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Interviewed on BBC World Service on credit crunch

Howard Lake | 10 October 2008 | Blogs

Thank you to everyone who responded quickly via Twitter and the UK Fundraising group on Facebook with ideas, thoughts and experiences of the impact of the credit crunch on fundraising.
I was interviewed last night by the BBC World Service on the subject, although I only found out at the last minute that it wasn’t going to be a live interview. So, I’m not sure when it will be/has been used.
It nearly didn’t happen. I went to the Colchester studio of BBC Essex as asked, found it dark, and found out from the researcher that they’d thought I was going to the Chelmsford studio, 20 miles away. Probably not a huge distance for the BBC World Service, but tricky for me to cover in under five minutes. So, I was interviewed when I got home.
As promised, I’m reporting back on the experience. It was a useful exercise to run through the various recent developments in the crisis, although the impact of charity investments in Iceland banks was only just becoming clear at that time.
The interview
The interviewer asked me to run through the problems being faced by charities in terms of their different sources of income, so I mentioned legacies and the drop in value of houses, grant-making trusts and the drop in the value of their investments, some high net worth individuals (HNWI) seeing their investments threatened, the likely drop in corporate support.
I mentioned that some charity shops with second-hand items had done well this year, yet there were also reports that the number and quality of donated items were dropping, with the assumption that people were selling them for themselves on eBay.
Not surprisingly the first question was introduced with a reference to ‘more aggressive tactics’ like face-to-face fundraising. I was able to suggest that charities already try to diversify their income sources and that this was one option among many.
Which charities are suffering?
I was asked which charities in particular were suffering. I explained that the charity sector was quite diverse, ranging from a few hundred multi-million pound organisations to tens of thousands of tiny volunteer-run organisations with annual incomes of under £10,000. I suggested that the latter were particularly vulnerable with minimal reserves: if one grant-maker pulled out or one fundraising event failed that could have very serious consequences for them.
At the same time I noted that 30 chief executives from middle to large organisations had that day met with Home Secretary Jacqui Smith to demand a £500 million government fund to shore up charity finances, according to Hard times: cash-strapped charities ask government for help at The Guardian. So, there is clearly considerable concern from the larger charities too.
I mentioned the CAF report in September (Charity donations fall as demand for their services grow) that said that a survey of charity CEO’s found that 29% were already making redundancies, 56% had limited staff pay increases, and that fundraising activity had been ‘ramped up’ at 77% of charities.
I didn’t manage to include the observation that calls on charities’ services are already increasing and are expected to do so as the crisis continues.
What can charities do?
The final question was “is there anything charities can do in the current crisis?”. I made two suggestions:
1. work hard at retaining their existing supporters as we all know it costs far more to recruit a new donor than to keep one.
2. work hard to maximising donations by Gift Aid and educate their supporters. Dr John Low, CEO of CAF, commented in the September report that CAF estimates that charities are still losing out on an estimated £700 million a year in unclaimed tax from donations that could have been made under Gift Aid.
Some more sources
As with any interview, you never get to cover all the points. So, here are some of the other resources I’d have liked to have include, most of which were forwarded to me.
* Recession and charities; the paradox of charitable opportunity? (PDF)
Jenny Harrow and Cathy Pharoah
Co-Directors, ESRC Research Centre for Charitable Giving and Philanthropy
Cass Business School
1 October 2008
* npfsynergy report on likely impact of credit crunch on giving which had a more optimistic view, expecially for the top 56 charities by income, based on their income against GDP over the past 28 years. It also indicated individuals’ giving levels only began to drop off or increase from 10-17 months after a change in GDP.
August 2008
* VSO is finding it hard to recruit enough professional volunteers for two-year placements. It needs 335 but since April has sent just 48 overseas.
In addition, 56 prospective volunteers with teaching or management experience had dropped out due to worries about not finding empoyment after their two years with VSO.
Quoted by Our Man in Cameroon‘s blog
October 2008
* Nelson’s Journey, a small charity supporting bereaved children living in Norfolk had analysed fundraising income for the first eight months of 2008 against the same period of 2007. Although it had increased the number of donations from 198 to 305, they had raised £20,505 less. Average donations were dropping.
* The National Alliance of Childhood Cancer Parent Organisations reported having to pay a lot more for food at fundraising events, whether using caterers or providing it themselves.
Also, he charity raised just £500 from an event in June 2008 when a very similar event had raised over £1000 in November 2007.
* Adam Rothwell’s sanguine acceptance at IntelligentGiving.com that, while planning is important for charities, they “have little option other than to cross their fingers” because:
a) “Nobody knows why people give to charity in the first place”
b) “Nobody knows how important donations are to the majority of people”
c) “Nobody knows how bad the economic situation is going to get”.
* similar comments from another trustee that we can’t know how bad it is going to get, or indeed if overall income will shrink much, and that we should plough on with fundraising. Fundraising costs will inevitably rise, but we should expect that and worry a little less about that for the time being.
* one trustee of a charity told me capital campaigns were very hard work. For the first time in 20 years, she was now hesitating before calling peers and friends to ask for a major gift.
* cancellation of million-euro plus Toothfairy Ball next year in Ireland which would have benefited three charities.
* Disability charity Scope is to make five senior management posts redundant in response to the credit crunch.
* John Baguley blogged about a charity CEO telling him that “one major donor pledge [had] reduced [a pledge] from £50,000 to £10,000 and another for £350,000 cancelled”.
* one charity reported that some of their HWNI supporters were unlikely to be affected by the credit crunch, but then they were worth billions rather than millions. But more importantly, they were sitting back to see how things went, rather than committing to support.
* Two other suggestions for what to do that I’d like to have included would have been:
a) get creative – don’t just batten down the hatches, think how your charity can work on low-cost activities now (digital?) to take advantage of the upturn, whenever that comes
b) cut costs with collaborative working? More joint fundraising events, partnerships in tax-effective giving promotions etc?
* Simon Burne’s very creative and positive ideas about how to work with major donors now.
Thank you once again to all who helped out with preparing for the interview. I’m sorry if I’ve omitted any of your points or suggestions in this report.
As an amusing postscript, I was called a few minutes after recording the interview by Radio 5 Live who wanted me to “do a 40-second rant against Iceland for what they’re doing to charities’ money”.
I declined the offer.