Reading tea leaves # 14: More thought should be given to donor relations

By: 

Cheryl Chapman

Managing Editor, Philanthropy UK

Tracking the impact of the recession on giving...

The big news in donor circles this fortnight is that giving is down 11% on last year’s levels, according to UK Giving 2009, the most comprehensive research on giving statistics and trends in the UK, undertaken by the Charities Aid Foundation (CAF) and National Council for Voluntary Organisations (NCVO).

This is disappointing, but not surprising given the severity and speed of the economic downturn. But one message that came through load and clear from the report and others this week is that donors and charities need to be more strategic.

The UK Giving 2009 report says regular, planned giving enables charities to predict income and manage funds more strategically, encourages positive relationships between charities and donors, and is more easily made tax-effective.
 
The positive news from the research is that regular methods of giving (for example direct debit or payroll giving) have increased in popularity, with 37% of donors giving by a regular method in 2008/09, up from 34% in 2006/07. Regular giving is also gradually taking a larger share of the total amount given over the same period, up by two percentage points to 31%. Though this needs to continue.

The report also shows Gift Aid usage has increased slightly since 2007/08, with 40% of donors using it in 2008/09, but CAF estimates that almost £750m is lost to the sector in unclaimed Gift Aid. Maximising donor usage would compensate for the fall in overall donations of over £700m.

The report ends with a call for government and sector action to support more planned giving, through promotion of Gift Aid and through new tax-incentives and tax-effective giving mechanisms, including Lifetime Legacies.

However, one key strategy open to all charities, that calls for no government intervention and could make an enormous difference to their funding, relates to how they engage with donors. Those charities that take good care of their donors, regularly communicate with and engage them, are more likely to be successful when asking them for more support.

The latest Market Trends report from Arts & Business, published last week, which aims to assess the trends that have arisen as a result of the recession, highlights the good practice of ‘friend-raising’, which it defines as ‘fundraising through donors you stay in touch with’. As explained in the report, ‘friend-raising’ is the focus of efforts and resources on “maintaining relationships and keeping donors happy and showing them their appreciation”.

“It is important therefore to make sure, as many have already identified, that donors, past, present or future, are kept in the loop and made to feel welcome and appreciated, therefore cultivating that personal connection and feeling of belonging: to this end, when they are able to donate again (or more) they will be more than happy to do so,” the report says.

In our December 2008 newsletter, fundraising guru Ken Burnett made a similar point in his ‘10 commandments’ of fundraising in a recession.

His number one tip was: “Do not cut back investment in fundraising. This would be very foolish. In particular, don’t cut basic donor care, such as your welcome and thank you procedures.”
 
Yet charities don’t even seem to be asking. A member survey by the Association of Charitable Foundations (ACF) in May revealed that foundations generally have seen little change in the number of grant applications during the recession. Let’s not forget that the number one reason people give – regardless of their background or interests – is because they are asked. We cannot have a giving culture without an asking culture - as pointed out in Reading tea leaves #13 - recovery is in the gift of the charity.

Perhaps this is part of the reason that donor networks, such as The Funding Network (TFN), have been so successful. TFN’s most recent fundraising event, held last week, which this time focussed on climate change charities, more than doubled its target, raising £54,000.

And in the US, the fifth Annual Clinton Global Inititiative conference attracted 284 new commitments valued at more than $9.4 bn (£5.9 bn) billion dollars, an increase of $1.4 bn (£0.8 bn) compared to last year.

Which gives some hope for giving.