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Income grows despite reduction in fundraising spend

Fundraising | Tania Mason | 1 Mar 2008

Most charities are reducing the amount they spent on fundraising and publicity as a percentage of total expenditure, the NCVO’s latest Almanac shows

Almost three-quarters of charities with incomes exceeding £10m spent less on fundraising than last year, as did almost 19 in 20 of the smallest organisations, according to the latest figures from NCVO’s UK Civil Society Almanac 2008.

According to the research, “this was mirrored by mixed fortunes in returns on fundraising and publicity spending, and suggests charities either feel they don’t need to spend as much as they did in this area or that they are unable to”.

Yet perversely, charities collectively spent £300m more on fundraising and publicity than they did the previous year, the result of a very small number of organisations substantially increasing their spending.

The sector continues to grow, both in terms of number of organisations and overall income. The total income of general charities grew by almost 10 per cent on the previous year to £31bn. Karl Wilding, the NCVO’s head of research and co-author of the Almanac, says: “Charities are still enjoying a good run as the amount of resources entering the sector continues to rise.”

For the first time the sector is earning, by delivering government contracts or selling goods and services, more than is being donated to it, suggesting the existence of a healthy entrepreneurial spirit. In 2004-5, the sector earned 48.2 per cent of its income, in 2005-6 this figure stands at 50.3 per cent. “More than ever before, fundraisers need to think of themselves as income generation specialists,” says Wilding. The number of paid staff in the whole sector is growing by 10 per cent a year, and Wilding believes fundraising is playing an important part in that. He denied charities reducing their spending on fundraising automatically translated into less expenditure on fundraisers. “We’re seeing continuing skills shortages, so fundraising as a career is still on the up.”

Funding from government continues to increase as a proportion of overall sector income, while giving from individuals is down by 3 per cent, as outlined in the recent CAF/NCVO Giving Report. More than 47,600 charities are “heavily reliant” on statutory funding, though grant income from government has been flat for five years. But Wilding predicts the state of public finances will inevitably lead spending on the sector to stagnate. “I don’t think it will decrease, but the rate of increase will slow down.”

He advised fundraisers to be more concerned about discretionary giving by individuals. The proportion of people giving fell, from 53 per cent to 48 per cent of men and from 60 per cent to 59 per cent of women. Though the mean amount donated per person in a four-week period remained the same as the year before, at £16, this was a net drop because less people gave.

Many charities are still struggling, with one in 10 of the largest and one-third of the smallest seeing swings in income of up to 20 per cent over the most recent two years.

The ‘Tescoisation’ of the sector is continuing, with a greater proportion of smaller charities seeing their income fall rather than rise, while more big charities saw their revenues rise than fall.

Larger, household name charities appear to be better cushioned from fluctuations in the market. “Big charities that invest more in fundraising will find it easier to ride the storm,” says Wilding. “But volatility is an ongoing problem – big swings in income and expenditure are indicative of short-term contracts.”

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