Fundraising Report

April 2008

Fundraising Report to the Global Board of Directors

To:       Members of the Global Board of Directors
From:  Lee Stuart, Director of Strategic Investment

Executive Summary

The fundraising countries of The Hunger Project include the United States and the “Partner Countries” – Australia, Belgium, Canada, Germany, Japan, The Netherlands, New Zealand, Sweden, Switzerland, and the United Kingdom. Prior to 2007, fundraising results were reported differently for the US and Partner Countries. Net fundraising results were reported for the Partner Countries, i.e. total raised less costs, and total fundraising for the US. This report is based on total fundraising for the US and Partner Countries, with the amount sent to the Global Office from Partner Countries designated as applicable.

2007 Results

  • A total of $16.0 million was raised for The Hunger Project in 2007: $9.5 million was raised in the United States on a target of $10.2 million and $6.5 million was raised in the Partner Countries on a target of $5.8 million. The Partner Countries sent $4.88 million to the Global Office for programs.

  • The Fall Event generated $2.7 million for 2007, $300,000 short of the targeted $3 million. In addition the Fall Event generated $1.44 million in pledges for 2008.

  • Participation in investor trips generated significant funding: $1,725,000 over multiple years from various foundations, businesses and individuals.

2008 Results to Date

  • The global fundraising target for 2008 is $17.7 million, with $10.5 million to be raised in the US and $7.2 million to be raised in the Partner Countries. The Partner Countries have a minimum target of $5.5 million for global programs. To date, $10.5 million has been raised ($5.9 million from the US and $4.6 million from the Partner Countries, with $2.9 million designated for programs). As of April 22, fundraising in the US is 8% below where it was in 2007 and Partner Country Fundraising is 45% ahead of 2007.

  • The decline in the US is chiefly related to the deaths of two key investors, lower renewal rates overall and renewal of 259 investors at the $1,000 level at lower amounts in 2008. Sixteen of these investors account for $1.046 million of the total differential of $1.745 million.

  • To counter the decline in the US, additional staff are being hired, and the US fundraisers are focused primarily on increasing high-level (>$25,000) investors and rebuilding the $10,000 - $25,000 level of investment.

  • US activists are playing an increasing role in introducing The Hunger Project to potential corporate and foundation support.

  • A total of $852,000 has been raised toward the million dollars required for the Robertson Challenge Match in 2008. Two investors are in the final stages of commitments which are expected to bring in the final balance for the match.

  • Investor trips to Benin and Bangladesh have generated $800,000 and $177,000, respectively, to date.

2007 Highlights

Overall Results

In 2007 the US raised $9.5 million and the Partner Countries raised $6.5 million, of which $4.88 million ($1.5 million over their target of $3.3 million!) was sent to the Global Office for programs (Table One). The results are truly a breakthrough for Partner Country fundraising, particularly with respect to fundraising from institutions and entrepreneurial networks.

Table One: Amount sent to Global Office in 2007 by Partner Countries

Country

Amount

Country

Amount

Australia

$1,382,498

New Zealand

$   49,950

Canada

$  146,817

Sweden

$  477,100

Germany

$  755,386

Switzerland

$  323,832

Japan

$   22,321

United Kingdom

$  169,887

The Netherlands

$1,549,821

TOTAL

$4.88 million

The United States fundraisers had a 2007 target of $10.2 million and raised $9.5 million, a shortfall of $700,000. About one-third of this can be accounted for by investors who gave at the level of $1,000 or more in 2006 renewing at a lower amount in 2007, and about one-third can be accounted for from investors at the $5,000 level and up in 2006 not renewing in 2007. However the investments above $25,000 exceeded the global target ($5 million) by $789,000. In the United States, high-level investments (>$25,000) generated 60% of the funding. This is an increase over 2006 when high level investments generated 51% of the funding.

