Fundraising after COVID

How do you do planning in a situation like this? We remain in a position of enormous uncertainty about pretty much everything important in our economy and our society. Seismic shifts have happened that have impacted virtually all aspects of life as we know it. Probably many of the most important changes are yet to fully surface. In this context, how does any organisation develop any longer term plans or strategies?  

But that’s what many charities are trying to do now, in response to the actual and potential impacts Covid-19 has had on their income and operations. And that’s what we are trying to help the organisations we work with to think through.

I’ve tried to take stock of what we know already about how the global health pandemic is affecting non-profit fundraising and to see what, tentative, conclusions we can draw about how this will affect charities’ income over the next year and beyond.

There’s been a lot of focus on the immediate hits to charity income that we’ve heard about. I think the picture is more nuanced than some doomsayers will allow. Closed charity shops and cancelled fundraising events are unquestionably serious impacts but only account for a relatively small proportion of charity voluntary income. Against these we have seen many charity emergency appeals do well or extremely well. Regular gift cancellations for many charities went up in March, although not to catastrophic levels, and seem to have settled down somewhat in April. Some large donors have cancelled planned gifts but this has been offset by other individuals and organisations increasing or bringing forward giving. Legacy income this year will be hit by delays in closing estates and values will be reduced by lower share and house prices but there’s evidence that legacy consideration may have significantly increased.

There are clear winners and losers so far in terms of sectors with of course NHS charities doing extraordinarily well but also a wide range of other organisations seen as responding directly to the crisis, food banks, homelessness and domestic violence charities being clear examples. Organisations seen as being less directly relevant now are suffering although this is in some cases at least partly self-inflicted as charities assume that donors don’t want to hear from them and are losing out to others who are braver and more proactive.

 What’s less clear but also more important is what this means longer-term. Predictions in the current environment are clearly extremely risky but I think there are five main areas where the important longer run impacts on nonprofit fundraising will be seen. They are all linked.

Less money overall. How deep or bad the recession will be arising form this crisis is not something we can tell now, but we can be fairly sure it will be worse than any of us have ever experienced. The money available in the economy will be lower, and it might be much lower, for some time. There isn’t a straightforward relationship between the state of the economy and giving, but we do know that in the long-run, individual giving tends to track GDP, corporate giving has a weak relationship to company profits and trust giving is driven by their asset values. So less of all of this means less money to go to charities. It doesn’t mean that any individual charity will see less income, there will be winners and losers for sure.

Changes in donor choices. I think we are at a point in time where very large numbers of individuals are going to be making new choices about the charities they support in the future. This is partly why is such a catastrophically bad idea for charities to stop communicating and fundraising now. This is a life-changing event and those organisations who position themselves to be relevant to it will be those who will survive and thrive in the years to come. Those who don’t, not so much.

Changes in donating behaviour. How people give to charity is changing. Giving online is the most obvious example but think about how the interactions people have with charities will be fundamentally changed. How long is it going to be before someone will stop on the street to talk to a stranger about donating? And this is the final death of cash collections, surely (there’s an opportunity surely with all those useless coins in people’s homes). More broadly, what will be different in how people consider charities and chose between them? Who will be the influencers and what will be the most important channels?

Digital transformation. That thing about digital being really important and how charities needed to take it really seriously? We all kept banging on about? Yes, well, it’s happened. Most charities today are operating remotely and more or less entirely digitally. Only with systems, structures and people that were developed for a completely different operating model. We’re not going back from here. So how do charities move, very quickly to equip themselves to work effectively in the new world? Again, who manages to succeed at this will tell us who will survive.

Changes in fundraising models. All of this means of course that for most charities, the old fundraising models are obsolete. Looking across the spectrum, the whole approach to individual giving, community fundraising ,events, legacies, philanthropy, needs to change fundamentally. And very quickly. The list is lengthy, what do charity shops look like in a world of social distancing (it’s not only impact on customers, what about volunteers?), how can virtual events replace mass participation activities that aren’t coming back for a long time, how do you recruit new donors, what does community fundraising in the new world look like?

Looking forwards, the only thing we can say with certainty about the new world we are in is that incremental change is not going to cut it for most charities. Survival will be about the ability to achieve rapid transformation in key areas. Charities need to be thinking about this now and developing the strategies, approaches, structures, systems, people and behaviours that will make successful adaptation possible. It’s our job, as consultants, to help you chart a path through.