Short-termism not a bad option for the third sector in challenging times
Howard Lake | 27 January 2009 | Blogs
The number of British donors is falling. Four in five people used to fund charities 20 years ago, but this shrunk to just above half the population in 2007, which is very bad news for the third sector since the number of UK charities is growing.
Last year alone 3,728 new charities were registered with the Charities Commission and all of them are looking for a slice of the donation pie. In addition, even though household wealth has doubled over the last decade, donations to charity have struggled to keep pace with inflation, not to mention the increase in disposable income.
It gets worse
And it gets worse – research by Charities Aid Foundation shows that typically six per cent of donors contribute almost half of all money raised, meaning many charities are becoming increasingly dependent on a smaller group of people that are growing older every year.
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And that doesn’t even begin to factor in the added pressure of the economic tsunami that has come crashing down on the UK. You can’t open a paper or switch on the gogglebox without seeing yet more doom and gloom stories regarding redundancies. Last month charities warned they faced devastating cutbacks in support from the City amid the world financial turmoil.
Once-wealthy American banks were amongst the most generous of givers, but have significantly reigned back or cancelled altogether their charitable programmes after being caught in the centre of the financial crisis. Moreover, drops in consumer spending will also have shattering consequences.
The retail industry is currently forecast to have the worst Christmas in 30 years due to the belt tightening of UK shoppers and charities are likely to fair even worse over the festive period – ordinarily a season of good will and peace amongst men.
Consumers and potential donors are now thinking more about themselves and hence more carefully about their now sparse spare pounds. The phrase "charity begins at home" certainly has more resonance today than it did this time last year.
Detrimental effect of some fundraising initiatives
Further compiling these problems are charities’ own fundraising initiatives, which when first introduced were extremely successful, but in the current climate may actually prove detrimental.
A case in point is the astronomic rise of web-based fundraising sites. Whilst a great tool for the third sector; as these portals provide a cheap and easy fundraising platform for the charity, the fundraiser and the donor, the average consumer is now suffering from extreme online fundraising fatigue.
A recent survey found that regular web users received an average of one online sponsorship request every three weeks. As a result consumers are becoming more picky about both who they sponsor – no longer a friend of a friend of a friend that is trekking the Great Wall of China – and thinking more carefully about the charity the person will be representing.
In times gone by if the fundraising mechanic was interesting and deserving it didn’t matter so much about the cause and vice versa, but now in general both have to be right in order to attract donations.
And don’t get me started on chugging…
Long hard look at marketing strategies
It is therefore critical for charities to take a long, hard look at their marketing strategies to weather the current storm. Where once retention was the name of the game by encouraging repeat donations through direct debits, it is now also important to capture and promote one-off donations.
We have already witnessed a significant sea-change in the last few months from third sector clients that want to encourage short-term support during the upcoming financial uncertainty.
For example, we recently worked with a charity to increase small and mid-level, single donations through banner advertising, strategic media buying and tactical online PR. Not only was this approach an extremely cost effective acquisition method, but one that also added value as it is possible to capture the details of the donor.
Our strategy was to appeal to emotionally driven, one-off supporters to quickly and tactically boost donations. However, by executing the campaign online the charity is able to record exactly who was driven to donate and target these people as potential repeat donors when the economy picks up.
Target businesses, not consumers?
Another tactic worth considering is moving budget from consumer campaigns to those targeting businesses. Whilst charities will miss out on the big money from the City, there is still a wealth of opportunity amongst SMEs and bluechips in terms of CSR. Corporate Social Responsibility remains on the corporate agenda (albeit perhaps not as far up the list as it once was) as organisations are keen to demonstrate their commitment to giving something back.
Hence UK companies are increasingly fundraising for charities through inventive initiatives of their choice or volunteering time to work for a charity such as planting trees or delivering meals. At Positive Thinking, for example, we hold Positive Days where each member of staff spends the day working for a worthwhile cause. Additionally I have heard of some organisations offering charities their services for free for a limited period.
Whilst ordinarily I wouldn’t advocate short-term tactics, in such circumstances charities could really reap the rewards to tide them over in the coming months. However, that’s also not to say that charities should ignore their existing donor base. As whilst many people will reduce their charitable giving, and some stop totally, it is possible to "market yourself out of a recession" using a range of marketing channels from direct mail through to DRTV and customer publishing. Meaning that when the market picks up your organisation is front of mind for donors looking to re-engage.
Therefore it would be premature for charities to shift all the marketing budget from long-term activity into purely tactical campaigns, but in challenging times the ability to react tactically could well prove the differentiate between the charities that are still around this time next year and those that suffer irrevocably.
The words of Darwin sum this up perfectly: "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."
Julian Reiter is Managing Director of full-service marketing agency Positive Thinking
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.