Beneficiary gifts: The rise and rise of giving in kind

Goats, it seems, are old hat. Why not give your friends adopted rare vegetables, counselling for a bullied child or even Kalashnikov rifles to be beaten into ploughshares? Helen Barrett examines the booming world of beneficiary gifts.

Charities are confident their supporters are dreaming of an ethical Christmas this year. The 'virtual' or beneficiary gifts phenomenon has spawned a raft of charity catalogues and websites encouraging consumers to ditch the seasonal spending frenzy in favour of buying reasonably priced gifts of practical items for beneficiaries - such as the ubiquitous goat for a farmer in the developing world. All that the recipients receive on Christmas morning is a thank-you card with a description of the gift and the satisfaction of knowing they have helped make the world a better place.

But the market is starting to look a little crowded. Action Aid, Unicef and Save the Children are the latest household names to launch schemes, adding to the bewildering choice on offer. And virtual gifts are no longer confined to the developing world. An elderly British dog, for example, can be sponsored during its retirement years with the Blue Cross; a bullied child can attend a session with a counsellor, courtesy of Barnardo's; there's even an adoption scheme for a rare variety of vegetable through the Good Gifts catalogue.

Although charities will not reveal how much money their virtual gift schemes generate, all are quick to express delight with their income.

Oxfam finds that the £50-and-under gifts in its Unwrapped catalogue are the most popular, and that sales volumes are impressive: in 2005 the charity shifted 50,000 goats at £24 each and 30,000 calves at £32.

But the success of virtual gift schemes has brought murmurs of disquiet.

A spate of articles in the national press earlier this year asked uncomfortable questions about what consumers' money is spent on. A piece in The Daily Telegraph concluded that virtual gifts had expanded beyond the wildest hopes of the charities that pioneered them, but the market was in urgent need of regulation.

The problem was that, although some catalogues could guarantee that the stated gift would definitely be delivered, many included small print to say that the money could be spent on something else.

In May, the Institute of Fundraising tackled the problem by inviting beneficiary gift charities to meet to develop a common approach to transparency, with the aim of including rules for beneficiary gifts in its planned Accountability and Transparency in Fundraising code of practice. A draft version, circulated for public consultation in July, included a rule requiring IoF members to state prominently in their advertising and catalogues whether donations for gifts might be used for other purposes.

The code is due to be published in the next few weeks, but Megan Pacey, director of policy and campaigns at the IoF, says many charities produced their Christmas 2006 catalogues as if the proposed rule were already in place. "We hope to strike a balance," she says. "We have to be specific enough to be helpful to consumers and charities, but we must also enhance the differences between charities' schemes. That's the test."

Hilary Blume, director of the Charities Advisory Trust, the organisation behind the Good Gifts catalogue, believes that transparency for consumers does not stop at disclaimers. "We drop those gifts we can't deliver," she says. "For example, last year we sold Kalashnikov rifles - disabled, of course - for blacksmiths in Sierra Leone to turn into farm tools. They were extremely popular, but we used them all up, so they don't appear in this year's catalogue."

Good Gifts brings together a selection of virtual gifts offered by a range of charities, and the catalogue includes a guarantee that the money received for a gift is passed over in full - in other words, the charities have all agreed to spend the money solely on what they say they will.

Blume believes that unless charities work towards this standard, virtual gift schemes will eventually be discredited.

Christian Aid, however, believes supporters are willing to accept that charities might spend their money on something else, if the details are clearly explained to them.

Kati Dshedshorov, a fundraising spokeswoman at the charity, says its disclaimer was reworded after Christian Aid received feedback from its supporters this year. "We support what the IoF has come up with," she says. "We realised that people do want to know exactly how their money is spent, but once you explain and make it clear that it's not cost-effective to earmark every gift to one particular project, they realise it's necessary to choose - they don't want to force goats down people's throats."

The charity is now carrying a more obvious disclaimer on its Present Aid website than it did last year. The site still features a virtual shopping basket in which consumers can place goats, ducks or bicycles, but a separate section, called How It Works, includes a heading "so where exactly does the money go?" Here consumers learn that "the gifts on sale are virtual.

