In this article, Martin Mercer, Head of Charitable Trusts at Cartwright and Tobin Aldrich, Partner at AAW Group, outline the dilemmas which charities often face when it comes to growth strategies: when to save and when to spend?
Charities operate in a resource-constrained world, constantly weighing how best to use today’s funds to secure tomorrow’s mission. This often crystallises into a familiar dilemma: invest in fundraising to actively grow donations, or place reserves in financial markets in order to grow the spending pot.
In practice, however, these decisions are rarely compared on equal terms. Fundraising, marketing, and finance teams typically sit in separate organisational silos, each with distinct metrics, risk appetites, and time horizons. Without a shared framework, charities struggle to judge when to spend and when to save.
As consultants working in both investments and fundraising, we see these conflicting priorities daily. Fundraisers focus on acquisition costs, lifetime value, and the relational quality of supporter journeys. Marketing emphasises reach, brand strength, and engagement. Finance teams concentrate on risk-adjusted returns, liquidity, and long-term resilience.
All perspectives are valid, yet rarely aligned, leading to fragmented strategies competing for the same resources.
Investing in fundraising
Directing capital into fundraising activities (such as individual giving marketing or the development of philanthropy programmes) can produce relatively rapid gains. A successful campaign or appeal might deliver immediate income boosts, expand visibility, and create opportunities for storytelling that strengthens community ties.
Over the long term, fundraising builds relational capital: loyal monthly donors, committed advocates, and legacy prospects who function as a kind of long-duration asset. Campaigns also generate data that refines future efforts and increases efficiency.
Yet these returns come with risks. Fundraising requires upfront expenditure, specialist skills, and coordinated execution. There is enormous competition in fundraising markets, meaning that the returns can be unpredictable. Campaigns can underperform, donor fatigue can set in, and results are inherently variable.
Nonetheless, fundraising uniquely enhances mission engagement and amplifies public visibility - benefits financial markets cannot provide.
Investing in financial markets
Financial market investments, whether in diversified portfolios, endowments, or cash reserves, offer a contrasting path. In the short term, they preserve capital, ensure liquidity, and ease operational pressure by providing passive income that does not rely on constant solicitation. During difficult economic periods, investment income can buffer programme work and reduce strain on fundraising teams.
Long-term benefits stem from compounding. Well-managed portfolios can outpace inflation, underpin strategic planning, and secure funding for future generations. But markets carry volatility, may suffer downturns, and do not deepen donor relationships or elevate the charity’s narrative. Unlike fundraising, financial investments support sustainability but not engagement.
Why comparing the two is difficult
The challenge arises because charities often treat fundraising, marketing and financial investments as fundamentally different categories rather than two sides of the same expenditure coin. Each silo uses its own language of returns, measures risk differently, and works to mismatched timeframes: one year for a fundraising campaign, five years for an investment in regular giving, ten for an investment strategy, longer for legacy marketing. These divergent approaches make holistic resource allocation difficult and can create internal tension and unhelpful competition.
Working toward a unified investment framework
Breaking out of siloed thinking requires a shared decision-making framework, one that evaluates all options through consistent lenses.
Shared measures of return:
Assess long-term net donor value alongside expected market returns using aligned time horizons.
A unified view of risk:
Recognise that a campaign flop and a market downturn are both legitimate investment risks, simply expressed differently.
Consistent timeframes:
Evaluate both types of investment over comparable 1-, 5-, and 10-year horizons and with consistent parameters to avoid misleading contrasts.
Clear strategic purpose:
Determine whether the charity most needs short-term liquidity, long-term resilience, or a blend of the two.
Cross-department collaboration:
Regular forums where fundraising, marketing, and finance share assumptions and establish joint performance dashboards can transform planning. One practical model is a “Unified Investment Dialogue,” enabling scenario planning such as when to spend on donor acquisition versus when to save or grow reserves.
What a balanced approach delivers
When charities adopt integrated thinking, the question shifts from “Which investment is better?” to “What combination best serves our mission?” Balanced strategies allow organisations to take calculated risks in one area because another provides stability. For example, an organisation might rely on investment income to safeguard baseline operations while funding long-term acquisition campaigns. Conversely, strong fundraising performance might allow more conservative investment choices during market volatility.
A holistic approach improves resilience, clarifies trade-offs, reduces internal friction, and leads to more confident, mission-aligned decisions. Ultimately, the greatest strength lies in blending the relational power of fundraising with the financial resilience of investment markets.
Conclusion
Fundraising and financial market investments are not opposing priorities but complementary tools. Each offers essential short- and long-term value. By adopting shared metrics, aligned time horizons, and joined-up conversations, charities can move beyond siloed thinking and create balanced, strategic resource plans that support both immediate needs and enduring mission sustainability.