Robertson Challenge Match

In 2006, The Robertson Foundation made a $5 million grant over five years to support The Hunger Project’s scale-up in the Eastern Region of Ghana. The conditions of the grant were that the first million dollars was a direct grant, with the remaining funds made available on a one-to-one matching basis from “new” money invested in The Hunger Project (i.e. either from new investors or investments over and above the July 2006 investment levels of current investors). The 2007 Robertson Match was achieved in full by June. Three-fourths of the matching funds came from Partner Country investors, one-fourth from the US.

Fall Event Challenge Match

The Fall Event fundraising campaign was based on a $3 million challenge match. The original idea was that front-end investors would invest $1.5 million to be matched one-to-one. In fact, slightly more than $1 million was raised at the front-end. In total, the Fall Event generated $2.7 million for 2007, short of the target, but nearly half a million more than the previous year’s event. The Fall Event also raised $1.44 million in 2008 pledges, 3% above the prior year.

Epicenter Underwriting

In 2007, in addition to the Robertson Challenge, Epicenter Underwriting became a major restricted grant initiative. The minimum investment as an Epicenter Underwriter is $400,000 spread over five years. In the beginning of 2007 there were four Epicenter Underwriters, two from the United States and two from Australia. By the end of the year, an additional eight epicenters had been underwritten, with investors from Switzerland, Sweden, Australia and the US participating. Three investors (two from The Netherlands and the other from the US) made pledges in 2007 to become Epicenter Underwriters starting in 2008.

Lessons learned from the success of the Epicenter Underwriting include that investors are highly attracted to a specific project with which they can feel a special identity, so much so that we have more interest in Epicenter Underwriting than we have epicenters to underwrite! As our first extensive restricted investment initiative, it became clear that in the future we need to think more critically about how to include Global Office and Program Country general costs in the initiative. The Epicenter Underwriting initiative generated a need for reporting which was a new demand on Global Office and Program Country staff. A third issue raised by the success of the Epicenter Underwriting Initiative was that although based on an average across Africa accurate in 2006, with local inflation, devaluation of the dollar, and increased costs of oil, it became apparent that the true costs of epicenters can not be met in full for $400,000, requiring revision of the initiative.

Clinton Global Initiative (CGI) Commitment

As reported in October, XL Results Foundation committed at the 2007 Clinton Global Initiative to invest $5 million over five years to fund The Hunger Project’s work in India. In December 2007, they made their first payment of $280,000, primarily from fundraising in advance of an investor trip to India in January 2008 and a holiday event in the UK.

Investor Trips

In 2007 investors traveled to Malawi, Mozambique, Uganda and Bangladesh. The trips to Africa generated significant funding: $1,725,000 over multiple years from various foundations, businesses and individuals.

We are continuing to use investor trips as strategic opportunities to expand investor leadership. People on trips understand that as a consequence of their participation on trips, they are expected to generate an additional $25,000 for The Hunger Project, either from their own increased investment, from others, or a combination. As compared to 2006, there was a relative decline in US participation on trips as compared to Partner Country participation. One of the reasons is that the Partner Countries organize investor trips for specific constituencies, and often these trips are completely full with institutional investors or with members of an entrepreneurial network. We learned in 2007 that these kinds of trips need to be structured differently than the trips comprised mainly of individual high-level Hunger Project investors. The trips can be shorter, require more briefing of participants on Hunger Project principles and practices, and are often more focused on the quantitative aspects of our work, both financial and programmatic, than the relational aspects of our work most attractive to Hunger Project individual investors.

2008 to Date

Overall Results to Date

The 2008 global fundraising target is $17.7 million. The US target is $10.5 million (a 10% increase over 2007 results) and the target is $7.2 million in the Partner Countries, of which a minimum of $5.5 million will be for programs (a 13% increase). To date $5.9 million has been raised in the United States, leaving $4.6 million to go. The Partner Countries have raised a total of $4.67 million, of which $2.94 million has been designated for programs, leaving $2.56 million on the $5.5 million target. As compared to last year, this is an 8% decline in the US and a 45% increase outside the United States.

