How does recession affect charitable giving?

Recessions are tough for charities. With less money in circulation, raising funds can become difficult. Problems are further compounded by the fact that there’s growing demand on the core services of many charities, especially those dealing with homelessness, food poverty, or domestic violence. Is it all doom and glow, though? In this post, we take a look at the latest stats on how recessions influence donation trends, and suggest some ways on how to improve fundraising during a downturn. 

Do people give less during recession? 

In a word, yes. It’s inevitable that donations decrease during recession as people prioritise their own immediate needs. The most comprehensive and relevant data we have in a modern context comes from the 2008 financial crisis. According to a report from the Charities Aid Foundation (CAF), the total value of donations in the UK fell by 11% between 2006/07 and 2007/08 as fewer people gave to charity and in smaller amounts. 

Donation habits during coronavirus 

More recently, economic hardship seems to be having a similar effect on charity donations. Although the data is still fresh, another report from CAF states that 53% of UK charities have experienced a drop in donations in the period March – June 2020. Whilst this is a staggering decrease, it’s important to note that it’s not simply a result of reduced economic activity; it’s also due in part to the practical impossibility of holding in-person fundraising events during lockdown.  

An interesting, though tragic, corollary to the current situation is that legacy donations are expected to increase. According to Legacy Foresight, UK charities are expected to receive 1.6% more bequests over the next five years as a direct result of COVID-19. 

Which causes receive the most donations during recession?

This is a tricky one, with different answers depending on where you look. Data from CAF, for instance, shows that donors barely changed which causes they gave money to before, during, and after the 2008 financial crisis. According to their study, medical research, hospices, and children were the most popular causes regardless of the state of the economy. 

More recent data suggests that the particular nature of a recession influences where people direct their donations. The current pandemic, for example, isn’t a ‘normal’ economic occurrence, and the recession that has started as a result of lockdown doesn’t fit into the standard ‘boom-and-bust’ model. 

Given the unique nature of the current situation, it appears that donors have slightly changed which causes they donate to. A survey conducted by Opinium, a strategic insight agency, suggests that the most supported causes during the pandemic have been: animals, specific diseases, poverty, homelessness, and local services – signalling a moderate departure from charities focused on children, mental health, and emergency search.

A greater focus on local causes has indeed been registered elsewhere; in April, CAF reported that 41% of people wanted to donate to local charities (up from 34% in March) – a statistic that might be connected to greater community feeling as a result of lockdown measures. 

Who donates the most during recession? 

Donation patterns during times of recession reveal something interesting about why people give to charity. Following the 2008 financial crisis, for instance, those on higher incomes tended to give less, despite still accounting for around 60% of the total donations received by UK charities.

Surprisingly, however, other evidence suggests that those on lower incomes actually donate more during an economic downturn. A study by the Chronicle of Philanthropy showed that US households with a combined income of over $200,000 decreased their donations by 4.6% between the years 2006-2012, whilst those earning less than $100,000 increased theirs by 4.5%. Why would this be? Well, it’s likely that those on lower incomes are closer to the problems that charities are dealing with, and may feel more empathy with their causes. 

Fundraising during a recession 

Regardless of who gives what and to which causes, it’s vital to adapt your fundraising strategy during a recession. The main things to remember are: 

• Maintain your message – Even if people are less likely to donate, it’s important that your cause remains heard. Maintain a clear and strong message whilst being sensitive to the struggles of your audience. It’ll help to maximise the chances of donation and ensure your charity remains relevant once the economy has improved. 

• Target – It may be tempting to appeal to as broad an audience as possible, but it’s much more effective to target specific demographics. Create a ‘donor persona’ and tailor your fundraising efforts to them. 

• Go digital – The single most important action you can take is to invest in digital fundraising. This doesn’t just involve more engagement with social media and digital marketing, but an increased use of technology; contactless payment tech, for instance, has significantly increased the donation of organisations like The Church of England and the Ruth Strauss Foundation.

Looking to bolster your fundraising efforts during hard times? GoodBox’s contactless ‘tap-to-give’ donation terminals might just be the answer. Responding to a growing trend away from physical cash, our innovative and customisable tech is helping UK charities increase how many donations they receive. Sign up to become a GoodBox member for free – you’ll receive discounts off our hardware as well as free access to our data-centric fundraising reports.