UK Giving 2011/12: Dealing with the drop

pound coinCAF and NCVO’s annual look at charitable giving in the UK (UK Giving 2011/12) was launched yesterday, and as you may have seen that the news for charities is not great. Donations are down 20% in real terms (i.e. adjusted for inflation) from 2010/11 levels, or 15% in cash terms. This represents a drop of £2.3bn in real terms, or £1.7bn in cash terms (from £11bn in 2010/11 to £9.3bn in 2011/12).

This is a pretty stark finding,  and it raises a number of immediate and obvious questions:

1) Are these figures believable? Given the surprising drop in the amount of giving, the first thing we need to do is ensure that we are confident in the figures. This is partly about making sure the methodology is robust and partly about trying to work out whether there are contextual factors that make the apparent shift seem more likely.

2) What is the explanation for the drop? This links to the question of contextual factors raised above. We may not be able to identify any one cause or even a sufficient set of causes that might explain the reduction in giving, but we can certainly offer some hypotheses about factors that might have had an impact.

3) What can we do about it? The drop in giving is certainly a concern, and that is why CAF and NCVO are launching a new campaign calling on people to “Back Britain’s Charities”. More detail on this below.

charityBacking up the figures

In terms of the definitive word on the reliability of the figures in the report I will defer to the expertise of my research colleagues- this excellent blog by NCVO’s Karl Wilding deals with the key issues. I will just say a little bit about the wider context though: the first thing to say is that the drop in donations seems explicable by reference to obvious external factors (particularly economic ones), which lends credibility to the figures. (I will examine this question of explanation in more detail below).

The other contextual question is whether this drop in giving reflects the experiences of charities at the moment. This is a slightly trickier issue to untangle. The main thing to bear in mind (and forgive me if this sounds unbelievably obvious), is that a 20% drop in general charitable giving does not equate to a 20% drop in donations to each and every charity.

There will be many charities that will not have seen a noticeable drop in donations, and some that may even have seen an increase. The fact that larger charities with more of a public voice will also tend to be those with greater resources to put towards fundraising, and are therefore less likely to feel the effects of a fall in donations, could also give a false impression that there “isn’t really a problem”. This may well be exacerbated by the fact that many charities will not be keen to admit that their voluntary income is down even if it is, due to concerns that this will give the impression their fundraising is not effective.

If what is actually happening is that the silent majority of smaller charities and community organisations are the ones bearing the brunt of a fall in donations, then this should be even more of a cause for concern. The fact that over 800 people and organisations signed up to support the Back Britain’s Charities campaign in the first 24 hours certainly suggests that the findings have struck a chord with many.

An explanation?

In order to try and explain the fall in donations, we must first look in a bit more depth at the figures behind the headlines. The key pieces of data are that the average (median) monthly donation is down from £11 to £10, and that the percentage of people giving in a typical month is down from 58% to 55%. This means that there are fewer people giving, and those that are giving are typically giving less. This gives us some idea of the trends underlying the overall fall in donations, but it still doesn’t answer the question of why the fall has occurred. Why are fewer people giving, and why are they giving less?

The obvious answer is that it is symptomatic of the economic climate and the fact that individuals have less disposable income and thus less to give to charity. If people are feeling the pinch, as many of us are, then it seems reasonable to suppose that they will review their discretionary spending to work out what they can and can’t afford. While we might want to believe that charitable giving will be retained above other outlays, the reality is that this is probably not the case for many people. Perhaps the most discretionary spending of all is money that is simply given away; so many people will be reviewing their direct debits and giving less in response to fundraising appeals.

It is also worth bearing in mind that this year’s UK Giving figures come at the end of a prolonged period of economic difficulty: perhaps it is only now that we are really seeing the impact on charitable giving? Levels of giving may have remained fairly constant over the last few years of recession and stagnation because people were remaining optimistic about the prospect of things getting better in the near future, but this year everyone might have finally decided that the situation will not improve in the short term and that they need to make adjustments to their own finances, including charitable donations. We will not really know whether this year is an anomaly or indicative of a more general trend until a few years down the road and we have the benefit of historical context.

There is a danger here of assuming something to be true based on personal experience and extrapolation, along the lines of “well that definitely rings true for me, and I’m a pretty average guy, so it must be true for everyone.” I’m usually the first person to lambast others doing this so I’m loath to fall into the trap myself, but it’s certainly true that this explanation does just ‘feel right’ in a lot of ways.

Unfortunately, it is far more difficult to actually establish a causal link between the economic environment and falling levels of charitable giving, but there is plenty of historical evidence that charitable giving declines during a recession (for instance this).

What can we do about it?

Given our concern for the health and sustainability of the voluntary sector, we are obviously not happy simply to highlight that there is a problem; we also want to do something about it. That is why CAF and NCVO have launched a campaign calling on Government, the public and businesses to “Back Britain’s Charities”.

image

 

The five key asks are as follows:

1. Individuals should support charities by giving as regularly as they can, regardless of how much time or money they are able to give.

2. The Government should modernise and promote Gift Aid and Payroll Giving, so every pound given to charity goes even further.

3. Government should ensure that public bodies do not cut funding for charities disproportionately when making spending reductions.

4. Businesses should maintain or increase their support for charities – whether this is financial or practical help for good causes.

5. Charities should work together with the Government to modernise and improve fundraising and to enhance their impact, so that every pound given goes further towards helping beneficiaries.

I will look in my next blog at the rationale behind these asks, in the context of how the Government and others have previously tried to encourage charitable giving and philanthropy. We will be developing more work on each of these asks over the coming months, and want as many people and organisations as possible to back the campaign so that we can work together to make sure that charities do not suffer too badly as a result of this fall in donations.

 

Rhodri Davie

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