June 6, 2019

The Biggest Challenges In Fundraising That Charities & Non-Profits Face

The last decade has been a tumultuous time for charities and not-for-profits. With more demand on their services than ever before, austerity wreaking havoc to already straining budgets, and a reduction in public trust, it has never been more important for charities to innovate to ensure their mission and services are protected.

The thing about sticky situations is that once you know what your biggest challenges are (or identify what they could be in the future), you can work towards resolving them. At GoodBox, we help charities and not-for-profits get back on their feet and progress forward through innovation and new technologies. From local charities to big national names, we work with organisations of all sizes. It is through these partnerships that we’ve noticed some common problems. Here, we will lay out these fundraising challenges and give you some inspiration of how some charities are resolving them.

A reduction in individual donations

In the last few years, there’s been a drop in the number of people donating to charities. Part of this stems from the public loss of faith in the fundraising sector, aggravated by highly publicised examples of malpractice, and an increased demand for transparency from donors. In addition, as the way the public pay is changing, charities need to keep pace and be speaking the same language as their donors. It is more important than ever for organisations to adjust to the new way of doing things to secure their financial future.

The best way to do this? Look at new ways to diversify your fundraising income. Today, there are endless ways that donors can give money to charity. Instead of being limited to traditional cash-in-hand donations, charities can raise funds through various channels. Not all organisations are taking advantage of this, but there are some shining examples in the sector. Mind, the mental health charity, has a broad range of income streams, including revenue from donations, grants, profits from their charity shops, and challenge events. In fact, their challenge events made up 27% of their income in 2017/18, while donations represented 20% of their income for the same year. This helps to prevent them from being overly-reliant upon one revenue channel, a tactic many other charities could copy.

Not only will varying your income streams help you bounce back if one revenue source decreases, but it will also likely increase the funds you raise by taking advantage of all the channels used by different audiences. Indeed, here at GoodBox, many of our clients find that their cash donations increase having implemented contactless fundraising methods, due to a greater focus on individual giving. By developing a wide range of innovative strategies for generating funds, you’ll be able to weather storms during turbulent economic times and periods of low public funding.

Uninspired partnerships

Another way to revive your fundraising is to make friends in the corporate world. Forming long-term, corporate-charity partnerships has long been a great way to establish a fundraising channel with clear long-term outputs. But the days of a simple logo on an end-of-year financial report are long gone. Now more than ever, charities and corporates are working together to build public awareness through creative advertising and executions. Follow in the innovative footsteps of campaigns such as Stonewall’s Rainbow Laces, supported by their partnership with the Premier League to promote LGBT equality in football.

This approach isn’t only limited to larger organisations. TAP London is a volunteer-led organisation that uses key government and retail partnerships to raise money for homeless causes in London. Through establishing strategic relationships, this small charity has engaged over 28,000 Londoners to donate to their cause through GoodBox technology. You can form a meaningful relationship with local businesses or international names (or both!) depending on what suits your audience and organisation size.

Relying solely on donations

Over the past few years, we have seen the rise of the social enterprise. Organisations from Toms to Change Please have been providing consumers with something they want, whilst doing good and delivering on their social mission at the same time.

If this sounds out of your reach, think about what you have available to you at the moment. Do you have spare office space? Rent it out as a collaborative workspace! Do your team have specialist knowledge? Take inspiration from St John Ambulance and run specialist training courses. You could also follow GLL’s example by creating community spaces such as gyms, libraries and event venues which help those in need. Or follow suit from Divine Chocolate, a 100% Fair Trade company owned by cocoa farmers that allows them to use their profits to invest back into their communities. All of these approaches are tried and tested ways for charities and non-profits to diversify their fundraising income through trading.

Social enterprise projects can take on many forms, and will not only create a steady revenue stream to supplement your other channels, but can also connect you with potential corporate partners and donors.

Maintaining Trust

Charities and not-for-profits are supposed to be the good guys. Instead of generating income for the sake of making money, they have a mission, a vision to make the world a better place. But in collecting public funds, charities must be on the straight and narrow. Thankfully, most of them are. Charities such as London’s Air Ambulance and Magic Bus UK are among Charity Clarity’s Top 10 Charities for overall financial health, accountability, transparency and accessibility – and they’re certainly not the only ones. It all comes down to being as honest and open as possible about your procedures and operations, not cutting any corners and taking a more considered approach to your donors. Not doing so is risking a loss of faith and trust from your supporters and audience – the kryptonite of all charities.

Ensuring compliance across the board

Compliance is an ever-changing, expanding area that you need to constantly keep up to date within every aspect of your organisation. Following legally set codes is one thing, but ensuring that these rules are followed at every level of your operations is another. From your management board to your volunteer base, everyone who represents your organisation should know how to act and what rules they need to follow. The challenge with this, is that it requires dedicated resources, sustained board level commitment, and of course time to establish the correct controls and protocols.

