I’m increasingly hearing from fundraisers that their success rates are significantly down and asking what they’re doing wrong. The answer is nothing.
Looking at Charity Excellence’s data, our resilience model almost exactly mirrors the track of our fundraising figures. In fighting to keep us all going, you are the front line in and you’re doing brilliantly in very tough times.
Charity Excellence has aggregated user data anonymously since 2018 and, for fundraising, uses a bank of 83 questions. We rapidly recovered but performance slowly deteriorated until the cost-of-living crisis impacted in late 2022. The crisis was at its worst in quarter one of 2023, with those working in poverty and advice hit hardest. As we had predicted the crisis was both longer and deeper than Covid-19.
Smaller charities hit the hardest
By mid-2023, recovery had begun but our September 2023 £1bn Funding Cuts report warned that these cuts might well derail this. This now appears to be happening, with our fundraising data to April 2024 showing charities reporting it’s now worse than during the peak of the cost-of-living crisis, in early 2023, and that was worse than the peak of Covid-19 in 2020. Fundraising during Covid-19 might not unreasonably now be referred to as the ‘good old days’.
These cuts hit contracts and government grants, including local grants to often very small charities. Based on our data, these impacted health and social care hardest, and to a lesser extent employment, education and justice.
We highlighted the risk of widespread charity closures and potential long-term damage and, whilst we don’t have the data to prove it, this may now be happening. It’s the charities with income under £500,000 per annum that are being hit the hardest. We don’t know why but it could be they don’t have the fundraising skills to adapt and/or to transition much more to a digital world. If it’s the latter, it’s only likely to get worse with the advent of generative AI and the likelihood of it transforming fundraising.
During tough times, all income streams tend to fall, except retail and legacies. Sector recovery will depend on economic recovery and, whilst still very weak, it is looking better than it was. We think that what happens with the public sector will also be a key factor. We are hoping to see some, albeit less, of a sector recovery in 2024, with full recovery in 2025. However, the coming general election adds uncertainty to the outlook.
Potential recovery
So, we just have to hunker down and sit it out? No. Currently, only 18 of our 82 income generation metrics are at green, which means charities are reporting that these are not being done well. Whilst some are externally driven, many are amenable to management action.
Funnily enough, having enough people with the right skills/experience and a sufficiently large pipeline of funders, are both poorly rated. The situation doesn’t just look grim, it is grim, but I offer you three possible responses.
Firstly, whilst tax reliefs aren’t “proper fundraising” they represent a huge source of income. We don’t need to bid for this, we’re entitled to it and all we have to do is submit claims. We fail to claim about £500m each year in gift aid alone, that’s just one of many tax reliefs, which can be claimed up to four years retrospectively. That’s billions of pounds.
Secondly, other areas reported as weak include having processes to identify and engage potential funders, and re-engage lapsed funders, and systems to maintain and grow engagement with existing funders/supporters. And having a CRM system that is used to improve fundraising effectiveness is and always has been rated poorly. Fundraising isn’t just about asking for money, but I suspect too many trustee boards and some CEOs still don’t get it.
Finally, I think AI represents one of the biggest opportunities for the sector in a very long time, particularly for fundraising, because it can’t do one thing, but it can do two things. It’s not going to replace fundraisers because it’s not human – it just doesn’t have the creativity and flair needed to be a good fundraiser. But it can substantially augment your capabilities and it can also do the heavy lifting with admin, freeing you up to do more of what you’re so good at – creativity and flair.
Support for fundraisers
The last four years have been brutal, and fundraising isn’t going to improve rapidly, but we have one huge asset – our people. The data shows that fundraising is the key to rebuilding a resilient sector, but fundraisers are as hard pressed as anyone.
CEOs and trustees need to get behind their teams and support them. The data shows trustees doing so is an area of weakness. If your charity doesn’t yet have a fundraising culture, now would be a good time for your trustees to begin creating one.
Related Articles
