Is your charity managing the risk of donor dependency?
In a recent survey of 200 charity leaders one third believed their organisation to be over-reliant on a single source of funding. It is a warning that needs to be heard. In a world marked by years of austerity, the Brexit stalemate isn’t making things any easier. In fact, with sector leaders predicting increased levels of service need (deal or no deal) times look set to get tighter - and no charity wants to see their future bound to the success of one income stream alone.
It’s easy to say. Yet as organisations work to balance modest, and often declining budgets, it can be hard to plan ahead. In fact, the same survey shows one in five charity leaders failing to look past an immediate 12-month timeframe. Not only does this make it hard to spot upcoming risks, such a short-term restricted focus can stop organisations from harnessing important new opportunities.
It is an important lesson to learn. We’d all love a miracle, but unless you’re ice-bucket lucky, most miracles take planning. Fortunately, the sector is far from stagnant. In fact, if you turn the above statistic on its head, you’ll find that 80% of respondents are planning ahead - with 60% successfully diversifying their incomes in the past three years. The question is, how?
Looking at the Charity Risk Barometer, the most popular move is the provision of extra services to win funding. No, we don’t advocate mission creep, but perhaps there’s a balance to be struck here? Chasing money at the expense of your vision is damaging, but tapping into opportunities that fit user need and emerging funding opportunities is smart. It’s also interesting to see a number of organisations starting to commercialise their services. It makes sense, especially given the increasingly contractual nature of international aid, the rise of the social enterprise, impact investment, charitable shares and bonds. Don’t worry if it’s all sounding a bit complicated - awards, corporate partnerships, high-value giving and investment strategies are also proving popular ways to help organisations diversify their incomes.
Unsurprisingly, the Charity Risk Barometer also shows organisations starting to reach out to new supporters through digital means, with 47% of charity leaders predicting a rise in technology-based giving. Of course, Gen Z are the holy-grail here, and that makes social media a popular choice for those looking to engage a younger audience (although traditional methods such as volunteering, community links, schools, colleges and universities definitely still have their place).
Whichever approach your charity has decided to take – and however long the road to success might seem – remember how important it is to start that journey. Don’t lose momentum. It will take time to find a strategic combination that works, but is important that you do. We live in uncertain times, and if your charity is caught off-guard, one strong gust of wind could be all it takes to knock it over.
Speak to one of our Not for profit specialists to find out how you can use our Not For Profit solutions to meet your donor engagement needs.