This goes beyond government set guidelines. It’s a matter of following the best procedures in every element of your business. For example, getting a financial expert or business analyst to take a look at your business model to check it’s working at its best will guarantee that you are well-managed and financially sustainable. Actions such as this will go a long way in preventing malpractice and help to show that you are dedicated to transparency, efficiency and professionalism at every level.

Juggling data after GDPR

Thanks to GDPR (and Facebook’s public scandal), personal data has been brought into the limelight. You’ll no doubt know that the general data protection regulation of 2018 drastically changed how charities, and any organisation for that matter, process personal data. Obviously, getting this right within your own organisation is vital. Any individual’s data that you process – whether that’s through your marketing, campaigning, or fundraising – will have to meet legal restrictions. But your actions should go beyond these legal requirements.

With more control over who and what personal data they share with businesses, consumers are more likely to hold organisations accountable for any action that would be seen as misusing their data, legal or not. As pointed out by DMA, the new GDPR rules give charities the chance to highlight how they use consumers’ data. By being as transparent as possible, you will increase the trust donors place in your organisation. While the opposite of this is risking public backlash to uses of data that may be seen as unethical or exploitative, even if they are legally sound. This could seriously damage your reputation amongst your current and prospective donors, significantly impacting your funding streams for years to come. It’s certainly not a subject to be taken lightly.

If you don’t have an in-house compliance team already, don’t panic! There are still plenty of actions that you can take to ensure that you are in line with GDPR – from minimising data protection risks to employing a Data Protection Officer. As a good starting point, the Institute of Fundraising has created an insightful (and recently updated) guide to understanding and meeting the current requirements of GDPR.

Donors becoming disconnected

Nurturing connections with your audience and developing long-term relationships with your supporters is more than just a nicety, it’s now what’s expected. With fears of eavesdropping smart devices, and ever-increasing publicity around data safety, consumers are taking back control when it comes to brand-consumer relationships. From skipping ads to choosing who sends them emails, the ball is very much in the consumer’s court when it comes to deciding who is allowed to target and interact with them – and when. For an example of ethical advertising in practice, check out GoodLoop. When someone chooses to engage with one of their ads, they donate half of the advertisers’ money to a charitable cause. This gives customers an incentive to interact and engage with their adverts, promoting a more positive relationship between customers and branded advertising.

Mastering this is all about treating your audience with respect. Take My Oxfam app, as an example – this donation app not only allows users to make donations quickly and easily, but shows them exactly what impact their donations have. Unlike the old days of repetitious cold-calling, this donation app can be opened and closed by users when and where they want, allowing them to give on their terms. By taking this more personal approach to donation, you’ll be more likely to drive new supporters to you and keep your current donors engaged, making them feel more valued and respected. This will also prevent you from using valuable resources contacting people who are not interested in your cause.

Sluggish digital growth

Then there’s going digital. In a world where everyone is online, there is no shortage of platforms where you can promote your charity and generate funds. Yet many charities are struggling to keep pace with digital change. Immediate interactions on the likes of Twitter, Facebook and Instagram mean that you can quickly develop a personal rapport with your audience and help spread your message in real time. Increased exposure, brand building, spreading the word about what you do – all this good stuff opens up the opportunity to turn one-off givers into long-term donors. Fundraising platforms can also help you encourage people to raise money on your behalf. These types of channels require little capital upfront but can have really positive results for your organisation.

However, digital fundraising goes beyond having an enviable Instagram feed. Being on Twitter is all well and good, but if you’re still collecting cash donations in a contactless dominated economy, you’re missing out on a whole new way of on-the-ground fundraising. From contactless donation technologies to creating new donation apps, there are plenty of ways charities and non-profits can raise funds without relying on loose change. ShareTheMeal created by the United Nations World Food Programme allows users to tap their screens to donate $0.50, feeding a child for one day. Johnson & Johnson’s app Donate a Photo lets you share your favourite snaps with the world, while they donate $1 to a cause of your choice for every photo you share. Our aforementioned client TAP London lets commuters give £3 at contactless donation points across London, raising vital funds for the homeless. These types of initiatives create ingenious ways to digitally fundraise, helping charities and non-profits stay up to date with the spending habits of their audience.

If there’s one thing the aid sector is known for, it is resilience. Despite the challenges in fundraising that charities and non-profits may be facing, there are opportunities to come out stronger. From the Tate, to the Costa Foundation and the V&A, GoodBox has helped numerous charities and non-profits overcome challenges by embracing digital technologies. Bringing them up to speed with the modern world, so they can concentrate on doing good.

If you want to help your organisation tackle digital transformation head on, get in touch with our team today to find out how we can help.

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