Is charging beneficiaries* the route to sustainability for some charities?

We explore the issue of charging for charity services. Can (and should) charities charge their beneficiaries to make up for falling fundraising income?  And what happens when they do?

Joe Saxton

*We know that not everyone likes to use the term 'beneficiaries' when describing the people who use the services their charity or organisation provides. We have chosen to use this term in this report for its conciseness, and for the lack of a consensus on a better alternative for the third sector. We will be publishing a blog exploring the issues around this term in the coming weeks - please tweet us at @nfpSynergy or drop us an email (insight@nfpsynergy.net) if you'd like to share your views on the term 'beneficiary' or your preferred alternative(s).

Generating income is a challenge for many charities. The pandemic has meant a halt, or at best a stop/start interruption for fundraising events, street collections and charity shops. Government expenditure is under pressure, and dividends from investments are a much less certain bet than they were a year ago.

With income under assault from all sides, now is the time to look at all the sources of income for charities. This is why we are publishing our new report ‘A small price to pay?’ which looks at the pros and cons of charging charity beneficiaries.

For many people in the sector, the idea of charging beneficiaries is instinctively distasteful. They may have visions of a person at a food bank being asked to pay, or a child being asked for a contribution when getting their malaria vaccine.

In reality, charging beneficiaries is much more common than you might think. Anybody who has every attended an NCVO or Institute of Fundraising conference has been charged as a beneficiary of those charities. Private schools charge their pupils. Relate, the relationship charity, routinely charge those they give one to one counselling advice to. The list of beneficiaries who pay for their benefits is very long. We just might not be as used to looking at them (or ourselves) as ‘beneficiaries’.

Our report looks at the nuances of charging beneficiaries. One example is how when mosquito nets (large nets to go over a bed or sleeping quarters treated with insecticide to prevent malaria) were charged for, they were more likely to be used properly and effectively. Another example recently in this video from the BBC tells the story of a community who paid for a car to help get pregnant women from a small village in rural Nigeria to hospital – and they each paid the equivalent of $3 for the service. It is worth noting that some frustration is expressed by a community member that the government has not provided them with the ‘basic healthcare facilities’ that it should have done so in the first place, which might eliminate the need for the car. Our guest blog ‘The UK Runs the Risk of Being a ‘Justgiving’ Nation’ explores this theme further.

I suspect many may find the idea of financially ‘poor’ people parting with money for a service a difficult circle to square. However, the report does provide further examples where charging makes people value the service more.

In the current climate, charging beneficiaries has another important benefit – it brings money. With fundraising income at risk of drying up significantly from GDPR to the pandemic, then the income from charging beneficiaries may be a way to help an organisation balance the books. It would be a foolish organisation or individual that assumes that charging individuals is a zero sum game. As our report shows, it can be good for the bank balance and the beneficiary, and in these difficult times, that has to be an approach for charities to look at very closely.

You can read the full report here.

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