As many charities struggle without mega-donations from the generous wealthy, the sector should consider a redistribution of charitable gifts, lest the charity market become dominated by a few big players, says Peter Horah.
The increased number of high-value donations to charities, reported in the Million Pound Donors Report released late last year, reminds us of the challenges facing smaller charities which are less fortunate in receiving such generous support.
The report found that more donors are giving exceptionally large gifts, worth more than £1m, and that the two most popular destinations for those donations are – as is tradition – higher education and culture charities. From an independent and personal perspective as a volunteer who has tried to raise funds for charities, and as the current chair of a charity board, the discourse on competitive giving is a concern. I believe that smaller charities have an unequal challenge in achieving high-value donations.
Charities have always had to balance the need to increase donations with the need to maintain the loyalty of their supporters and have developed opportunities to maximise donations and relationships. This requires a sensitive approach as well as scrutiny by trustees to ensure that both the charity and donor achieve a symbiotic relationship where both parties achieve the intrinsic benefit of giving.
However, there is a competitive market in achieving donations. Charities must perform as effectively as commercial organisations in finding new sources of funding as well as retaining existing revenue streams. Established charities which can afford fundraisers with budgets and ability to push supporters up a donor pyramid need to adopt clever marketing techniques just like a commercial brand when they target potential donors.
If a charity is successful in achieving the marketing mix, by getting the product, price, promotion and convenience right, the financial rewards are great.
But, we need to question whether this is an effective and fair way of redistributing wealth as well as managing social welfare. There is inevitably a hierarchy of interest when donors decide to support one charity in preference to another.
Whether in prosperous or austere times, the ability of a charity to market itself and create a brand for donors to identify with is a key to its success. The challenge civil society faces is that it is not an equal game; unconsciously, donors are being asked to select one organisation over others and define which charities are deserving or non-deserving.
If we are going to rely on donors to frequently give more there needs to be a system of redistributing donations fairly so that the charities supporting similar client groups or causes are not denied.
The link between donor and charity is essential but maybe we need to consider the involvement of a third party to encourage support for smaller, unknown and local charities so as to balance the unequal distribution of giving. If we don’t address this imbalance, civil society will be caught up in a zerosum game as creative destruction will see the biggest and popular charities dominate the donation market.
