The charity sector could be in real trouble this year. Everyone, from the lowest-paid consumer to the largest of multinational corporations, is cutting expenditure wherever possible.
Meanwhile, the many thousands of charities that rely on the annual interest from funds managed by charitable trusts or legacy money linked to shares, have seen a nasty dip in their incomes.
According to the Charity Commission, of about 170,000 charities registered in England and Wales, more than 80,000 operate on annual revenues of less than £10,000. At the other end of the scale, almost 90% of the total £46bn income of the charity sector in England and Wales is controlled by fewer than 9,000 charities – about 5% of the sector. The largest 700 charities, with an annual income of more than £10m each, now attract more than half the total income and this proportion is set to increase as smaller and weaker charities lose their fights to survive.
The economic squeeze creates something of a perfect storm for many charities as the number of people they seek to help increases just as the money they need to provide the help dries up – think about what the nationwide redundancies could be doing to your average local charitable organisation dealing with an issue such as mental health, for example.
The tension is telling. An ugly squabble between two charities went public this week when the Scottish SPCA launched an astonishing broadside at the RSPCA, accusing it of “stealing food from the mouths of Scotland’s defenceless animals” by advertising heavily in Scotland where it does not rescue or rehome any animals.
Such conflicts could become more common, but one executive at a small charity says such a scenario is exactly the opposite of what should be happening. With less money to go round charities should not be turning on one another but working together, according to Joel Rose, director at OCD Action. Despite the fact that charitable trusts account for 80% of OCD Action’s income – a situation he describes as “a killer” – Rose says his charity’s income has actually doubled in the past year.
How? By being smarter, he says. Donors, charitable trusts and other funds will want to see clever and constructive partnerships and joint working between charities operating in similar sectors. Stands to reason, really. If a fund has less money to give then it’s unlikely to give to ten charities doing broadly the same thing.
Research recently showed that joint projects between charities are not the only partnerships that can aid the fortunes of a charitable organisation. Consumers, according to independent market research agency NFP Synergy, are more likely to buy or feel strongly about a brand that donates a segment of its profits to a relevant charity. This issue of Marketing Week offers further insight (and hopefully inspiration) for marketers in the charity sector. Times are indeed bad but with good planning and a little creativity, the next 12 months need not be as bleak as they look.
Cover story, page 16