Even before the pandemic, traditional charity fundraising was stagnating.
The pandemic has turned a conversation about the challenges of long-term decline into one about short-term collapse.
Thinking about “fundraising” in a silo misses an important bigger picture.
When it comes to fundraising income, charities do not compete with other charities. They compete with everything else a person might be trying to do to lead a meaningful life.
There is a big prize here. Charities need to think urgently about this wider framing, especially in the face of the current crisis
The stagnation of traditional fundraising
Even before the pandemic, the stagnation of fundraising was a cause for concern. Charities of all sizes were reporting drops in their voluntary income. The Charity Aid Foundation’s research showed a steady decline in people donating money or sponsoring others to support charities between 2016 and 2018 after a long period of slow growth.
Changes in demographics – with wealth concentrating in fewer, older people – helps some types of giving but hurts others. Where charities have reported increases in voluntary income, legacies and major-giving have often driven the growth. On the other hand, individual giving, community fundraising and event fundraising have grown more slowly, with greater competition and ever-shorter product lifecycles. Trust and Foundation support was growing, but is increasingly competitive. There are one or two charities that have done well in these areas, but they seem to be the exceptions that prove the rule.
Charities were coping with this stagnation through defensive tactics: marginal gains to reduce attrition rates, sweating assets, accepting higher cost ratios and adjusting supporter journeys. These are all responsible things to do, but they were not going provide the growth required to fulfill their ambitions.
Where are we now?
A conversation about the challenges of long-term decline has become one about short-term collapse.
The pandemic has devastated fundraising. Fundraising income is expected to decline by 48% on average, and an estimated £4.3bn of projected income was lost in the first three months of the pandemic. Sectors are asking for (and not getting) government support to avert crises. Job losses have been announced, with more to come.
New initiatives have launched but have not plugged the gap. The 2.6 Challenge is a case in point. It has raised £11.2m – an incredible achievement for a new fundraising initiative given the circumstances, but it doesn’t come close to replacing the £66.4m raised by the London Marathon.
There have been success stories, such as Sir Captain Tom Moore’s achievements in raising over £32 million for NHS Together, but the energy of the public has largely been directed at the NHS and to local mutual aid activity.
Missing the bigger picture: Living with purpose
Much of the debate about ‘the future of charities’ – by the sector’s regulators and others – poses traditional questions and yields traditional answers.
It thinks of the fundraising market as distinct, described fundamentally in terms of established fundraising products or the income received by registered charities.
However much they might deny it, these conversations pit charities against each other in competition for the finite attention and discretionary charitable spending of the public.
In the face of collapsing income, there is a strong instinct to go back to basics, to always focus on the same questions.
This is a mistake, because it traps you in a silo and misses the new opportunity.
The size of the “market” is both much bigger, but also much more competitive than normally described.
When it comes to fundraising income, charities do not compete with other charities. They compete with everything else a person might be trying to do to lead a meaningful life.
The important long-term trend is that people are building meaning and purpose into all their choices.
In a world where people are more and more likely to consider the ethical, social and environmental impact of all their choices, it is less and less meaningful to separate ”charitable” giving. It is a small part of a bigger market. Consider the following examples:
- People are much more likely to build ethical considerations into their spending behaviours. Most European consumers want brands to take actions to protect the environment (88%), prevent climate change (85%), global poverty (84%) and gender inequality (77%). Ethical consumption has grown 4-fold in the past 20 years, accounting for £41.1bn in spending.
- People are looking for meaning and purpose in their work. A survey of US professionals found that nine out of 10 workers would trade 23% of their future income for “work that is always meaningful”. The British Social Attutude Survey found 68% of people say that having a job that is useful to society is important or very important.
- Over the past 3 years, over a million people have financially supported the Guardian – keeping its content free for all and supporting investigative journalism. This is neither a traditional subscription nor a traditional donation, but something in between.
- Patreon gives a direct route for people to support artists and creators. They have paid out over $1 billion dollars to the 150k creators who use the platform, half of which was last year. This is neither completely transactional nor old-fashioned “patronage” of the arts, but something in between.
None of these things are captured in current analyses about the size of the “fundraising market”, but all compete with money a person might choose to give to charity. Even the global growth of vegetarianism and veganism worldwide can be seen through this lens.
For example, if someone is concerned about climate change, and they choose to fly less, go vegetarian, invest their money in ethical funds, spend money on carbon offsets, buy a bike and drive less, support campaigns they like directly on social media, and encourage their workplace to adopt a good sustainability plan, what space is left for an established charity? What need do they meet for that person?
This should be a positive. People are looking for help, support and partnership in all of these areas. There should be an opportunity to connect to people’s motivations to live more purpose-driven and meaningful lives. People – as citizens, consumers and supporters – are more amenable to the arguments charities have been making for years.
But even though the amount of time, money and energy given with a consideration of social impact could be bigger than ever before, fundraising is stalling – even collapsing in some places.
We don’t have a good measure of it, nor do we have a good idea of the impact of the pandemic, but these trends are huge and real.
As we look to the future, it’s clear the next few years are likely to be tough.
We know – especially in fundraising and especially in a crisis – there isn’t always space to think about these wider trends. But the risk is that charities become irrelevant, when there was an opportunity to become essential.
We don’t know what comes next, but there is a big prize here for whoever gets it right.