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This report on charity sector fundraising trends 2024 uses Charity Excellence data to look at the impact on fundraising over the last 4 years, what future trends might look like and identifies ways in which charities could respond. For ideas on what a wider and sector level response might comprise, go to the last section in our £1 billion Funding Cuts Report.
I’m increasingly hearing from fundraisers that their success rates are significantly down and asking what they’re doing wrong. The answer is nothing. Looking at the Charity Excellence data, our resilience model almost exactly mirrors the track of our fundraising data. In fighting to keep us all going, you are the front line in and you’re doing brilliantly in very tough times.
Charity Excellence has aggregated user data anonymously since 2018 and, for fundraising, uses a bank of 83 questions.
The graph below is sector fundraising performance from June 2020 to Apr 2024. The dip on the far left is Covid. We rapidly recovered but performance slowly deteriorated until the Cost of Living (CoL) Crisis impacted in late 2022. The crisis was at its worst in Quarter 1 of 2023, with those working in poverty and advice hit hardest. As we had predicted the crisis was both longer and deeper than Covid. By mid-2023 recovery had begun but our Sep 2023 £1bn Funding Cuts report, warned that these cuts might well derail this. These hit contracts and Government grants, including local grants to often very small charities. Based on our data, these impacted health and social care hardest, and to a lesser extent employment, education and justice. We highlighted the risk of widespread charity closures and potential long-term damage and, whilst we don’t have the data to prove it, this may now be happening.
Fundraising now is worse than it was at the peak on the CoL crisis and fundraising then was worse than it was at the peak of Covid.
Our data shows that it is the charities with income under £500k pa that are being hit the hardest. We don’t know why but it could be they don’t have the fundraising skills to adapt and/or to transition a much more to digital world. If it’s the latter, it’s only likely to get worse with the advent of generative AI and the likelihood of it transforming fundraising. This may be the first evidence of the emergence of the large charity digital moats we first warned about in 2021. The graph below is the same data but just for micro charities (under £10k pa), who have been hardest hit of all.
There is also evidence on small charity costs increasing faster than income. The Charity Commission E&W analysis of annual return data for 2022 found that charities with an income of less than £100,000 reported an increase of 0.84% in income while seeing their expenditure rise by 8.95%. Those with an income of less than £500,000 experienced a 3.24% increase in income alongside expenditure rising by 11.6%.
Our 'smalls' may not get the headlines or funding of larger charities but those under £500k pa represent 95% of the the 400k charities and their millions of unpaid volunteers. That's why we invest so much of our limited resources in doing our best to support them.
UK. In terms of a recovery, to steal a phrase from the Clinton election campaign, it’s ‘the economy, stupid’. During tough times, all income streams tend to fall, except retail and legacies. Sector recovery will depend on economic recovery. In May 2024 the OECD downgraded the UK economic outlook. We are hoping to see some, albeit less of a sector recovery in 2024, with probably greater fundraising recovery in 2025. We think that the coming UK General election adds uncertainty to the outlook and what happens with the public sector finances will also be a key factor.
Global Head Winds? The 2024 global economic outlook is also weak, particularly for Europe. If one or more global issues, such as the US election, real estate in China, or the conflicts in Gaza or the Ukraine, were to go badly and/or coincide, potentially the global economy might move towards recession. The UK economy would also probably do so and that would negatively impact fundraising. If you're into that sort of thing, this WEC economic forecast for 2024 is a decent read and includes their assessment of the impact of AI.
So, we just have to hunker down and sit it out? No. Currently, only 18 of the 82 income generation metrics are at green. That is, charities reporting these are not being done well. Whilst some are externally driven, many are amenable to management action. Yes, funnily enough, having enough people with the right skills/experience and a sufficiently large pipeline of funders, are both poorly rated. The situation doesn’t look grim, it is grim, but I offer you 3 possible responses.
Tax Reliefs. Firstly, whilst tax reliefs aren’t ‘proper fundraising’ they represent a huge source of income. We don’t need to bid for this, we’re entitled to it and all we have to do is submit claims. We fail to claim about £500m pa in Gift Aid alone, that’s just one of many tax reliefs, which can be claimed up to 4 years retrospectively. That’s £s billions.
Donors & Systems. Secondly, other areas reported as weak include having processes to identify and engage potential funders, and re-engage lapsed funders, and systems to maintain and grow engagement with existing funders/supporters. And having a CRM system that is used to improve fundraising effectiveness is and always has been rated poorly. Fundraising isn’t just about asking for money, but I suspect too many trustee boards and some CEOs still don’t get it.
Fundraising AI. Finally, I think AI represents one of the biggest opportunities for the sector in a very long time, particularly for fundraising, because it can’t do one thing, but it can do 2 things. It’s not going to replace fundraisers because it’s not human – it just doesn’t have the creativity and flair needed to be a good fundraiser. But it can substantially augment your capabilities and it can also do the heavy lifting with admin, freeing you up to do more of what you’re so good at – creativity and flair.
For our wider suggestions on how the sector and Government could respond, plus ideas from others on how this might be done, scroll to the bottom of our £1bn Funding Cuts report. We think the concerted action that would be needed is unlikely to be taken forward.
The last 4 years have been brutal, and fundraising isn’t going improve rapidly, but we have one huge asset – our people. The data shows that fundraising is the key to rebuilding a resilient sector, but fundraisers are as hard pressed as anyone. CEOs and trustees need to get behind their teams and support them. The data shows trustees doing so is an area of weakness. If your charity doesn’t yet have a fundraising culture, now would be a good time for your trustees to begin creating one.
This report uses our Microsoft Power data tool which has 9 interactive dashboards, tracking about 150 metrics, that we use to extract data from our Charity Data Store. The Data Store has data for the 500+ assessment statements in the model, that cover every area of activity and to date holds 0.75 million data points going back to 2018, so includes both crises. We augment and validate our data store using our benchmarking surveys for Salary & Motivation and Trustees in the Spring and Autumn each year. These are based on the system's core model but are rated by individuals from across the sector.
A registered charity ourselves, the CEF works for any non profit, not just charities.
Plus, 100+downloadable funder lists, 40+ policies, 8 online health checks and the huge resource base.
Quick, simple and very effective.
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To access help and resources on anything to do with running a charity, including funding, click the AI Bunny icon in the bottom right of your screen and ask it short questions, including key words. Register, then login and the in-system AI Bunny is able to write funding bids and download 40+ charity policy templates as well.
