How we can shape giving and fundraise post-coronavirus

How we can shape giving and fundraise post-coronavirus

Guest Bloggers | 8 September 2020

To help charities plan for the future and think about how donation trends might be impacted, we commissioned a new paper from academics Cathy Pharoah and Tom McKenzie. In this blog they outline what the research reveals.

The fundraising uncertainties of the COVID-19 pandemic lockdown are cautiously giving way to the uncertainties of picking up the pieces. Some believe charities now have a moment of opportunity to capture the renewed sense of public responsibility, a counter-cyclical wave of public giving in recession. However, fundraising decisions on the ground are fraught with unknowns – around recession, employment, distancing rules and public behaviour. In a context of such unpredictability, planning has to be open-minded, iterative and adaptable. One starting-point is to reduce some of the uncertainty through what we can learn from previous experience and research.

A highly positive message for fundraisers has emerged from new research on trends in household giving commissioned by the Chartered Institute of Fundraising. It shows that – pre-COVID19 – public generosity has been growing. There has been a real 29% increase in average UK household giving over the last couple of decades. More importantly, donors are now devoting a higher share of weekly spending to charitable giving. This increase in giving is more than seven times the 4% increase in general household spending over the period. It represents a much-anticipated shift in donor behaviour, and a signal of successful donor engagement by fundraisers.

It could hopefully provide a platform for the strong post-COVID-19 charity fundraising that will be needed as the economy begins to struggle. Research indicates that levels of charitable giving are directly linked to wider economic growth. What this might mean in the post-COVID-19 era can be assessed through applying the Treasury’s most optimistic and pessimistic forecasts of GDP to project household giving. This suggests charities might see a fall in the range of 0% - 25% in the value of household giving in 20/21 (or worse), followed by low flat growth for some time.

‘Who can afford to give’

Donor willingness to prioritise charitable giving could be seminal as the impact of COVID-19 unravels in increasingly unequal ways. Its negative effects on health, employment and income are already being experienced worst in the poorest areas, and amongst young people. This will only exacerbate existing marked differences in household incomes, and capacity to spend. The research shows that participation in giving by the general population as a whole has fallen over the last two decades. With government forecasting a doubling of the unemployment rate, charities will need to look towards those who can most afford to give. Spending on all types of giving (to charities, directly to family and friends and overseas) is eight times as high in households in the top 10% by disposable income as amongst those in the bottom 20%. This is reflected in wide geographical variations in giving’s share of spending, from 1.7% in the West Midlands to 2.5% in the wealthier South East.

Fundraising could also try to play successfully into opposing consequences of COVID-19 on household finances. Taking a long view to keep in touch with donors whose financial anxieties may lead to deferred rather than cancelled giving may pay off in time. In contrast there may be scope for shorter-term fundraising gain in attracting a share of household savings made through lockdown’s restriction on activities, particularly eating out, trips to museums, galleries and the cinema, and travelling. In these areas alone, combined weekly savings could be around £44, and research suggests that such ‘windfalls’ are likely to be available for charitable giving. The success of the government’s ‘Eat Out to Help Out’ scheme shows how consumers can still be attracted to dig into their pockets for something seen as good value. Perhaps this would be an opportune moment to re-emphasise the use of charitable tax-breaks to lower the price of giving?

Fundraising charities were already facing a harsher and more competitive fundraising environment before the COVID-19 crisis. Alongside long-standing fundraising charities like Cancer Research UK, Oxfam and the British Heart Foundation, other organisations such as universities, schools, arts institutions, leisure centres and community groups have increasingly acquired charitable status and begun to fundraise. Fundraising income to general charities has been on a plateau in recent years, and there was a fall of 1.7% among the largest 100 fundraising charities in 2018/19. This undoubtedly reflected public fall-out from recent charity fundraising and governance crises, which are now being addressed. Charities will be very challenged to recover and maintain ground, and trend analysis shows that fundraising broadly reflects economic growth. Voluntary fundraising income fell in 2008/09 following the credit crunch: if it follows current Treasury projections for GDP growth, its value in 2019/20 could fall back to the levels of five or six years ago. This could hit smaller organisations, which depend more heavily on donations from the public, very hard.

‘No fundraising stream immune from the fall-out’

None of the main voluntary fundraising income streams will be immune from the fall-out of COVID-19, though severity of impact might vary. The value of legacy income is directly linked to house prices and these are predicted to fall by a median 3.8% in 2020, recovering quite quickly by 3% the following year. Legacy income has outstripped economic growth over recent years. There will also be a small increase in the number of charitable bequests due to excess COVID-19 deaths, though this population over-represents poorer groups which are much less likely to leave charitable bequests or die intestate.

Non-mandatory reporting on corporate cash giving means data is too poor to analyse recent trends. It appears to be hovering around £0.5 billion. Amounts of corporate giving are linked to company size and success, and there is likely to be a strong recessionary effect. However, there was a time-lag after the major 2007/08 recession, and giving held up till 2008/09 when it dropped by 1.4%. A fundraising opportunity is that many large and small companies may want to maintain stakeholder relationships even if their giving falls. Potential new sources of giving are sectors which have grown during COVID-19, such as pharmaceuticals, online retail of essential goods, e-commerce, and technology.

Charitable foundation giving has some resilience, though it’s important to remember that foundations dependent on annual statutory or corporate grants will be differently affected from philanthropically endowed foundations with their investment assets of around £68 billion. As with legacies and household giving, growth in foundation assets over the last decade has considerably outpaced GDP growth. Experience of the 2007/08 recession shows there was a considerable time-lag between fall in foundations’ asset value and fall in spending. In 2007/08 there was a real charitable spending increase of almost 14%, though asset value had begun to fall. The growth rate in assets continued to fall for two years before spending fell by 9%. Grant-makers have responded to COVID-19 by adapting funding requirements, creating new funds and increasing social investment: it is not possible to tell yet how far this represents a diversion of funds or an increase in spending in 2019/20.

Fundraising is woven intrinsically into the multiple aspects of our social, economic and personal lives affected by this unprecedented pandemic. Inevitably future outcomes will be linked to the economy. Fundraisers cannot control this, but they can influence donor decision-making in the post-COVID-19 years. Those who can most afford to give should be encouraged to do so, even if giving is deferred for a time. Imaginative use of media and online fundraising approaches will increasingly be needed. Lockdown has only accelerated the shifts to homeworking and online shopping already well under way. Many policy-makers are re-thinking public space, and fundraising needs to get on the front foot in reaching out to donors formerly contacted in high street, workplace and other public settings.

Download Reframing the Ask: Trends which will shape giving and fundraising post-COVID-19 here.

Cathy Pharoah is Visiting Professor at the Centre for Charitable Giving and Philanthropy, Cass Business School

Tom McKenzie is an Honorary Research Fellow, University of Dundee

Comments

Post a comment
Validate

Please click the box below to indicate you are a human rather than an automated system completing this form.