Fundraising income is going to go down
Whatever way I look at it raising money is going to get harder and harder over the next decade. There will be a short term hit from a tighter Code of Fundraising Practice which is inevitable once it is taken out of the hands of the Institute of Fundraising. The Fundraising Preference Service may stop vast swathes of the giving public from hearing from charities at all. Let’s not forget that millions of households are signed up to the telephone preference service and mail preference service respectively.
And if this regulatory hit is compounded by a hardening of attitude that a summer of scrutiny by politicians and the media has stirred up, the public may well expect more (transparency, proof of impact, etc.) and give less (time and money)
We are now fair game for the media
Charities used to be a bit like the Catholic Church – beyond reproach. Well not any more. The media has discovered a number of things recently: first, that beneath our worthy but dull exterior is some pretty bad practice; second, that charity ‘exposés’ chime with many of their readers/viewers; and third, that the sector is about as good at defending itself as a new born baby. So expect the media scrutiny to go on indefinitely. The mirror has very definitely cracked.
Politicians don’t know what to do with charities
Up until recently, politicians’ favourite response, particularly ministers, was to tell charities how fab they were and what a great job they did. Now they tend to say how shocked they are about the outrageous behaviour of a few charities. Love us or hate us politicians don’t seem to have any clear idea about the role of charities in the 21st Century. The Tories had a one-month wonder of the Big Society followed by the Lobbying Act. Labour had the risible Compact and hoped that large amounts of funding would suffice for a clear plan.
But then neither does the sector
We shouldn’t be too surprised that politicians can’t answer the question ‘What are charities for?’ because charities can’t answer that same question about themselves. Charities have changed hugely over the last twenty years, but you’d struggle to know it from the leadership and direction from the sector’s great and good. There is a kind of intellectual torpor in the sector about what all this change means for charities and how we should respond.
UK charity policy is going to become fragmented
Another way in which life is going to become tougher for charities is that the policy that applies to us is going to become more fragmented. Devolution means that we can expect different regulatory regimes covering any charities who work across the national borders of the UK. We already see it with charity lotteries and charity registration, but expect it to happen with gift aid, fundraising regulations, data protection, and SORP, to name but a few areas over the next 20 years.
The generation after baby boomers is not going to have the same wealth
Baby-boomers (those born between 1948 and 1960ish) are very lucky. They have good pensions, wealth through property and can retire usually in good health. They are a hugely valuable generation to charities with the best of their contribution yet to come (though some may have been irredeemably pissed off by the behaviour of charities). All of you out there should love them to bits while you still can. The generation after them (those now closer to 40 than 50) is going to have much less to give: their pensions will be much worse, their property wealth suppressed by high mortgages and the debts of a university education. It’s harder to see how charities can do as well in the 2020s as we do now.
The digital revolution seems to have passed charities by
People hate me for saying this but the digital revolution has, so far, passed charities by. Online or digital giving remains a tiny portion of individual giving for most charities. On any hallmark of the digital revolution that has overtaken the corporate world, or us as consumers, charities are left on the start line. So are there big new ‘digital’ charities? No. Have old established charities disappeared because of digital technology? No. Has the sector created new ways of doing things that change charities for ever? Maybe a bit. Are there great new charity services that only new technology can make possible? Barely a handful. We use some of the existing technology tolerably well, but a revolution it is not.
What I don’t know is whether something about the charity sector that makes it inherently less able to benefits from digital technology. Or is it just a failure of leadership and management and investment. It may be that as baby boomers are replaced (both as trustees, CEOs and donors) by a more digital literate generation we will see a change in the importance of digital for charities.
The public don’t really understand how charities work any more
Charities and the public are like so many married couples. We started with the flush of excited romance. We couldn’t keep our hands off each other. But as things settled down we began to go our separate ways. Little by little we felt we didn’t need to tell them about the cost of fundraising, the salaries of CEOs and senior staff, and the whole edifice of management that a 21st Century requires. How charities do their stuff, and how donors think and want us to do our stuff are a long way apart. And the path of least resistance for charities has always been not to say more than we need to. When the public discovers what we are doing with their donations they tend not to like it, and to date our strategy appears to be to mumble a few excuses and say ‘We never lied’. Perhaps not. But we have rarely told the whole truth either.
Look out for our two new reports later this year and early next: ‘Past imperfect’ looking at whether charities have done a good job over the last few decades, and ‘Future perfect’ about what lies in store for charities and what we can do about it over the new few decades.
A prescient piece. Hard to argue with any of it.
It's being so cheerful that keeps him going! But it's impossible to disagree with Joe's analysis. The priority must be for major charities to explain to the public how they work and get the public on their side to fight off political and media interference.
This are brilliant points, I would like to add a few of my own to this 'risk assessment' of the future.
There is a further risk to the sector through private sector competition and the market the private sector has spotted for profitable contracts. Local authorities tell us that this will be good for charities, because the contracts are unlikely to be profitable. If past experience is anything to go by, charities have already been running contracts 'at a loss' the pressure to do this will be mounting further as cuts hit harder and the contract awards smaller. There is a danger of companies 'cherry picking' public sector contracts and leaving the voluntary sector picking up the pieces.
