New fundraising data reveals an opportunity for charities to diversify unrestricted income

New research conducted by Work for Good and analysed by Pro Bono Economics provides key insights for charities looking to diversify their unrestricted income and build better relationships with businesses in 2023.

The Generosity of Business report reveals a new study of SMEs and their propensity to fundraise for charities during the current economic crisis.

The UK has over 5.5 million SMEs, contributing over half the turnover of the private sector at ￡2.3 trillion, yet there has not been significant research on UK small businesses and their charitable giving.

What the survey revealed was that despite economic challenges:

- 73% of businesses surveyed will sales fundraise in 2023.

- Over nine in ten businesses responding to the Generosity of Business survey believe supporting good causes is important to them.

- Six in ten say it is essential.

Why is this important information for fundraisers?

Many recent fundraising reports have shown how the pandemic and cost of living crisis have negatively impacted individual donors and traditional forms of workplace fundraising.And yet, while many charities are facing reductions in their income, demand for their services and support has been continuing to escalate.

With public giving waning and cuts to public services on the horizon, charities should be looking to explore every funding opportunity possible.

Looking for diverse unrestricted income streams is crucial when traditional sources of income are under pressure.

But many charities struggle to diversify their income and are often reliant on a single funding source. Research shows that 60% of charities that are less than 10 years old derived at least 90% of their income from a single stream.

Building new relationships with businesses fundraising through their sales offers charities a crucial opportunity to both diversify and increase their unrestricted income stream.

There has been other research that demonstrates that the private sector wants to find ways to make a meaningful impact and charities need to adapt their strategies and simplify their offerings to help them do this.

Over the last ten years charity sector income received from the private sector has grown by more than 20%, from under ￡2 billion in 2010 to almost ￡2.4 billion in 2020 (NCVO, Civil Society Almanac, 2022). And over one in three charities say that they want to collaborate more with businesses.

Supporting charities is also a vital opportunity for businesses and many of them are aware of that. Almost two in three (63%) of company directors believe that businesses exist to do more than generate profit . Much of this realisation is driven by consumer sentiment and behaviour.

- Consumers who choose products and brands based on how well they align to their values now represent the largest segment of consumers.

- In 2020 the market for ethical consumer spending and finance in the UK is now worth ￡122bn, a growth of nearly 24% since 2019.

- When consumers think a brand has strong purpose they are four times more likely to purchase from it (8)

The future of fundraising

It is widely discussed amongst fundraisers that income diversification will be a key part of a charities’ financial resilience.

“Having monitored trends and behaviours of the business community for the last 4 years, at Work for Good, we know that businesses can and want to play an integral part in the future of our society, economy and environment. As we head into another challenging two years, now is the time for charities to collaborate and harness the giving power of sales fundraising and unlock some of the ￡2.3 trillion in revenue that SMEs make every year.”

- Veronica, MD of Work for Good.

This report demonstrates that relationships with SMEs wanting to fundraise through their sales offers a wealth of untapped opportunity for both sides. But there is so much more that could be done.

Read the full Generosity of Business report by Work for Good here.