What’s happening with individual giving?

Predicting donor behaviour is always difficult, doing it during a pandemic feels impossible. Although we have seen some big highs, such as the overwhelming generosity towards the NHS sparked by Captain Tom, there have also been some big lows, with charities reporting their income has been heavily hit across a number of areas. This makes it hard to spot the wider trends in giving and make plans for the future, so we organised a briefing for our members with Catherine Mahoney, Research Manager, CAF and Joe Saxton, Driver of Ideas, nfpSynergy to try and answer some of the biggest questions around giving and predict how fundraising will change in the short and long term.

CAF’s poll with YouGov found that giving remained stable at the beginning of 2020, but then declined sharply in September. Although it recovered relatively quickly, the usual peak we see from November to December, brought about by national and Christmas appeals, was not as high as previous years. Equally, sponsorship dropped and has stayed low. The most probable reason for this is that donors need to be asked in order to give, but social distancing, periodic lockdowns and reduced capacity have lowered the number of opportunities for charities to make that ask.

The causes that donors supported also changed. Public awareness around the difficulties faced by NHS staff boosted donations to hospitals and hospices, whilst medical research (usually one of the top three causes) is estimated to have lost £170m in income. Time will tell how giving in these two areas will stabilise, but feedback from our members indicates that public support for healthcare workers will remain a driver to support charities delivering healthcare services.

For the first time, online donations overtook cash. Whilst it has increased slightly, it remains lower than pre-pandemic levels and CAF’s poll with the public found that 40% planned to stop carrying cash. None of this is surprising, hygiene concerns and social distancing have reduced the appeal of cash and accelerated the sector’s digital transformation. But at the moment online donations are not a perfect replacement for cash; the cost of technology makes it inaccessible for smaller organisations and many supporters are donating through third party platforms, rather than directly to the charities themselves. Although we have made huge advances in this area in a short amount of time, fundraisers need to keep innovating to fully unlock the potential of online donations.   

Society lotteries have been a steadily growing source of income for some time and have proven to be effective for both recruitment and retention, particularly with younger audiences. As the sector pivots away from direct debits, we can expect to see more charities move into this space. Fundraisers must therefore ask themselves how they can enhance their lottery offering to stand out from the crowd, and what investment they will need to achieve this.

Despite seeing an increase in complaints challenging gifts in wills, legacy giving remains a promising income stream for charities, with nfpSynergy finding only 9% of donors actively reject the idea of leaving a legacy. With house prices set to increase and baby boomers ageing, gifts in wills shall continue to grow in importance. Charities need to consider how they can use this to their advantage, not only through marketing, but investigating how in-memory giving and cross-team collaboration can increase their number of pledges.  

Finally, COVID-19 brought donors closer to the causes they care about, and many philanthropists chose to give more. The Beacon Collaborative’s quarterly survey has found that the amount of money given to charitable causes by philanthropists increased throughout 2020 and we can expect this to continue to rise as the number of HNWIs increases. The next step is to keep nurturing these relationships through agile and innovative donor journeys, you can understand more about the challenges philanthropists encounter when donating to charity in our report on Barriers to Giving here.

COVID-19 has forced charity shops and public fundraising to pause, and the disappearance of cash coupled with the scarcity of volunteers is going to make their return harder. This does not mean that we should dismiss them immediately, agencies and charities have used the past 12 months to fast-track the adoption of cashless technologies, which are now commonplace across the UK, making donations more accessible. Equally, our recent taking the pulse survey indicated that charities are confident that the 1-1 interactions with donors will continue to be crucial for donor recruitment and raising awareness.

Online has been crucial to keeping the sector afloat over the past 12 months and will continue to be effective for emergencies. But can it replace paper and email appeals? A poll of the audience on whether digital fundraising could recruit as many new donors as offline fundraising shows us that the answer is unclear, with equal numbers of attendees saying it could and couldn’t.

Conversely, event income has declined during the pandemic and will likely increase quickly when large numbers of people are allowed to meet face to face. However, prior to COVID-19 this was a competitive space and fundraisers need to consider how new formats will help them stand out from the crowd and incentivise fundraising, rather than simply participation.  

Whilst those with large and loyal databases did well throughout the pandemic, individual giving recruitment is going to get harder and harder, particularly regarding direct debit. This means charities must create new regular giving products and improve supporter journeys to bring donors closer to their cause to motivate donors to give.