Charity giving forecast to fall 20-30 per cent

As a new survey shows that charity fundraising income may fall by 20-30 per cent over the next nine months, sector leaders discuss how not-for-profits are fighting back with creative digital campaigns, a new charity funding platform and diversified revenue streams.

Fundraising income in Australia is predicted to fall by more than 20 per cent over the next nine months due to the COVID-19 crisis, according to a survey carried out by Fundraising Institute Australia (FIA).

“A significant number of charities feel it will have a 20 to 30 per cent impact on their fundraising revenue,” Katherine Raskob GAICD, CEO of FIA told the AICD during an interview. “One reason for pessimism is due to charities pulling back from physical face-to-face events, which is a really big source of fundraising revenue for many.”

According to the survey, carried out jointly in March by FIA, More Strategic and Donor Republic, around half of respondents predict that the fall will be more than 20 per cent. The main impact is on the loss of gala and ticketed events like dinners, networking and social gatherings and the loss of face-to-face contact such as door knocking and the temporary suspension of street fundraising.

Another survey carried out recently by a group of suppliers who are FIA members shows that 38 charities reported an actual 14 per cent drop in fundraising income for March 2020, compared to March 2019. The survey, reported by consultancy More Strategic, shows the biggest impact was in the area of events, where income was 43 per cent lower than this time last year. “This figure is significant,” says Raskob.

Smaller charities appear to be most threatened by the COVID-19 crisis, with 19 per cent reporting in the FIA survey that “their very existence is threatened”. Raskob says potentially there could be a number that close down operations, although government assistance under the JobKeeper scheme is now helping many.

Going digital

An April report by JBWere titled Where to from here? examines the impact of COVID-19 on charitable giving, and estimates a decrease in donations of 7.1 per cent in 2020, and 11.9 per cent in 2021.

Fundraising organisations now need to change traditional ways of raising money and turn those into new formats, says Raskob. “Obviously, physical events can't be held. So they need to consider how can those be transformed in a creative and imaginative way in the online space. There are lots of charities that are starting to do that and having great success. There's definitely an increase in the use of digital to connect with donors and supporters in place of the old face-to-face events.”

However there are also other options. “There are more people at home than ever before, so telephone fundraising is probably going to have a bit more success than normal. Direct response TV is also doing quite well. Because more people are at home, the TV is on. And the cost of the advertising space has also come down.”

Some examples of creative digital campaigns by bigger charities are the annual Australia’s Biggest Morning Tea event hosted by the Cancer Council, which has gone online for 2020. Last year it raised $11.9 million and this year $13 million is being targeted.

This year, the Salvation Army Red Shield Appeal, which raised $78 million last year, also hopes to enlist 10,000 virtual collectors this year to sign up and fundraise ($240,000 has been raised so far early in the campaign in the second week of May). Meanwhile, donations were about 50% down from last year for the Melbourne Royal Children's Hospital, so the Victorian state government stepped in with government help to raise the total to $18.2 million. The RSPCA’s Million Paws Walk for the month of May has already raised more than $640,000 nationally. The May 50K walk campaign hosted by Multiple Sclerosis Australia raised $2.1 million last year and has also gone online with ambitions to reach the same target this year, with 40,000 donors. The Starlight Children’s Foundation raised $270,000 (with the help of corporate donations) after targeting $250,000.

“We've come off the back of two massive natural disasters in Australia, the drought and the bushfires,” says Raskob. “So you wonder how much further Australians can dig deep into their pockets, but what's amazing about Australians is that they are very generous. They understand that despite the current conditions or off the back of the bushfires, the causes that they care about still require support.”

As a result, it’s very important for charities at this time to communicate strongly with donors and sponsors. However, the challenge now is that economically, it's going to be a very tough time ahead, she adds.

According to informal research conducted by the AICD, more than 14 major fundraising events have been cancelled for the months of May and June alone this year, with the status of July events unknown at this point.

