Committing to better fundraising and so better processes overall
It’s the million dollar question for charities – how to maximise donations whilst keeping overheads to a minimum?
Throughout the political and economic turmoil of the last 12 months, the generosity of the UK public has remained unwavering. A total amount of £9.7 billion was donated by Brits in 2016, a very slight increase from the £9.6 billion donated in 2015. The general public's willingness to donate has not been dampened by an increasing number of acute causes in need of support.
However, the landscape is ever changing, with new ways to donate being introduced all the time.
The challenge facing charities is how to make a cause as attractive and as easy to support as possible.
To do this, charities need a multi-faceted fundraising strategy, combined with streamlined administration processes, something which on the face of it can seem contradictory. The key part of this is having a strong understanding of how people donate, and aligning your donation options closely with this.
The changing landscape
The latest figures from the Charities Aid Foundation reveal that cash remains the most popular way to donate, with 58% of respondents having given a cash/cheque donation over the past 12 months. This is consistent among all age groups and genders, with over 50% of every group that CAF surveyed having donated cash.
Buying goods and buying tickets for raffles and lotteries occupy the second and third spots, with 40% of people having done both in the last 12 months. Interestingly women are much more likely to give through these options than men – make of that what you will!
This all seems fairly straightforward and is probably to be expected. The fourth and fifth most popular options are different.
The fourth most popular way to donate to charity was direct debit – with 31% of people having donated using this method. The fifth was online giving, with over a quarter of people having used this method. Both methods are increasing in popularity year on year.
Direct debit and online giving largely result in much higher individual donation amounts than cash, goods or raffles/lotteries, generating a much higher return for charities who commit to enabling people to donate via these methods.
It’s hardly surprising. Other research has shown that the average direct debit donation totalled £181 over the course of a year, or £15 a month. Whereas the average cash/cheque donation is just £5, with people likely to only make a one-off donation to each charity via this method. This probably won’t come as a surprise for most people - £300 is a daunting one-off donation, but £20 a month seems much more manageable.
Another interesting point that CAF’s research has thrown up is the changing course of donation habits across the year. Several methods of donation see a spike in November, including on the street (43%), television (35%), direct mail (33%), and the radio (15% vs. 9% on average across the year).
When you think of the number of charity campaigns which fall in November, Red Nose Day, the Poppy Appeal and #Movember, to name but a few, it all makes sense. In the run-up to Christmas donations spike again, December was the key time to be asked to give at work last year (13% in this month vs. 10% average).
What does this mean?
With this in mind, in order to maximise all revenue streams charities need a genuinely multi-faceted fundraising approach, which can be sustained across a 12-month period to account for peaks and troughs in donation habits.
Cash/cheques and lotteries work well to generate volume of donations, but other strategies, including direct debit and online giving, produce a greater value per individual donation. Facilitating different methods of giving can initially appear costly, especially for smaller charities. It is important for charities to identify their most successful revenue streams and maximise them – to do this, charities need to embrace new methods of giving which might hold the key to increasing revenue.
As already identified, people tend to donate more in certain months, however charities have to balance this against the competition for funds in those popular months. A smaller charity might be wise to plan their campaigns in slightly quieter months when they’re not competing with national causes like Comic Relief or Sports Relief.
This raises the question, how can charities, especially smaller charities adopt a multi-faceted, 12-month fundraising strategy, while also reducing administrative costs and overheads? The answers lie in embracing technology and specialist support.
Putting it into practice
There are a range of ways to streamline admin processes and increase donations, below are four that are cost effective and combine both.
Use the cloud
New technology is often seen as costly and a luxury that charities cannot afford. However, using out of date software or software that regularly requires expensive upgrades can add huge administrative costs in the long run. Over the long term, charities can benefit from a significant reduction in costs if they use cloud computing technology that doesn’t require expensive installation or upgrades.
This can include cloud based desktop software, cloud based emails, cloud based payments software, cloud accounting software, cloud based CRM systems and much more.
From a cost perspective, one of the biggest plus points for a charity moving to cloud computing is that they will no longer need to buy or maintain expensive and energy-draining servers.
The cloud also allows easy remote access, so staff can log on and work from any location with an internet connect, as well as giving piece of mind about data security – with disaster recovery coming built-in to many cloud packages.
Clearly, the cloud has a huge potential to reduce long term administration costs. It can also help to increase donations, as the cost reductions created by the cloud mean that methods like direct debit are now much less expensive and more accessible.
Effective fundraising methods
The majority of charities still use telephone or paper based donation systems that are costlier and involve a lot of administration time.
Research has shown that 31% of people in the UK donated to charity by direct debit in 2016, but 91% of charities still do not offer direct debit as a way of donating.
Taking payments by cheque, cash and standing order is a huge administrative burden for charities and fundraising organisations.
Taking donations by credit or debit cards can be more streamlined, but typically costs around 2-3% per transaction plus a flat fee of £0.30p or more.
In comparison, direct debit is easy to set up and costs much less - solutions start from just £0.35 pence a transaction.
Outsource where relevant
Outsourcing is particularly beneficial if you’re working at a small charity.
Depending on the size of the charity, you might not need a full IT department or marketing department etc. The temptation can be to fear that outsourcing will lead to a less effective service, or put donors’ data at risk. However, the reality is that in most cases it not only reduces costs, but also increases efficiency.
As an example, offsite network management, in particular, can lead to fewer disruptions in service, improved network security and increased access to IT services often reserved for larger organisations.
Similarly, using third party providers to run donation strategies, such as Direct Debit, can reduce the internal administrative burden and provide a more cost effective and secure solution that will encourage a greater number of donations.
Also, look at the time spent printing and pulling together materials, as well as the cost of copier maintenance. By outsourcing to a local printer, charities can save up to 30% on printing expenses.
Plan ahead
Charities need to ensure that any campaigns are tailored to take into account popular times for donations, or to cover any shortfalls in quieter months, like January. Likewise, spending habits need to be well planned to ensure that cash flow remains consistent and the charity can always meet its obligations regardless of whether donations rise or fall each month.
Take stock of marketing efforts and ensure all campaigns and fundraising initiatives are well planned and executed at the perfect time. It pays to be patient and hone a great message/ communications strategy, rather than adopt a scatter gun approach that takes time and money and generates far fewer results.
Making the big decisions
Like a business, charities must identify the initiatives that can drop costs and increase income the most – while not burning up a lot of resources in the process. Although, a change might save money, there’s often a time cost to consider. The approach has to be balanced. Ask, as well as reducing admin costs, will this change also positively benefit fundraising efforts? If so, it’s probably a winner.
Once areas to save money are identified, then it’s time to commit to the change, even though changes can sometimes ruffle feathers. Streamlining the charity doesn’t just control costs, it also helps the mission thrive and donations to increase.