This means that whatever you buy, your money will go directly to a project fund relevant to your gift." Although it is a click away, the message is more clear than the ambiguous one the site carried earlier in the year, which read: "If you buy a goat your money will be spent directly on livestock and agricultural projects."

Cafod's World Gifts catalogue's disclaimer is even more candid. Under the heading "Where your money goes", it says: "We don't promise that we always buy goats, blankets, latrines or pencils - but we do promise that your money will be spent on work in those areas."

Damian Conlin, co-ordinator of World Gifts, believes that there was no danger of virtual gifts being seriously discredited last year, but that the IoF's draft code of practice and the wider debate it generated was a helpful call to action for charities offering them. "All the main players have made efforts to be transparent, and they certainly desire to be," he said. "Like others, Cafod was taken by surprise at how the scheme took off, so even if we had been trying to promise that everyone got exactly the gift they ordered, it would have been impossible to meet demand."

Spana - the Society for the Protection of Animals Abroad - is a newcomer to the virtual gifts market. It began targeting its supporters with the Happy Hooves catalogue in October this year, offering gifts such as donkey first-aid kits for £15 and veterinary health checks for working animals abroad for £55. Like larger charities, it aims to fulfil demand, but is aware that, if Happy Hooves proves popular, it could find gifts oversubscribed. The charity includes a disclaimer in its catalogue and on its website, indicating that funds could be spent elsewhere.

Jo Harding, Spana's direct marketing co-ordinator, says the charity was mindful of the IoF's draft rules when it wrote its disclaimer, but ultimately relied on its supporters' views. She says: "We held focus groups when planning the catalogue and asked people if they would be happy for their money to be spent elsewhere and, if so, how they would like to see that explained to them in the catalogue."

The IoF's Pacey says: "The work we have done on this draft code has had more impact and response than any other fundraising code I have worked on." The IoF now plans to gather responses to the draft before publishing the final code early in 2007. It hopes that the new guidelines will secure the future of virtual gift schemes by helping to dispel criticism.

But perhaps a different, more serious backlash against virtual gifts has begun. Last month, pressure group the World Development Movement ran a small but decidedly barbed insert campaign featuring a quizzical-looking goat, asking: "Do I look like the solution to world poverty?"

It went on to make the case that sending goats to the developing world is of limited value. It urged people to tackle the root causes of poverty and injustice by joining a campaign to press for change, giving the example of how it helped to win debt relief worth $100m for Burkina Faso, which meant the government of that country could build more schools and maternity clinics.

"Isn't it time to ask why the farmer has no goats?" it asked. Perhaps consumers will soon be asking themselves the same question.

OXFAM GETS UNWRAPPED

Oxfam launched the Oxfam Unwrapped catalogue in 2004. "We aimed it at existing donors, but it has proved very successful at bringing in new ones," says Douglas Graham, the charity's head of business development.

The winter 2006 edition is the biggest ever, with imaginative gifts such as school dinners offered not only as Christmas gifts but also to mark festivals such as Diwali and Eid. Graham says the catalogue works on two levels: to improve life for Oxfam beneficiaries, and to raise awareness about poverty and explain the breadth of Oxfam's work. Although fundraising income remains confidential, Graham does reveal that over Christmas 2005 the charity sold 30,000 latrines at £30 each, as well as tens of thousands of goats and calves.

Like most virtual gifts catalogues, however, such success has led to questions about transparency, which Oxfam has tackled head-on. "The media were supportive when we launched in 2004, but by 2005 they needed a new angle and started to ask where the money really goes," says Graham. Since 2005, Unwrapped has included a prominent double-page spread, which explains clearly to supporters how their money will be spent.

In practice, Oxfam's fieldworkers suggest gifts, then the charity aims for the money raised to be restricted to the gift and the cost of providing it. If a gift is oversubscribed, the money can be spent elsewhere, but in the same programme. "We need to explain to people that a goat, water tank or whatever doesn't just appear in the middle of Eritrea," says Graham.

"Each item has associated costs such as transport and training. Last year, we tested the concept and our supporters understood it.

"We make sure that we can explain our position when the media comes knocking," he adds.

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