In addition, as local authorities continue to cut their role in developing public services, devolving public services to mutuals and co-operatives, will increase overall size of non-profit and increase competition for funds. Some of these decisions to devolve the sector will put vasts funds into hands of mutuals and co-operatives will diminish the overall commissioning pot and contract awards. Small charities will have to compete against 'super sized' mutuals or co-operatives.
The recent media furores will do more than simply draw attention to the sector in untasteful and time demanding ways, but also present a new risk for senior management in the sector, professional reputation damage. There is no doubt that we were always publicly accountable; but this has a new meaning when coupled with making headline news on Radio 4, the broadsheets and the tabloids. There is a danger of talent being lost from the sector in lieu of taking careers that don't mean you end up frontline news if a disaster happens with the organisation, which by all accounts is not always in the hands of a CEO.
The best bits about years to come:
- Growing number of wealthy women will create a larger number of potential women philanthropists
- Growing number of millionaires will increase the pool of prospective major donors.
For larger charities who depend on EU funding this will obviously depend heavily on if we stay in the European Union. International development charities are going to continue to be affected by the choice to spend International aid budgets locally to support the migrant crisis.
A further recession, ultimately can't be ruled out- we have still not cleared the deficit and the recent issues with the China Economic Crisis as well as Economic crisis in European economies still puts us in a difficult position. We have to remember the funding available from trusts and foundations is linked to financial performance of the markets. Endowments and investments by trusts mean that if their portfolio collapses, we also see a deterioration in the overall income pot.
It should be added that corporate social responsibility has been a trend over the last decade which has increased, but moved from a cash to a skills exchange. There is a question now whether corporate giving will retain this commitment to giving staff time to charities, which will depend upon the financial performance of the markets.
We're in for a rocky ride!
Each charity needs to have a sound answer to the question 'what would happen if we did not exist' both for its own operation and for the public. And be prepared for the answer. It's all about trust, and charities would do well to demonstrate practically how they make a difference, and be honest about the full cost of their service. There is still a perception that it's all about volunteering and that volunteering does not cost anything. Charities should not undercut others by insisting they can do things much cheaper, as if this had no consequences.
Like, or at least recognise, all of this, only take slight exception with the 'any more' bit of the final section - I don't think they every really did understand what we did. A bit like people used to trust that their doctors knew best, people trusted that charities did good, and the best good they could do. Unsophisticated asks generated unsophisticated donors and we allowed people to think that £2/month *could* beat cancer/save the whales/protect the vulnerable child. But for sure, we haven't bothered them overtly with the troubling information about salaries etc, though it could be found on the Charity Commission website if anyone had been that bothered.
This is a very thoughtful account of the situation except that it applies only to large national charities. Overwhelmingly, charities are not large and are not national. The scenario for them is upbeat.
We should concern ourselves about the extent, quality and responsiveness of charitable endeavour, not about the health of mammoth charities. My judgement is that local initiatives are developing apace. The empowerment of local people is what small charities do best. That is likely to mean that small charities grow at the expense of the large. Why not?
As a concept, the Big Society is of its time. It is a pity the big charity battalions rubbished it but it will not go away because it represents the way baby boomers and those who come after them perceive their role in the world. They want to be in charge of their own destinies. Unaccountable charity leaders inspire them even less than politicians.
You are probably right to expect fundraising to become more difficult but local groups have greater access to volunteers who, once empowered, are enthused to do incredible things.
While big charities seem to be using megaphones to change the world and alienating the public with their fundraising techniques, lots of tiny organisations are making a difference to their local communities.
At the Conservative Party conference, Theresa May referred to the need for cohesive communities. That can only be driven locally. With charity leadership largely in the hands of big national charities, it is no surprise that there has been no audible response from them.
For the charity sector as a whole the future is bright, not gloomy. When we are better at energising communities and volunteers we shall be ready to empower consumers of public services. Now that really will be a challenge.
Broadly agree with the analysis however might be useful to define one's terms - what is the charity sector and what is the link if any, with wider unincorportated community groups? Likewise where is the political economy? Surely the situation is generated by political choices and hence can be tackled in the same way. Strongly agree with point about digital tech being much neglected
I think we could argue that charities are brilliant at digital fundraising. I would have thought 99% of all sponsored event income is now made via an online giving platform (JustGiving et al.) these days. How many charities take their event registrations online - most I hope. How many use EventBrite style things to sell tickets to their events, got to be a good few I would think!
We all say we're not very good at online giving simply because people aren't clicking on that big shiny "DONATE" button on our websites. Maybe they don't want to...Maybe we need to think about other things they might want to give money to - in shops for example, by texting a number at a gig, after watching an advert, text giving after taking part in a viral challenge on Facebook where they chuck water over their head etc...
If you look at all of those elements of fundraising I'd say we're doing pretty well at digital fundraising. It's just the older senior management at charities only seem to think digital fundraising is clicking on that "Red Button".
This website enables donors to have access to a lot of relevant information about a charity they may intend to support.
I think my,(baby boomer), generation of donors, who do have disposable income & want to re-balance inequality, are probably becoming more savvy about their choices. I will support the big, well publicised, humanitarian crises, but for regular support I try to chose small, low key, niche charities who target a particular group eg women or children. These charities overheads tend to be smaller & they deliver low tech interventions which really do make a difference. They do need to market themselves better though & technology & social media could be a lot better utilised.
The bottom line for me is that first we have to raise people out of poverty in order for them to be able to educate their children. Education is the key. Money has to be better targeted.