website donation pages
• Events and challenges
• Community partnerships
• Direct mail
• Corporate engagement programmes

Optimising your charity’s profile on online fundraising platforms and social media campaigns can be key to helping you reach wider audiences, especially if you are running a smaller organisation without a large marketing budget.

Step 6: Create an action plan

Your fundraising strategy should translate into practical actions, which could include targeted marketing efforts, key activities and events, responsibilities, timescales, milestones, budgets, and expected outcomes.

Planning to thank donors for their support is important for nurturing relationships and maintaining momentum. Showing appreciation to supporters when a campaign ends, and communicating the impact their donations have on your cause, can inspire them to donate again in the future.

Assigning ownership within your team to each fundraising task can help to ensure accountability and make it easier to track progress throughout the year.

Step 7: Measure and monitor performance

Develop a campaign roadmap to review and evaluate progress regularly to ensure that your action plan remains effective and identify where changes might be required.

Establish financial projections to guide your charity’s activities and track key performance indicators (KPIs), such as total funds raised, number of donations, donor retention rates, average donation size, event participation, or return on investment.

Regular reviews can also allow you to respond to any changing economic conditions and funding opportunities.

Common fundraising strategy mistakes to avoid

Even well-intentioned plans can fail if charities overlook common challenges, such as setting unrealistic income targets or measuring activity rather than outcomes.

Underestimating the resources needed to run a campaign, or failing to understand donor motivations and neglecting donor retention, can derail efforts to run otherwise engaging and memorable fundraising experiences.

Successful strategies often balance ambition with realistic expectations and focus on building relationships with supporters and partners that are sustainable over the long term.

Please make sure to always do your due diligence and research any risks associated with a fundraising idea before hosting your own. Note: Markel Direct’s policy excludes cover for events where the attendance exceeds 500 people.

Visit our charity insurance overview to discover how you can protect your charity in the case of injury to a third party, or damage to a third-party property. Discover more charity help and guidance here.

Please note: This article provides guidance for information purposes only and is accurate at the time of production. It should not be relied upon wholly when making or taking important business decisions – always seek the services of an appropriately qualified professional. The views expressed by websites referred to are limited to those of the websites, and do not necessarily reflect the views of Markel Direct.