In terms of new investors at the $1,000 and up level, the US is ahead of its position in terms of money, but with relatively fewer investors than at this time last year; participation in the Global Investment Group (GIG)—$5,000 and up—is lower and foundation investment is comparatively flat (Table Two).

Table Two: Summary of results to date in the United States

2008 Number

2008 Amount

2007 Number

2007 Amount

New $1,000+

22

$159,000

31

$100,000

Total New

318

$192,000

290

$131,000

GIG

218

$5.31 M

245

$5.5 M

Institutions

13

$1.284 M

9

$1.239 M

Challenges facing US fundraising in 2008 and how we are addressing them:

The decline in the US is chiefly attributable to lower renewal rates at the level of $1,000+ compared to last year at this time (60% vs. 65%), investors renewing at lower levels (a $1.745 million differential), and the death of the highest individual investor in 2007.

In the United States, the following challenges were recognized by the US Staff Fundraisers at the beginning of the year:

  • The retirement of The Hunger Project’s most senior fundraiser, Laura Burt;
  • Balancing the risks and rewards of a strategy heavily skewed toward high-level investments;
  • The declining dollar and financial downturn;
  • The relative decline in “mid-level” investors (between $5,000 and $25,000) in 2007 vs. 2006; and
  • Many of the current investors, particularly at the highest level, are reaching their capacity for investment; in other words, in the past it was easier to “upgrade” investments and now it increasingly difficult to do.

We are taking the following steps to address these challenges:

Strategic assignment of investors with whom Laura was working: Higher level investors in Laura’s constituency have been transferred to the most appropriate regional fundraiser, usually based on existing relationships. Highly experienced Hunger Project activists in the Bay Area are reaching out to the mid-level investors in Laura’s domain, and the lower level investors (less than $1,000) are being handled within the bottom-of-the-pyramid strategy (receiving newsletters and quarterly appeals).

Additional hires: After a complete review of the structure and needs of US fundraising, we are advertising for another US regional fundraiser and will have this person on board by June. We are seeking someone with passion for The Hunger Project’s vision and experience as a major gifts fundraiser. In addition, we are advertising for an institutional fundraiser to work full-time at expanding The Hunger Project’s investments from foundations and corporations in the US. Although this was originally under my personal mandate, it turns out that more is necessary, particularly someone who has had recent and direct experience in the emerging world of corporate philanthropy as corporate social responsibility.

We have recently increased the administrative capacity within the Global Office by hiring a person with great skill and aptitude for the administrative position. Last year when I asked the US fundraisers what would double their effectiveness, the unanimous answer was “administrative capacity to help with maintaining accurate investor records, setting up and reminding people about appointments, doing the follow up to renew $1,000 and lower investors, and logistical support for locality events, etc.” The new administrative assistant certainly has the skills and the capacity to do this work.

Continued focus on high-level investments: Although it is now axiomatic in the non-profit world that loyal high-level individual investors are the key to funding sustainability, the greater dependence on relatively few investors does bring with it additional risk. The loss of only a single investor can have extremely negative consequences. We are working to counter the risk of dependence on relatively few investors by a concerted effort to expand our pool of high-level investors. In other words we are countering risk by spreading the risk over more investors.

We are actively pursuing high-level investment as the most strategic course we can take. Our participation in the Clinton Global Initiative and the TED conference has given us expanded access and openings to high-level investments. We are also encouraging current high-level investors to connect us through their relationships to other high-level prospects. This approach recently resulted in an invitation for Joan Holmes and Kristin Walter to be on Dr. Oz’s radio show, which was taped in mid-April and will air soon. Activists have set up meetings between Hunger Project fundraisers and various large foundations.

