How can charities prepare for a downturn?
Economic downturns can be challenging times for charities. As fundraising drops, demand on services tends to increase. To continue offering help to those in need, charities must take decisive action. This means innovating where possible, and not being afraid to make difficult (and complex) management decisions. Here are some more tips on how charities can prepare for a recession so that they can come out stronger on the other side.
Invest in Digital
The coronavirus pandemic has catalysed the shift towards a greater use of technology. Alongside for-profit organisations, in order to stay safe, charities have been forced to adopt new ways of operating that rely on technology. This includes remote working, developing their websites, organising online fundraisers, and investing in contactless donation technology. Although improving ‘digital’ requires investment (currently at a time when finances are stretched), it’s likely to result in dividends; our data shows that charities using our ‘tap-to-give’ donation terminals, for instance, see an average ROI of 212%.
Diversify revenue streams
Fundraising is still the most important source of income for charities. Although a little dated now, a 2010 government report following the financial crisis then showed that 45% of revenue for UK charities came from public fundraising (this percentage was higher for smaller charities). In order to keep afloat and avoid using reserves, many charities will need to consider diversifying their revenue streams; investments, subscription schemes, and government grants should all be considered.
The National Council for Voluntary Organisations (NCVO) estimated back in March 2020 that the lockdown would cut the income of UK charities by around £4.3 billion. Despite best efforts to boost revenue through diversification, charities may have to find ways to cut costs. They may also need to re-consider their reserves strategies in order to become more flexible when times get tough.
Consider ‘big’ strategies
Charity executives may need to take a step back and look at the bigger picture when deciding how to navigate the post-COVID world. These wider strategy re-structures could include merging (or collaborating more closely) with other charities, forming cause-based consortia, or engaging more with private sector organisations and CSR departments. Whilst significant change can be daunting, it can also lead to successful new models that carry success past recession.
Maintain donor communication
Many will be less able to donate in the coming months because of financial difficulties, but it doesn’t mean that they don’t want to. When the economy begins to recover (and it will), it’s highly likely that they will begin to donate again. In the meantime, it’s important to maintain effective communication with the public, either through social media or online fundraising events. Keeping up the momentum will help your organisation get back on its feet once the ‘new normal’ has firmly established itself.
GoodBox is here to serve the needs of charities. We make contactless ‘tap-to-donate’ technology that helps charities move away from a reliance on cash, and towards a more profitable, data-driven way of fundraising.
So far, we’ve helped organisations like The Church of England and The National History Museum boost their donation revenue to fund their causes. If you’re interested in finding out more, please get in contact.