For boards, the message is not to withdraw support for fundraising, because that will disadvantage the organisation in future years, says Raskob. “There is sometimes a tendency for boards to pull costs out of the organisation, due to fears of what's coming ahead…but fundraising is actually an investment. And so they need to understand that if they pull out fundraising investment now, they may see savings this year but they are also going to see fundraising revenue decline in subsequent years.”

FIA also recommends that fundraisers have a seat at the board table. “Senior fundraisers in this country are very smart in their approach to driving critical revenue. They should hold board positions,” says Raskob.

National charity funding platform

A new online charity funding platform has recently been launched jointly by the Australian Communities Foundation and Philanthropy Australia.

They partnered to provide a national funding platform to coordinate the philanthropic response to the COVID-19 pandemic. On the site charities can register their COVID-19-related funding needs so that individual donors and philanthropic funders can understand the granting opportunities available and respond to the critical needs of the sector.

“The platform has already given us great insight into the generosity of our giving community during a crisis: $433,000 for COVID-19 support to 33 community organisations and counting, and numerous additional contributions from Philanthropy Australia members,” announced the foundation at the end of April.

It has also launched the National Crisis Response Fund which has raised $44,594 and will disperse grants as needed to deserving charities.

Government announces charity help measures

Dr Gary Johns, Commissioner of the Australian Charities and Not-for-Profit Commission (ACNC) agrees that charities have been hit “massively” by COVID-19, due to a halt in face-to-face fundraising and are now living off their reserves.

Johns is not sure how many charities are facing closure as a result of COVID-19, but he points to examples of big staff layoffs such as those at Oxfam Australia, which will cut the number of full-time staff from 185 to 94 by October. 

The charities that have diversified revenue streams and are not solely reliant on face-to-face events are faring better now during this period than others whose fundraising was more narrowly based, he told the AICD during an interview. “You really do need to have various sources of income,” he said.

Economically, in terms of fundraising, there is a risky period now due to unemployment or the fact that people have already given. “I think it's going to be quite difficult for charities to raise new money.”

However, a government announcement last week which gives philanthropists an incentive to donate and give more support to charities at this time is welcome news for the charity sector, says Johns. Ministerial guidelines have been amended for public and private ancillary funds to provide a credit to funds and allow them to make higher donations in 2019-20 and 2020-21, according to a statement from Assistant Minister for Finance, Charities and Electoral Matters, Senator Zed Seselja.

“We know charitable giving is likely to decrease over the months ahead at a time when demand for charitable services is increasing,” Assistant Minister Seselja said.

The minister also declared the COVID-19 pandemic across Australia a disaster for the purpose of establishing Australian disaster relief funds as DGRs, allowing these funds to receive tax deductible donations.

This followed a call by a coalition of major Australian charities, the Charities Crisis Cabinet, co-chaired by Rev Tim Costello and Susan Pascoe, which called for tax concessions by registered entities to be increased to 150% to encourage philanthropic donations.

Boards need to link fundraising to purpose

In general, the principles of fundraising during this climate apply now more than ever, with boards needing to pay close attention to the purposes of their fundraising and recipients alike and the risks involved. “The message is still absolutely clear about purpose and if it's going to a particular charity, then you better check out that charity’s governing document. You need to make sure your fundraising is absolutely aligned to charitable purpose,” says Johns.

Problems can emerge for charities and donors when public passion and a governance model mostly based on trust and transparency clashes with the complex rules governing traditional charitable donations. The most high-profile example of this was the Facebook Fundraiser campaign set up in January by Australian comedian Celeste Barber to benefit the NSW Rural Fire Service (RFS).

Barber’s intention was to give a boost to firefighters and bushfire victims. But after receiving a staggering $52 million in donations, it emerged that the RFS, bound by its own trust deed, could only spend the money in circumscribed ways — on equipment, facilities, training, resources and administration. The matter is now before the NSW Supreme Court.

Charities with ‘hallmark’ fundraising events: 2020

June

July

Source: AICD