What's your approach to income generation?

So now it is official. 2023/24 was the worst financial year on record for the independent hospice sector.

Figures from 96 hospices in Hospice UK’s and db associates quarterly survey for the year-end, revealed a collective deficit of £23m. That’s £48m if extrapolated across the whole sector. Not surprisingly, stories of hospices have to consider significant reductions in services are becoming more regular. 

Going back just a few years, the sector came out of the pandemic in a healthy state, largely due to government support, especially in England. Ironically, for want of a much better word, the lack of statutory funding is the main reason for the current crisis.

There is no doubt that the present level of government support  for hospices is unacceptable. However, I remember a present hospice CEO saying to me that if the sector spent as much time focusing on where (generalisation ahead) the 2/3rds of money comes from as it does on the 1/3rds, then maybe the former would grow even larger in proportion and so the latter reduce.

This was said somewhat tongue in cheek. But there is sense in  the argument that it is better to focus on what you can control more, i.e. your own activities, rather than those that you have less influence over. Several of my recent blogs have discussed some of the examples of this. 

How far a hospice is prone to do this depends on having an entrepreneurial culture and seeing income generation as a core part of the service that engages the community, not just a means to an end. 

I have long found it fascinating that (another big generalisation ahead) many hospices seem much more comfortable being involved in what I label transactional IG activities, rather than transformational. 

By the former, I mean those that a) involve some kind of exchange and b) due to this purchase and / or the overheads required, often have low ROIs. E.g. lotteries, retail and events. 

By contrast, hospices have been less comfortable with more transformational forms of raising money such as regular giving, major donor support and legacies. All the evidence shows that if invested in over the long-term and carried out properly, these income streams have a much higher ROI.

A couple of years ago, I raised this very question at a Hospice UK trustees conference. The results can be seen in the graphic above. Sometimes, it seems that whilst we are proud of what we do, asking for ‘pure’ donations or for people to leave a legacy is seen as somewhat uncouth. 

Yes, hospices have received significant legacy income over the years. But the evidence is that they spend much less on pro-active legacy marketing than other charities and are losing market share. 

Research from Legacy Futures shows that other charities are now investing a higher proportion of their fundraising spend on legacy marketing, around 6%. Based on the figures from members of the Hospice Legacy Circle, hospices are at around 3%. This despite the fact that legacies make up 47% of the sector’s voluntary income. And one exceptional legacy can have a transformational impact.

I’m not saying that the transactional activities are not important. Indeed, some of the newer commercial income generation ideas are more akin to forms of trading too. 

But to transform the current situation, there needs to be more focus on the more transformational opportunities.