What's next?

Money for Good: What’s next?

By Lena Baumgartner 9 July 2013

Is the sector so satisfied with current levels of income that it can afford to not try new things? I don’t think so.

In fact, anecdotal evidence gathered from various charity and funder events over the past few months indicates the opposite is true. Everywhere I go, the number one talking points are reduced income, government spending cuts and rising levels of demand for charity services. The sector is really feeling the pressure.

This is backed up by a regular trickle of statistics confirming that funding sources for charities are declining. The latest report from the Directory of Social Change claims that corporate donations to charities are down by 9%, adding to similar messages that the number of donors signed up by chuggers has dropped by half, the UK’s top high net worth donors are giving away a smaller proportion of their wealth, and UK household giving is down by 20% from 2010/11. At the same time, continued welfare cuts, recently confirmed in the Chancellor’s Spending Review, create an even starker picture of rising social need across the UK.

So, things are not getting any better and there is an urgent need to come up with new and different ways to raise funds. Really interesting work is already going on: Nesta is testing out a range of new ideas and technologies to enable giving through the Innovation in Giving Fund, and the Nudge Unit ran five randomised controlled trials showing how insights from behavioural economics can help charities and employers grow charitable donations by making simple changes in communications.

Since NPC published Money for Good UK in March, we’ve spent a lot of time talking to fundraisers across the charity sector—at least  50 of them. To recap, the research explored  the habits, attitudes and motivations of UK donors. It was designed to find out how we can encourage donors to give, and to give more thoughtfully. We discovered a real opportunity to increase giving—by a staggering  £665 million each year—but to access these donations, charities will need to better meet the needs and preferences of donors.

The report identified seven distinct donor types which will act as a starting point for this. However, the segmentation needs to be tested in practice to be validated, and this was the challenge we took to fundraisers. We heard all sorts of views, from the very critical to the very endorsing. But what struck us most was the excitement and readiness of some of the UK’s leading charity brands such as the RNIB and Samaritans to embrace and apply the research.

So, over the coming months, NPC and a range of charities will be running tests to assess whether applying the donor segmentation will yield increased donations over time. We will test different approaches with different charities, and in the first instance, we’ll apply it to the participating charities’ databases  through an allocation tool developed with Ipsos MORI. Pilots in the areas of major donor fundraising and volunteering are also in the works.

The challenge (and I’m aware of the irony!) is to raise enough money for this work. The Gates Foundation, which funded the original research, have confirmed their continued support. However, we are also looking for UK funders to join the consortium. We need  funders that  want to back innovation, address systemic questions—how to raise funds from donors in a thoughtful and sustainable way—and are willing to take risks, because, let’s face it, this may not work. If it does work, however, it has the potential to put fundraising on a more stable footing in the longer term.

So, to repeat my question: is the sector so satisfied with current levels of income that it can afford to not try new things? I don’t think so. Many of the leading charities in this country don’t think so either. But what do UK funders think?