What happens to fundraising income during a recession?

Digital fundraising in a recession

What's the outlook like for charities during an economic downturn?

The outlook for the immediate future is uncertain for charities. The news tells us the economic situation is serious – with both inflation and low wages pushing down peoples’ income and restricting spending.

The cost-of-living crisis is now part of daily life and charities will know what’s coming. As the effects begin to bite, demand on services will grow. People will need more help to get by.

Most of us know how to give, or maybe get help from a local foodbank.

The general data shows why.

The Trussell Trust distributed 1.3 million food parcels to people facing hardship between April and September 2022. That’s 52% more than the same period in 2019 – and they report for the first time a drastic increase in the number of people turning to food banks for support.

Let’s not forget we’re still in a post-Covid hangover.

Demand for services and support went up during the pandemic according to NCVO. Most seriously felt in front-line and infrastructure organisations – digital technology, service development and mobilising volunteers were the pressure points. So, as people feel pressure to make ends meet, it’s understandable things get squeezed: regular donors and charitable giving in general will be under review.

About 40% of charities have relied on reserves to get them through the past two years and the potential impact of a recession on charities is clear according to CAF polling:

  • 1 in 7 donors are considering cutting back on donations in the next size months
  • 1 in 10 have already chose to not make a one-off donations

If history says a recession usually means a drop in fundraising income, what will happen to the way people donate?

 

Charitable giving fell 11% during the 2008 recession – due to a combination of fewer people donating, in smaller amounts according to NCVO. But – people still gave to charity. In that same period, over half the adult population still gave to charity each month.

The Economics Observatory says that UK charities appear to be facing a decline in the real value of donations, at a time when their costs will be rising.

They also show us  that in real-terms and as a share of GDP the value of giving has been in steady decline since 2010.

It will be important to adapt the way fundraising is done, to accommodate the flexibility people might need in their giving.

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What can charities do to protect themselves?

Unfortunately, the typical campaigns might not work. Cash appeal response rates are down around 20% against forecast figures, and access to additional philanthropy will require new relationship building and grant applications.

High-net worth individuals normally protected from economic recessions may prefer to stay in control of their assets directing their philanthropy to long standing partnerships. And corporate CSR budgets might get cut too, but here’s a great article to argue against that!

Positively – consumer spending on prize-led fundraising reached a record-breaking £4bn in 2019/20, and is estimated to rise to £9.4bn by 2024

Who are GWD?

We help socially-minded organisations transition to digital systems, building stronger relationships through impactful products and services.

Our experience goes back two decades, with a foundation building and providing critical digital services and products for the financial services and retail industries.

With a long-proven ability to handle challenging projects and a team of trusted experts, we work hard to solve problems and deliver change that helps others.

Donation Station Lite

Discover our latest range of contactless products

The Lite range features two of our most accessible products; the Pocket and the Express.

Built with simplicity in mind, these small-scale, portable devices are ideal for collecting donations on the go. 

Attract Loop

Part of the Donation Station’s key visual design features, the Attract Loop are screensavers purposefully designed to run on a loop. Created by GWD with your input, they use visuals or photography, plus an emotive call to action, to catch the donors interest and lead them towards donation through interactive storytelling.

Customisation

The entire Donation Station is open to branding, from external display to on-screen logos, photography and your brand look and feel.

Our design support service can adapt visuals and graphics to suit your brand.

Wifi or 4G/5G Data SIM

Where you need it, the Donation Station can be supplied with Data or Wifi connectivity.

If using the device in a remote location or at an event, it’s worth considering the signal strength available – GWD can support you to ensure there’s a smooth running operation on the day.

Safe & Secure

All data is transmitted with full encryption, so you can be sure that all individual donor data is safely used, in accordance with GDPR regulations.

Choice of Donations

Giving choice on where the donor wants their money to be spent empowers them further. The Donation Station asks this question and gives charities freedom to present their causes and activities as separate campaigns.

Gift Aid Up Sell

An integrated Gift Aid function on all Donation Stations helps boost fundraising a further 25%. This tax relief can be claimed from HRMC from any donor that supplies their contact details and makes a declaration, as a UK tax payer. The Donation Station is designed to encourage and secure this additional fundraising income easily, through simple reports that can be downloaded and submitted to HMRC as part of a Gift Aid claim.