Charitable giving is one of the first areas of discretionary expenditure to be cut when times are tough. As a consequence, charities are suffering from a sharp decline in income.
Last year, PricewaterhouseCoopers stated that charities could face a funding shortfall of £2.3bn, and in December direct-debit donation cancellations were up 67% on the average figure since 2003, according to The Charity Direct Debit Tracking Report.
All charities are feeling the squeeze, but housing and homelessness group Shelter has been in the news more than most. Its woes became evident last October when it announced it was to cut 43 posts in an attempt to fill a reported £2m hole in its budget. In December a restructure led to the departure of fundraising director Alan Gosschalk; the latest blow came this month when long-standing chief executive, Adam Sampson, announced that he was to step down.
Shelter has continued to invest in high-profile advertising, using a Radiohead track in its recent TV ads through Leo Burnett, supported by outdoor, online and direct activity.
As unemployment soars and repossessions hit a 12-year high, the charity's resources will be stretched more than ever this year. We asked Mark Chandler, head of marketing strategy and digital development at Marie Curie Cancer Care, and Clive Mollett, founder and managing director of 121 Fundraising, what Shelter can do to encourage donors to dig deep in difficult times.
Mark Chandler head of marketing strategy and digital development, Marie Curie Cancer Care
If you think Shelter is a charity that helps to house homeless people, you're wrong.
Last year, it offered guidance and advice on housing and legal issues to more than 170,000 people to help stop them ending up on the street in the first place. This preventative approach is, potentially, a fundraising Achilles heel.
Demand for Shelter's services is increasing at a time when donations are declining. Its recent campaign focuses on the state of the housing market and its need for more funds so it can advise more people. Yet, while it promotes the service, it doesn't have an emotive or compelling element to encourage people to donate. Supporting the provision of advice doesn't provide the warm, fuzzy feeling you get from believing your donation will result in a direct action to support a person in need.
When selected, the new chief executive will be keen to reverse the decline in donations and ensure that Shelter is viewed as a charity that provides an essential service to help families keep their homes.
Without focusing on the people it has helped, it may find donations continue to decline in the tough times ahead.
Remedy
- Focus on the people Shelter has helped and what it has achieved for them, rather than the service, to make the brand more personal and emotive and therefore boost donations.
- Use the high-profile economic crisis and government relationship to secure additional funding.
- When selecting the next chief executive, choose someone with a strong commercial background who will predominantly focus on the fundraising activity to exploit every opportunity.
Clive Mollett founder and managing director, 121 Fundraising
Shelter's woes are, sadly, not unique but neither are they vested solely in the current recession.
Certainly a recessionary climate is especially tough for service-delivery charities. Donations slide and the cost of service provision climbs with growing demand. Moreover, today, many third-sector organisations depend on publicly funded contracts, which tend to become less profitable in a downturn.
Throughout the sector, the greatest concern should be the systemic failure to apply marketing principles to fundraising. The apparent inability to recognise that success relies on identifying and satisfying donors' needs lies behind low and deteriorating levels of giving. Fewer people are donating, and those who do give relatively small sums. Shelter is not alone in its reaction to this being superficial, and based on channels, rather than its core marketing proposition.
Overlaying this with its recent run of poor industrial relations PR, Shelter has also underscored another 'unspeakable truth', reminding potential donors that it is not staffed entirely by kind volunteers, but uses paid professionals.
Remedy
- Rethink the core proposition to donors. Remember that they don't have the same needs, understanding or aspirations as Shelter trustees.
- Remember that retention is always going to be more cost-effective than acquisition. Develop a risk/reward matrix for current donors that focuses resources where risk of attrition coincides with optimum income.
- Develop additional fundraising programmes, where the transactional element is based on a value-added exchange that supporters will find easier to justify in a recession.