Winds of change: prepare for a decade of shifts and uncertainty

What effect will continued upheavals in our economic, social and political life have on the way we give and interact with charities?
Michele Madden
 

Will the recent upheavals in our economic and political life change the way we give to charity?

The events of the last ten years have resulted in a period of change and instability for the UK population. The financial crash of 2008 and its consequences have meant that austerity is here to stay for the foreseeable future. Our political stability has been shaken; the Tory/Lib Dem coalition in 2010 was the first government formed since the 1970s without an outright majority. Brexit has divided the nation, and Trump is dividing the world. On a broader level we are seeing international issues hit us hard. The impact of global warming may be being felt closer to home through excessive temperatures causing travel disruption in the States to droughts in Spain.  An increase in terrorist attacks, Grenfell tower, the list goes on….

So what does this mean for the average donor? Given that old certainties may be breaking down, will we re-evaluate who and what we give to? Or will things carry on much as they always have?

Figures from the NCVO Almanac show the total level of third sector income grew in the period between 2012-15; but we are yet to see what the overall picture looks like for the most recent years. When we look at the breakdown of income to the sector, we see that after the financial crash in 2008, government funding fell off a cliff. Individuals are the most important source of income for the sector[1]. The overall growth has been driven by individuals and government, but hasn’t kept pace with inflation.

  • Less money to give?

Yes, individuals have been hard hit financially. Levels of borrowing are up.  Wages have remained stagnant and while disposable income has risen slightly[2], this increase has been off-set by an increase in prices[3]. Overall, people have less money in their pocket to give. Data from the ONS shows that lower income households are hardest hit.

Looking to the future, it’s likely that interest rates will increase in the next few years. However, there is some room for optimism. Unemployment is at the lowest it’s been since the 1970s, and is forecast to stay at these levels[4]. Consumer spending is slowly growing. The latest wave of our research with the general public shows that there is optimism about future donation levels among the public, with more people stating their giving will increase than decrease in the coming months[5].

  • Change how we give?

People have less money to give - and even if they have more money, they’re more cautious as a result of the financial crash. The effect of this is that donors are less likely to commit to giving on a regular basis. Our latest wave of research[6] shows that ad hoc donation methods continue to be the most popular with the public, particularly donating to and buying from charity shops; direct debits have remained static.

Give to the biggest and the smallest? There is some evidence that bigger charities are seeing the growth, while small and medium sized charities are struggling more. Is it likely that this trend will continue? Anecdotally, in qualitative research we are hearing that some donors are giving less frequently but larger donations (however, we don’t have quantitative evidence for this at the moment).

  • Change who/what we give to?

Our research in the Republic of Ireland shows a significant drop in donations to overseas development causes over the last two years. This appears to reflect a growing focus on the domestic market and domestic issues. This is probably due to two events - the financial crash and its fallout, plus the charity scandals in the past few years.  Will the same happen in the UK? Recent calls for a new domestic DEC would suggest so. There has been an increase in natural disasters at home – for example, the floods in Cumbria and Somerset over the past decade, coupled with a number of manmade disasters such as the recent terrorist attacks in Manchester and London Bridge, and the fire at Grenfell Tower.  

  • Operating environment

Our research with influencer audiences shows that in general, there is a less favourable environment for charities than in the past. The Lobbying Act is still in place, and there is a greater degree of mistrust for charities by MPs of all parties than in previous years. For example, 63% of MPs (total, not by party) think some charities are too political, while a quarter of Conservative MPs believe that charities should not campaign in Parliament[7]. It will be interesting to see whether the new intake of MPs to Parliament will have a positive or negative effect on this. The next wave of our research with MPs will explore this.

The media is not as hostile however, with journalists viewing themselves as critical but supportive friends of the sector. 70% of journalists think that the level of critical media coverage of charities will increase or stay the same over the coming year[8] (Journalists Attitudes and Awareness Monitor).

As stated above the regulatory environment is also set to get tougher. The new General Data Protection Regulation (GDPR) is due to come into force in May next year. Focus groups with the general public show that they’re are keen for this new regulation to come into place, and they see no difference between the way charities and corporates should be treated - even when prompted with the fact that it’s likely that charities will lose income as a result.

The introduction of the Fundraising Preference Service this month and GDPR next year will undoubtedly have an effect on charities’ income. Though it’s hard to say who GDPR will affect most – small charities with stronger local ties and donors who are very close to the cause may win out if they can capitalize on the strength of these relationships.  (For more information on this topic, a summary of our report “GDPR: the change that everyone wants’ will be released next month). 

It’s not clear what effect Brexit will have on how charities operate, but at the very least, the next few years are going to be dominated by the negotiations. This means less time, money, energy and focus for social causes.

So what does this add up to? There is undoubtedly a more complex and challenging operating environment for charities in the coming years. But one thing that hasn’t changed is the individual desire to help our fellow human beings and the planet. It is likely that there will be small-scale changes in the way that people give - but if charities can optimise their relationships with donors, this should mean better, stronger relationships. Charities will need to adapt to capitalise on this to fulfil the desire to help one another with the best outcomes for donors and beneficiaries.

What are your thoughts on this topic? Please share your views in the comments section located beneath the 'Share this Article' social buttons:

 

[1] NCVO Almanac 2017

[2] Oxford Economics/FFonline, UK, 2017

[3] ONS Family spending in the UK: financial year ending March 2016

[4] Oxford Economics/FFonline, UK, 2017

[5] Charity Awareness Monitor, nfpSynergy, April 2017

[6] ibid

[7] Charity Parliamentary Monitor, nfpSynergy, March 2017

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