Monday, 15 July 2024
UK Charity Week 2024 - Sponsored by Sinclair Method UK
Monday, 15 July 2024

New Data: 36% of consumers are looking to cut their charity donations

The cost-of-living crisis is hitting many people hard, making the challenge of fundraising more acute than ever. New data from Beautiful Insights as part of its regular Third Thursday ‘pulse check’ research into charities and donation trends has revealed that 36% of consumers are looking to cut their charitable donations in the next three months, which could see charities at risk of losing as much as £580 million. 

The survey shows that one in 10 respondents have confessed they have already stopped all charitable support, with another 26% saying they are likely to reduce the amount they give and 13% admitting they are likely to stop in the next three months. With not-for-profits also seeing an increase in demand for their services from the people who depend on them, many are struggling to juggle this with reduced revenues. 

Beautiful Insights gathered a roundtable of experts to discuss their own experiences of fundraising in the downturn and share their strategies on how to survive and continue to deliver the services that people need, now more than ever. 

They were joined by Jon Eserin, Assistant Director, Public Fundraising and Mass Engagement at RSPCA, Alexa Hawkins-Bell, Innovation Lead at Battersea (formerly Battersea Dogs Home), Will Davies, CEO of Lewisham Speaking Up, as well as Marc Middleton-Heath, Managing Director at Catalyst Works, a marketing and advertising agency with more than 16 clients in the charity sector, and Allan Freeman, an independent Charity Consultant and Chair of Remember a Charity.

With the current cost-of-living crisis, how have you or your clients had to change your approach to fundraising?

Jon Eserin: The RSPCA began disseminating new messaging last summer, building up towards the winter period. This included comms to all of our supporters, thanking them, demonstrating our impact and reiterating the continued need for their support, acknowledging how crucial they are. We also conducted an analysis of our supporter database to identify where the most at-risk groups were, so we could offer them appropriate help, such as a pause in regular support payments. The cost of living is the context for our winter campaign, which is about the abandonment of animals. This is one of the major issues we face every winter, but it’s exacerbated this year by the cost-of-living crisis. Also, we’ve done some more bespoke fundraising. We fundraise for a pet food bank scheme, which is a society response to the cost-of-living crisis and we have a cost-of-living information hub on our website, offering advice and support for people with their animals.

Allan Freeman: In times of hardship certain causes have become more important to people. International aid can suffer, as people are thinking more about local causes, although what is happening in Ukraine may be at odds with that. The role of the media is very significant for influencing the public psychologically and mentally and what the newspapers say every day about rising inflation can create an echo chamber. But they also do a lot of very helpful legwork when there’s an emergency and the situations they cover generate lots of support. The media is so much more important than it was previously and charities need to consider strategies to get the media to help them.

Alexa Hawkins-Bell: Battersea has been very strong in fundraising from an Individual Giving (IG), Legacy, and Direct Mail (DM) perspective.  people who support animal charities really love animals and are very dedicated. We’re not seeing a change in dedication to Battersea, but there is a change in supporter behaviour and how they want to engage with us. 

Marc Middleton-Heath: We’re seeing that clients in the not-for-profit sector are getting more cautious. The sector has a habit of being overly sensitive to the market and as soon as they see there is an issue, they respond to it strongly. I think that caution has driven them to rein back, ask for less, and ask for it less frequently. If you ask for a certain amount, you usually get it. Therefore, ask for less, you get less and donations are down as a consequence. The braver charities have carried on regardless and seem to be holding up. 

Will Davies: Lewisham Speaking Up supports adults with learning disabilities. Funding has always been a challenge for a small charity like ours without a fundraising team. When our charity was established, local authority funding was our life support. But continued austerity has severely reduced our local council’s main grants programme and accessing funding has become harder and harder. Post-Covid, competition for funding is fierce. Many funders have changed their criteria, making it harder or impossible to access their funding. Others have closed funding to new applicants. It feels like there are more and more charities competing for less money. One funder even told us they’re ‘heavily oversubscribed’ with applications. 

Marc: As you say, government and institutions are cutting their budgets, so lots of the big pots of money that charities might have been able to rely on, have gone. That’s where the cuts come, so there is an increased reliance on corporate and individuals for revenues.

In your opinion what are the campaigns that have really worked in the last year?

Allan: The John Lewis and Action for Children Christmas ads garnered a lot of attention and discussion. Christmas is a very crowded space for charities and they do best when they can elicit a strong emotional response. Most charities are going after supporters who already care about the cause, whereas the John Lewis ad is speaking to a colder audience. The childrens’ charity couldn’t have done that on its own.  If you’re going to go for those big things, particularly in a recession, there needs to be real clarity of thought and insight about what it is about your cause that will gain traction with the audience you want it to.  

Marc: To be successful you need to turn up the jeopardy a bit, regarding the consequences of people not giving. The DEC has done very well recently because they were able to articulate a very strong rationale to give. Children in Need is down slightly this year, but I think that it hits a slightly different audience that may not be as financially robust. The individuals that many of our charity clients are approaching are more secure. For example, there is a lot coming from older groups who no longer have a mortgage, no young kids to support, or no school fees. Market research shows the group that’s really squeezed is the 25 to 45 years age group. Many pensioners have their triple lock pensions and they are holding up too.

