Charities and third sector had never had it so tough, yet the number of charities increased by 1015 in 2015 to 165,290. The Charities Commission has recently published the charity statistics up to 31/12/15. This means there is increased competition for both public and private funding. Registered charitable organisations now have a combined annual income approaching £40 billion and account for 4.8% of all UK employment {www.charitycommission.gov.uk).
“The culture of the voluntary sector has become predatory rather than collaborative … this culture had helped to increase the gap in the sector between the largest organisations and the grass-roots ones.” (www.thirdsector.co.uk, 2012). This makes it even more important for your charity to understand and overcome the barriers to fundraising.
The expanding number of charitable organizations has increased “competition” for donations.
Problems with the government’s shift from grants to contracts mean that some charities feel it is inappropriate to spend money on a competitive process that may lead to nothing.
Psychological barriers to fundraising
UK Giving conducted a survey of 1042 British Charity donors asking them if they agreed/disagreed with the following statements:
- “If I knew how money was directly helping, I would feel more inclined to give to charity” 70% agreed
- “There are so many charities it is difficult to decide which to give to” 68% agreed
- “I am worried that if I give I will just be asked for more” 53% agreed
- “Charities don’t understand the financial and time pressures people are under” 55% agreed
- “The causes charities support don’t catch my imagination” 26% agreed
- “I don’t think giving to charity makes a meaningful difference” 24% agreed
To overcome these beliefs requires tailored marketing strategies. As you will see below, people are still facing financial constraints, so if you want their money, you must overcome the above perceptions. With charity marketing laws tightening up, you can no longer bombard donors with direct mail. Successful charities are donor orientated and you can read more about this below.
Attracting donations
- Before people donate, they want to know exactly where their money is going
- Competition for the donors’ market seems to have heightened in recent years due to a number of factors
- People are more willing to help individuals than the masses
Economical barriers to fundraising
“The fundraising landscape in the UK, and indeed across the entire EU, has become intensely unpredictable and turbulent. The central cause for this condition is the current economic global downturn, which is estimated to cost the charitable sector approximately £2.3bn in funding shortfall alone” (Little and Jordan, 2008).
Although it’s been seven years since the 2008 recession and the economy is growing, people are still feeling the impact and perhaps lack of disposable income. City AM states that there is normally a recession every ten years, so we may be due for another one within three or four years, which may feel worse than the last one because we still haven’t built reserves up after the last recession.
The values on offer to donors in exchange for their funds, time and/or energy, are mainly psychological and social and involve “relief of guilt”, “the need of self-esteem” or “concern for humanity”. Marketing’s role in this context is to create and maintain these as “satisfying exchanges”.
The National Institute of Economic and Social Research (NIESR), Jonathan Portes, has said that although the UK will regain its pre-recession peak soon, individuals won’t feel as well off as pre-recession times for a couple of years. One third of the top 300 charities in the UK have already witnessed a decline in donations from 2006 to 2007 (Pharaoh, 2008).
Charities must plan marketing strategies and understand donor behaviour if they are to persuade individuals to give.
Lack of strategic marketing expertise is a barrier to fundraising
Did you now that faith-based giving attracts £4.6bn in the UK (Blackmore, 2005) and medical charities benefit from being the largest recipients of individual donations in the UK for the past decade (Pharoah, 2006).
The survival and organizational success of the top charities, at least, appears to become increasingly dependent on their success in the donor market. The donor market is split between the consumer, public sector and corporate sectors.
With all these external barriers to fundraising, it is essential to understand what drives individuals to donate. Understanding what motivates a donor to choose a particular charity has never been greater. Charities must be innovative to attract donors which means they must differentiate and commercialise themselves (Lundgaard, Jens 2013).
The greater the donor-market orientation in a charitable organisation the greater its performance (Jaworski and Kohli, 1993). You may be surprised to hear that the larger the organisation, the lower its donar-market orientation. Assessing and improving “relationship quality” of donors is essential to improving fundraising marketing strategy (Bennett and Barkensjo, 2005a; Shabbir et al. , 2007). The smaller your charity is, the easier it can adapt. (Kohli and Jaworski , 1990) Many of the hindrances to adoption of the marketing concept appear to be related to the area of management which and Executive Coaching will help charities in this area.
It is essential for charities to recruit external strategic marketing expertise if they do not have this resource in-house. A skilled marketer will help charities to understand how and why supporters donate and how current non-supporters could be encouraged to start donating; this knowledge is is vital to sustain cash flow (Bennett R, 2007).
Tara Parker-Pope in the New York Times in 2007 said: ‘Giving is the gift that gives back. The ritual of showing how much we care also makes us feel ‘good’. psychological barriers to giving’
The lack of growth or even decline in the disposable incomes of families during the recession in the UK further squeezed the market (disposable income growth in real terms was only 4.7 per cent between 1989 and 1993), as did governmental spending cutbacks
Connecting charities and Corporates
There is some good news … businesses are under pressure to be transparent too and being socially responsible is big business. There has never been a better time to connect with corporates. A survey (LaFrancois H A, 1991) conducted with corporates revealed that in general, they indicated positive attitude towards cause related marketing. Examples of cause-related marketing are Innocent and Age UK’s bobble hats and Waitrose Community Matters scheme. There are 2.45 million enterprises registered for VAT in 2015 and there are only 165,290 charities.
Overcoming the tightening of fundraising laws
It is important to remember not to hound your donors. Remember the suicide of an elderly fundraiser 2015, who was bombarded with charity requests, the fundraising laws have been tightened. You must follow The Institute of Fundraising Code for Fundraising and all communications must have a clear ‘opt-out’ section.
References
- Dionysis Skarmeas Haseeb A. Shabbir, (2011),”Relationship quality and giving behaviour in the UK fundraising sector”, European Journal of Marketing, Vol. 45 Iss 5 pp. 720 – 738 Permanent link to this document: http://dx.doi.org/10.1108/03090561111120000 [Downloaded on: 06 January 2016, At: 02:19 (PT)]
- Little, M. and Jordan, H. (2008), “Sector ‘could face 2.3 billion funding shortfall’”, Third Sector Online, available at: www.thirdsector.co.uk (accessed January 1, 2009)
- Bennett R (2007), The use of marketing metrics by British fund-raising charities, Journal of Marketing Management, Volume 23, 2007, Vol. 23, No. 9-10, pp. 959-989
- Pharoah, C. (2008, 2009, 2010, 2011, 2012) Family Foundation Giving. Annual Editions CGAP/Pears Foundation/Cass Business School. Alliance. London.
ISSN0267-257X print /ISSNU72-1376 online © Westburn Publishers Ltd.
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