According to a new report released by wealth manager JBWere, giving in Australia could drop nearly 20% by the end of 2021.
The ramifications of the global health and economic crisis caused by the COVID-19 pandemic, as well as the catastrophic bushfires in 2019-20 and the unprecedented generosity shown by Australians during that time, will see overall fundraising fall significantly.
The report “Where to from here? The outlook for philanthropy during Covid-19,” estimates that total giving will fall by around 7.1% in 2020 after rising by almost 5% over each of the previous two years. The larger effect from the current crisis is likely to be felt in 2021 when giving is estimated to fall by a further 11.9%, back to levels not seen since 2012.
Key fundraising channels shut down
Face-to-face fundraising and events are currently suspended, with no clear timeline as to when they might resume. This has put huge pressure on fundraisers – some charities have up to 80% of their fundraising budgets committed to these channels. According to the PRFA (Public Fundraising Regulatory Association) last year about 335,000 donors signed up with their charity members, which translated to roughly $140m in annual funding. That is a huge hole to fill. We hear at The Vocal Minority that the New Zealand market is seeing similar trends.
Events and appeals are another important fundraising channel that is massively hit by COVID-19. While there are success stories of people raising massive amounts for charities – remember the fantastic effort of 99-year-old WWII veteran Captain Tom Moore walking 100 laps of his garden? – the reality for most is different.
Melbourne Royal Children’s Hospital’s Good Friday Appeal, a long-standing annual event that normally includes a full-day telethon and multiple associated events, raised $9,6m – just over half of last year’s total. The charity was saved by an unprecedented last-minute gesture where Premier Daniel Andrews pledged to top up the fund to a record $18.2m – up from $18.1m last year.
Another standout success story was the BBC’s charity special The Big Night In which saw Children in Need and Comic Relief join forces for the first time. Almost $53.2m was donated during the three-hour event, with the British government promising to double the total.
An event is a big cash injection but also an important networking opportunity. This is when major corporate sponsors engage with charities and where bequests and philanthropic support are generated. The knock-on effect of not proceeding with these events will not be felt for some time to come.
What can charities do in this situation?
One overlooked side effect of so many people working from home is that contact rates for telemarketing are the highest they have been in years. The rapid decline in landlines and the ability to decline (or block) calls from unfamiliar numbers meant that contact rates had dropped by about 45%. Telemarketers are now reporting that this has lifted by 15% over the past six weeks. This has significant impact on the overall cost per acquisition for a regular giver.
This has reinforced telemarketing as a very strong channel in both regular giving programs and lotteries. One noticeable trend is that donation rates are down a little, as people tighten belts, but there is a spirit of wanting to help out.
Digital marketing is also a very powerful tool in the current climate. Charities that have their digital house in order (there are less than you might expect) are reaping the benefits from social media campaigns and virtual appeals to their base.
What does it all mean for charities in Australia?
The old maxim that good businesses thrive in tough times has never more relevant. Charities are in the same boat as any other corporate businesses. This is an opportunity to tighten processes, eliminate loss-making initiatives and focus on winning strategies. Any charity that doesn’t have a strong digital team must find people who can help – there are plenty of great and experienced folk with time on their hands.
The current situation won’t last forever but it is likely to have a long-lasting impact on the charity landscape in Australia. This is the time to act and future-proof fundraising activities.