Recognizing the impact of the Epicenter Strategy as a way of attracting high-level investment, the Fundraising, Finance and Program Departments are in the process of aligning on a series of compelling high-level investment opportunities appropriate for each region where we work.

Maintaining relationships in the course of the financial downturn: The impact of the financial downturn in the United States is evident to US fundraisers in two ways: the lagging renewal rate and renewal at lower levels than 2007. Several of our investors who would normally have renewed their investment by now have told us that, in light of economic uncertainties, they are not yet able to make a reliable specific pledge in 2008. In addition, fundraisers have noticed that long-term investors are often renewing at lower levels than in 2007. Two hundred fifty-nine investors who were at the $1,000+ level in 2007 are investing less in 2008, but just 16 of those investors account for 60% of the differential ($1.046M out of $1.745M). We are also seeing reduction in Financial Family investments. It is a sign of great loyalty that Financial Family members are reducing their monthly investment as compared to withdrawing support completely. The US fundraisers are making a concerted effort to be in touch with our GIG ($5,000 and up) investors to keep them connected to The Hunger Project and to keep them aware of the importance of their continued investment at this time. As always, renewals of current investors remain the top priority of US fundraisers.

Increased activism in localities: In Seattle, Orange County, Los Angeles, Texas and the Bay Area, activist teams are taking a stronger role in expanding both the base and GIG level investments in The Hunger Project. In all of these areas, activists are also taking on a greater role in creating introductions to The Hunger Project for individual investors, opening doors for matching gifts and corporate philanthropy where they work, and reaching out to heads of foundations and institutions in their locality. One of the things the US learned from the European fundraisers in 2007 was the importance of leveraging employee participation as an entry to corporate support. The approach in Europe has also yielded results in the US: earlier this month we received word that following presentations by employees who are Hunger Project activists, a Texas-based corporation voted unanimously to underwrite an epicenter.

Rebuilding the middle: In 2007, the US fundraisers began to emphasize investment at $25,000 and up, whereas in earlier years, a great deal of attention had focused on $5,000 or $10,000 level investors. We experienced a decline in the mid-level investment between 2006 and 2007, and for this reason, the fundraisers are reemphasizing middle-level investment. Among other things, we have created compelling middle-of-the-pyramid “notional” fundraising appeals which allow investors to visualize the specific impact of their investment. For example, based on the 2008 budgets and program projections, an investment of $5,000 would provide for the training for 30 catalyst leaders in Mexico; 800 animators in Bangladesh; 100 elected women representatives in India; or participation of 30 indigenous women in Peru in the national networking meetings of our partner Chirapaq.

We are also working to strengthen the mid-level investment ($5,000 - $10,000) as a gateway to high-level investment. Thirdly, we will be approaching many of our investors who have been at the same level of $5,000 or $10,000 over four to five years to look at their investment in the context of their highest appropriate level.

Robertson Challenge Match

We have raised $852,000 for the Robertson Match in 2008, welcoming six new investors from the US, Sweden and The Netherlands. Two US investors are close to finalizing commitments which will likely cover the remaining $148,000 needed for the full million dollar match.

Epicenter Underwriting

Five additional epicenters have been underwritten in 2008, over and above the three pledges made in 2007 to underwrite epicenters.

CGI Commitment

So far in 2008, The Hunger Project-Australia has received a first quarter installment from the XL Results Foundation.

Investor Trips

A group of entrepreneurs from The Netherlands visited Benin in February. As a result of this trip they have committed at a minimum to underwrite two epicenters in Benin. They have also produced a business plan for a strategic scale-up in Benin. The plan calls for funding 25 epicenters over the next ten years and is currently being reviewed by the Global Office.

An international group of high-level individual investors visited Bangladesh in April. An additional $177,000 in pledges has been received so far as a consequence of this trip.

Trips are scheduled to Ethiopia in September and Peru in August with the possibility of a trip to India in November. In the future, investor trips will be planned strategically in advance to be of maximum value for fundraising and for the Program Countries.

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