Analysis

Cause and effect: Charity Market Monitor 2009

Fundraising | Cathy Pharoah | 11 Sep 2009

Figures from the top 300 fundraising charities reveal the latest trends in legacy fundraising, and offer insight into cause-related giving in a recession, as Charity Market Monitor author Cathy Pharoah reports. 

In reviewing fundraising performance, the current challenge for charities is to establish what is genuinely due to the economic downturn and what would probably have happened anyway.

Recessions can mask negative trends already lurking round the corner, or speed up positive changes already on stream. Moreover, the many daily reports on the impact of recession can make it difficult to discern the real picture.

Comparative financial results of the largest 300 fundraising charities in 2007/08 and the previous year draw out some wider fundraising perspectives and messages.

During that time, the charities raised an impressive combined voluntary income of £5.3bn – just over half of their total income. But this represented real annual growth of just 0.9 per cent, largely because of a fall in donations. It was only legacy income which prevented a bigger fall.

Legacy trends

Legacies represented over one quarter of the fundraising of this group (26 per cent), and were worth £1.4bn – a real annual increase of 8 per cent. This result is not totally surprising because of the likely time-lag in the full recessionary impact of lower values for property, shares and savings on legacies.

But analysis of legacy figures from Caritas Data’s top 5,000 charities over the last six years has revealed important new insights (see figure 1):

• total legacy income increased steadily between 2003 – 2007;
• the  number of charities receiving a legacy increased by 18 per cent;
• less than one-third of charities (310) reported a regular annual legacy income in each of the five years;
• average legacy growth amongst these charities was lower – they attracted just half of legacy income, and its value fell in real terms by 2 per cent over the five years.

The fundraising challenge is that while more charities may be receiving occasional legacies from donors whose specific individual interests they represent, regular legacy fundraising is becoming more difficult and may be most affected by the recession.

Top ten charities with regular legacy incomes

In contrast to the wide range of one-off legacies, the range of causes attracting regular legacy incomes is quite narrow.

The table that follows (figure 2) ranks the top ten charities by total legacy income from 2003-2007 compared to figures from 2008. Three are animal-related charities, and three are health charities – two for cancer. Areas less well- represented include international and environment causes.

Average annual legacy income growth varied hugely from the more than four-fold increase at the British Friends of the Hebrew University of Jerusalem, mainly due to one recent large legacy, to the negative 8 per cent at Sue Ryder Care.

Cause trends

But legacies are not the only factor determining fundraising success. So is there any evidence that the public’s choice of causes and charities is affected by the recession, with, for example, environment, arts or international development losing out to domestic concern?

Across the top 300 fundraising charities, the cause with the highest annual increase in fundraised income in 2007/08 was hospices, at a real increase of 21 per cent. This far outstripped other health causes except hospitals which experienced a 14 per cent increase.

This result may suggest that under economic pressure, the public is prioritising direct care over, for example, research. Cancer saw just a 0.6 per cent increase in income.

Other welfare services with robust increases included childrens’ and ex-services causes. Faith-based causes saw a fall of 17 per cent, exceptions being those concerned with social welfare, and Israeli causes which may have received a boost during recent conflicts. International causes generally attracted the highest amount of support at £869m, but this actually reflected a 2 per cent fall. Arts and culture showed the highest annual growth, but this was due to some major acquisitions, rather than general public fundraising.

A changing environment

The shape of the fundraising environment is changing. Growth in tax-efficient giving through gift aid saw the smallest increase of the decade in 2007/08 which could be due either to the recession or saturation in potential take-up.

Other changes are more clearly recessionary. For example, while overall corporate philanthropy did not fall in 2007/08, the dominance of financial services, which tend to support youth and education causes, gave way to industries such as supermarkets, minerals and insurance. Trust grant-making did not fall either overall, but with the value of endowments and investments falling it is increasingly dependent on annual corporate and major donor gifts.

Examples of success in 2007/08 such as hospice and hospital fundraising, Comic Relief, Christmas giving and the Obama campaign in the US demonstrate a recession does not necessarily undermine giving, but it is increasingly important to read the mood of the times. Killer fundraising campaigns will be those targeting the right donors in the right way.

Report author Cathy Pharoah is co-director of the Centre for Charitable Giving and Philanthropy

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