Fundraising during the cost of living crisis

As the pandemic comes to an end, the country is facing up to a new challenge. Rising inflation looks likely to prompt another recession and the UK is forecast to face a greater economic shock than any other G7 nation (IMF). GOOD’s Planning Director, Pete Grant, looks at what this means for the third sector…

The charity sector finds itself emerging from one crisis and entering another with lower reserves, either flat or declining regular income, fatigued supporters, and a strained workforce.

But unlike COVID-19 which surprised us all, we can anticipate the impact of a recession and plan accordingly. Household budgets will be increasingly squeezed, which will likely see donations drop as they did by 11% in real terms, during the 2008/9 recession (CAF report 2008/9). UK retail sales dropped in March as the rising cost of living hit consumer spending, as people cut down on non-essential spending, according to the Office for National Statistics.

This is also evidenced by Kantar’s latest research, over half a million of the people that cancelled subscription services in the first three months of 2022 cited “money saving” as their reason. This should be our signal that the nation is re-evaluating all discretionary spending, and charity donations are highly likely to be affected.

It’s imperative that charities adapt and create more resilient fundraising strategies to weather the coming storm, not least because demand for their support services will sadly rise as Brits face the largest drop in living standards since the 1950s (Guardian).

  1. Find your relevance

Whilst overall donations may drop, more cash and volunteering time is being directed to pressing needs within our local communities, following a pattern for mutual aid set by the pandemic.

In the COVID years, we saw donations to health care charities rise as the relevance of their cause shot up. This trend has now flattened and in the cost of living crisis, it is UK based poverty, mental health and children’s charities that are rising in relevance and support (Enthuse). There is a feeling now that the need is on our doorstep and people can’t ignore it.

Charities can become increasingly relevant by finding their unique part in this public conversation, such as Shelter’s recent 2022 Open Letter campaign “Everything is rising, including the risk of homelessness”.

The challenge will be for charities to become and stay hyper-relevant to the lives and values of their supporters, whilst also being distinct from others.

  1. Tailor your strategy

The pandemic turbocharged wealth inequality in the UK, with the richest 10% gaining an extra £50k on average from rising house prices, reduced spending and paid off debt (Resolution Foundation).

The Charity sector has seen a general trend for many years of fewer people giving higher average gifts, as well as a move to ad hoc rather than regular giving (CAF report and Wood From Trees). In an uneven society, a one sized fits all fundraising strategy will miss opportunities.

We’re increasingly seeing charities invest in richer high value, mid-value, legacy and stewardship strategies for their more affluent audiences, whilst also pursuing mass fundraising strategies, getting high volumes of low value, ad hoc giving through smarter digital targeting and partnerships.

  1. Stay present

Although it can feel challenging when purse strings tighten, numerous studies have proven the long-term benefits of sustaining media spend during a recession, with one finding brands who maintained spend had on average 256% higher sales after the recession had ended, than their competitor brands who cut back on advertising spend (McGraw Hill).

But this does not mean charities have to spend at the same level. They need to be more creative about how they spend their increasingly limited budget to stay front of their supporters’ and prospects’ minds.

“Necessity is the mother of invention”

We learnt in COVID, that the most difficult circumstances fast track change and innovation, and the cost-of-living crisis will be no different. Whilst demand for charity services sadly increases, and fundraising income comes under strain – we’ll also see communities come together in new ways and the generosity of the British public expressed in new forms.

Charities will have to evolve their message, offer and tactics to become hyper-relevant to supporters and prospects’ lives and values, as they are forced to start prioritising spend due to the cost of living crisis.

We explore further how the charity sector can navigate the cost of living crisis in our next event, “Spotlight On… The Cost of Living Crisis.” Register your interest to attend below:

Register your interest here.