Nonprofits with diversified income streams & digital maturity more likely to see growth, research finds
Melanie May | 23 August 2024 | News
In the last financial year, 36% of UK nonprofits saw their voluntary income grow, with these nonprofits more likely to have diversified income streams and above average digital maturity, according to Blackbaud’s 2024 Status of UK Fundraising Benchmark Report.
Nonprofits that use AI are also more likely to say that their income has increased, according to Blackbaud.
The 2024 Status of UK Fundraising Benchmark Report saw more than 850 industry professionals complete an online survey, with additional virtual interviews conducted with participants to provide more in-depth insight into some of the key findings.
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Factors for income growth
While 36% saw their voluntary income increase in the last financial year, for 17% it remained the same and 29% said it decreased. Out of those who saw income rise, the top three drivers were receiving a large gift, new or different activity, and a focus on the supporter experience. For those that saw it decrease, the biggest drivers were the economic environment, and not being adequately resourced. 79% of nonprofits felt challenged by the economic situation, and 58% of those who struggled to grow said the wider macroeconomic environment was the main reason behind income decline.
As in the previous year, grants were highlighted as the most important income stream (with the exception of the larger £10mn+ organisations for whom it was legacies). This was followed by trusts and foundations, legacies, major donors, and individual giving. However, the report notes that nonprofits relying on grants as their main income source are significantly more likely to say that their income decreased, while growing nonprofits have a more diversified income stream portfolio, relying on grants, trust and foundations, and legacies equally.
Digital maturity also has an impact. Using a digital maturity spectrum of 1 to 10, Blackbaud found an average score for those surveyed of 5.1, with 12% rating their organisation as 8 or higher, and 24% at between 1 and 3. Nonprofits with an above-average digital maturity score are significantly more likely to say their income is growing. AI use was also a signifier of growth with those that use AI more likely to say that their income has increased (42%) than those who don’t (31%).
Fundraising strategy
55% of UK nonprofits said they either met or exceeded their fundraising targets in the last financial year. Asked what would bring the biggest value to their fundraising strategies, 60% highlighted improved data management, followed by working with partners to reach new audiences (52%), multichannel communications, and training to use technology to its fullest potential (both 43%). There are however differences depending on size with collaboration top for smaller nonprofits saying they would benefit from reaching new audiences through collaboration. They are more likely to get value from introducing purpose-built technology.
AI use
57% of organisations said they use AI in this year’s survey, with generative AI dominating: most use AI mainly for developing draft copy (70%) and creating social media content (44%), and only 10% say they use predictive AI. 5% have an AI policy in place, with a further 15% saying they are working on one.
Philip Hunt, Senior Manager, Marketing, Blackbaud International Markets commented:
“The nonprofit sector is in a constant state of change with economic and political uncertainties, and the global pandemic aftermath. Despite this, we are seeing success in more intentional strategies that focus on maximising the potential of technology and driving sustainable growth through income stream diversification. AI, too, is shaping the nonprofit sector. These modern innovations propose exciting new opportunities, but also underline the need for accelerated policy making to ensure responsible and ethical use of AI.”
About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.