Fundraising income could drop to the levels of six years ago as a result of the pandemic, a research paper has found.
Reframing the Ask: Trends Which Will Shape Giving and Fundraising Post-Covid-19 was commissioned by the Chartered Institute of Fundraising (IoF) and put together by academics Cathy Pharoah, visiting professor at Cass Business School's Centre for Charitable Giving and Philanthropy, and Tom McKenzie, honorary research fellow at the University of Dundee.
It looks at pre-pandemic giving trends and data, including after the 2008 recession, to try and gauge what could happen to fundraising over the next months and years.
Smaller organisations could be hit harder
The paper found that voluntary fundraising income tends to broadly follow economic growth – for example, it decreased in 2008-09, although by less than GDP.
A GDP fall of 8.3% in 2020, as predicted by the Treasury in May, could result in voluntary fundraising income falling back to 2014-15 or 2013-14 levels, or lower.
The paper says: “This level of contraction could hit smaller organisations which depend more heavily on donations from the public very hard.”
GDP projections expect the economy to start recovering in 2021, but it could take longer for giving trends to follow.
The paper says: “While data indicate a broad relationship between economic growth patterns and fundraising income, the timescale is less clear. It could take the charity fundraising sector longer than the economy to recover, because of the capacity risks in the large number of small charities, or if households fail to prioritise donating.”
Household giving down by up to a quarter
The paper also looked at giving trends for different income streams.
Charitable giving by UK households was on the rise before the pandemic, with the average amount given by donor households increasing from £8.48 per week in 2000 to £13.16 per week in 2018. This made up for the decline in the percentage of total households giving to charity (from 32% in 2000 to 26% in 2018).
Household giving also tends to follow economic growth and could fall significantly in 2020-21, by up to a 25%.
The paper says that capacity to give will become “increasingly polarised” as some sections of the population such as young people are hit harder by the crisis. Fundraisers will need to prioritise people who can afford to give and encourage them to increase their contributions.
Corporate giving and legacies are also likely to be impacted, but trusts and foundations should be able to protect or increase their levels of giving thanks to growth in their assets pre-pandemic. During the recession in 2007-08, foundations increased their giving by 13.8% despite assets falling by 7.7%.
Most income streams affected
The paper concludes: “It is clear that most fundraising income sources will be directly affected by the state of the UK’s economic growth. Impacts will roll out over different timescales. Undoubtedly there will be some major losses, hopefully mitigated by some of the strength of private household and private foundation giving over the last year or two.
“However, fundraising outcomes will also crucially result from donor and funder decision-making. Donors may decide to defer rather than cancel giving, and charities need to keep in touch with these donors. Some donors may be persuaded to divert lockdown savings to charity.
“Lockdown lifestyle changes including greater homeworking and online shopping may become permanent, and new fundraising approaches will be needed to replace some high street and workplace-based fundraising including payroll giving.”