What are the biggest differences you are seeing in people’s attitudes to giving this year compared to this time last year?

Jon: We’ve done our own YourSay research and undertaken broader market analysis. Most of our supporters indicated they would intend to carry on supporting the RSPCA because of their commitment to the cause. This is generally playing out in retention but we are certainly seeing a tough period for raising funds generally as of course, there are supporters who are not able to donate to the same extent in the short term, due to financial constraints. To help counter this we will continue to focus on staying flexible and relevant with our offerings, demonstrate our challenges and our impact honestly, and signpost our own advice and support hub.

Alexa: Of course, all fundraising departments have been affected. The sector needs to learn to adapt and fast. Typically, an events team would introduce a new product or offer along similar lines to previous successes. But now, the same answer to existing problems is not working. We can see significant, fundamental changes in the way people want to interact with fundraising. It feels like a culmination after Covid, followed by the cost-of-living crisis. The speed of people’s change in behaviour is the most startling to me, and how fast people are adapting, and how fast other commercial worlds are able to adapt to start offering other things. We need to drive product from an audience insight perspective, requiring smarter use of data.

Allan: Also, when my clients look at the supporters on their database they have to be sensitive to their financial position and recognise that they may not be able to support as much as they used to. Charities have got to be smart and sensitive, but the existing supporters are the ones who think the cause is important, so it’s easier to go to them, the people who are already halfway on the journey.

What do you think charities need to do to maintain donation levels over the coming months?

Alexa: The work that Battersea’s Insight Team is doing with data and insight to understand our audiences is real gold. The outputs will be most impactful, helping us to make decisions quickly while also building a longer-term development piece, with insights into where we can make the most impact. They can use data to look in-depth at larger themes, such as engaging with a younger audience, or the cost-of-living crisis and find routes to feed that into the rest of the organisation’s work.

Will: At Lewisham Speaking Up we now find ourselves in a very challenging situation: we must innovate, adapt and experiment or we let go of staff, including people with learning disabilities and give up our premises. At best, we have a year to secure funding or we’ll have to close. The charity has never been in such a difficult position. We know we can’t rely solely on grants. This means diversifying our funding, building relationships with the corporate sector and ultimately adopting a completely new way of fundraising. In fact, we’ve set up a Crowdfunder for the first time to urge people to make a donation to save our flagship People’s Parliament programme. We must fundraise like mad for our survival. 

Allan: Maintaining supporter loyalty and commitment is very important. They may or not be able to give at the moment but it’s essential to keep the commitment of supporters and be ready for when they are in a position to give their money or time again. Engagement includes asking people how often you can communicate with them, perhaps within a range so that we are matching their expectations. Also, discover what interests them about the cause, reminding them about the impact the charity is having, and what might happen if people stop giving. It’s all more important now than ever. The data suggests that loyalty is contextual. So, as an extreme example, an individual might say they are loyal to brand X, but when the choice is eating or supporting brand X, eating will win. If they support four charities, it’s important to be sure yours is their number one, or two, not three or four. We can use the data to gain so many insights into brand measures and brand awareness. We can look to see the percentage of supporters who open our emails and how many read them and responds to them. The response can’t always be about money. Engagement is crucial and sometimes the goal must be to develop engagement scores and strengthen the link to loyalty and commitment.

What are the biggest challenges facing charities in 2023?

Jon: Charities are directly affected by the cost-of-living crisis. Our services cost more to run and our employees are themselves under more pressure financially. As well as the demand on services, we need to be raising revenue in an appropriate way, so able to offer more flexibility and ways to engage with us. This means meeting audience need and ensuring we provide a good experience for our supporters and service users. It’s important that charities can adapt quickly and work with their partners to be as effective as possible over the months ahead. Charities should not stop fundraising and marketing during periods like these.

Alexa: The ultimate issue is about the sector’s ability to adapt and change and move at pace. Within this, staff retention and recruitment is going to be the biggest challenge, working in this new landscape and the way people want to work now. We must understand the types of people we need for the world we’re operating in and how to retain them, and we need to consider where the new people are coming from. Previously, going into the charity sector was a way to do something worthwhile, with purpose. Now, so many corporates have a social responsibility arm with far more scope to do more social good. People don’t need to work in the charity sector to get that sense of purpose anymore and the next generation can weigh up doing something worthwhile with more benefits on the table and that’s difficult for charities to compete with.

Allan: That’s right. Some people have left their jobs and gone to others for a higher salary, which puts pressure on charities to pay more. Even a small percentage rise means less money can be spent on services. And replacing someone is much more expensive than raising their salary, because of the increased costs associated with that.

Marc: In all the campaign briefs we now receive we’re being asked to be cognisant of the cost-of-living crisis, which means being empathetic, recognising that people are having a tough time, so we have to be more explicit about it. We haven’t seen any particular reduction in campaign spending from our clients, which is encouraging as it’s always so much harder to switch it back on afterwards and invest in starting up marketing again. It is going to be difficult, though, because marketing spend is often seen as something you can drop, to protect essential operational costs. Our clients are definitely concerned about donations falling. I think that’s partly because some may have had an expectation that revenues would be lower, so they lowered targets, which starts a process of dropping down. Overall, most of our clients are still committed to their marketing activities and some have really big plans for 2023-24.

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