So what is happening to donations?

Fundraised income has remained strong in recent years despite a tough environment, but there are signs donations are starting to dip. Rebecca Cooney looks at the numbers

Harry Potter characters pose while raising money for Children in Need (Photograph: Shutterstock)
Harry Potter characters pose while raising money for Children in Need (Photograph: Shutterstock)

If you’ve been moving in fundraising circles over the past few years and listening to the right people, you’ll have noticed an undercurrent of concern about giving.

There’s a feeling, an indefinable niggle, that the Great British public’s much-vaunted generosity might be starting to falter. Nonsense, others say; despite the scandals and the concerns about trust, giving is as strong as it ever was.

And at first glance, levels of giving to the biggest British charities look fairly buoyant. But dig down into the numbers, and those at other bellwether charities, and a slightly different picture starts to emerge, one that could be a bad omen for the future if the sector does not rethink its fundraising strategies.

Giving to the top-10 fundraising charities appears to have grown by 2.4 per cent over the past three years, from £1.76bn to £1.8bn. But analysis by Third Sector suggests this growth is mostly supported by a rise in legacy donations.

Between 2015/16 – or the nearest year for which the charities’ accounts are available – and 2017/18, legacy income rose by 13.5 per cent, from £621.2m to £705.3m. Meanwhile, income from other types of donation, which was £1.14bn in 2015/16, fell to £1.1bn in 2016/17. It climbed slightly in 2017/18, but only by £2m, and there was still a 3.6 per cent drop across the three years. The fluctuations in the figures aren’t dramatic, but they are enough to suggest that rising legacy income is masking a fall, or at the very least a levelling off, in other forms of fundraised income.

Among the 155 charities in Third Sector’s Charity Brand Index of the best-known charities (see feature, pages 16 to 25), legacies grew between 2016/17 and 2017/18 (by 4.9 per cent to £1.6bn), while other donations fell (by 11.9 per cent to £3.2bn).

Residual bequests

Meg Abdy (left), development director of the legacy consortium Legacy Foresight, says death rates and house price increases boosted the legacy market, particularly with residual gifts – bequests in which donors leave charities a percentage of their estates rather than fixed amounts – which often involve the sale of a house.

In the long term, Abdy says, this trend might continue, but she warns that the sector could be in for a shock in the short term. "I don’t think charities can rely on legacy income to bolster voluntary income the way it has in the past three or four years," she says.

Brexit is beginning to have an effect on house prices already, she says, but a no-deal Brexit could have a big impact on legacy income for at least the next five years.

There are other warning signs. In March, Home Fundraising, one of the biggest door-to-door fundraising agencies, went into administration, blaming the costs of down-scaling the business to adapt to a changing marketplace. And the money raised by one of the UK’s biggest giving events, Comic Relief’s Red Nose Day, has fallen steadily since its peak in 2011, from a record of £108.4m to £82.1m in 2017. Its sister event, Sport Relief, had its lowest on-the-night total in a decade in 2018, raising £38m, down by £17m from the appeal in 2016.

Children in Need’s appeals, on the other hand, seem stable, although the total raised in 2017 did fall slightly to £60.7m from £61m the year before. But this was still up from £56.9m in 2015.

The Charities Aid Foundation’s UK Giving Report 2018, based on research that asks people how much they have given to charity in the past four weeks, concluded that giving had risen to £10.3bn in 2017 (up from £9.7bn the year before), but warned that this was driven by fewer people giving more: 37 per cent said they had donated money or sponsored someone in the past four weeks, down from 39 per cent in 2016.

Meanwhile, the Blackbaud Charitable Giving Report 2018, which measured donations actually given to 311 UK charitable organisations, said that overall giving fell by 4.2 per cent compared with the previous year. By comparison, overall charitable giving increased by 4 per cent in Australia and New Zealand and 1.5 per cent in the US.

Nick Pride, fundraising strategy director at the creative agency WPN Chameleon and former deputy head of fundraising at Oxfam, says there is a growing consensus that donations are coming under pressure. "I think most people are reaching the conclusion that we can’t carry on as we have been," he says. "Well, we probably can, but we won’t be able to do so for very long, and we’ll reach the point at which the money will continue to decline and we won’t have a better answer. We have to change."

The fall in fundraising income, Pride says, has come about because fundraising has become "divorced and separated from what’s unique about the organisation" in too many charities. "It has become too focused on technique, and there’s a danger of forgetting what the long-term vision is," he says.

The change that is needed is already happening in some quarters, Pride says, particularly at charities that have switched their focus from fundraising to supporter engagement, recognising that supporters’ contributions can be more than financial.

"There’s a lot of work still to be done on agreeing what engagement actually means," he says. "I think at the moment it’s quite loose and, if we’re not careful, it will become an excuse to carry on doing what we’ve always done, but calling it something else."

The key to more effective engagement, and thus more effective fundraising, he says, is to understand that it involves a two-way exchange. "What we have to figure out is what supporters of every kind are expecting and how we provide that," he says. "The expectations of the new supporter are very different from those of the older supporters: the fundraising they responded to is fast becoming old-fashioned."

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