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Thinking about Australian charity

Tag: Donations

Face to face fundraisers and why charities hire them

We all see the charity fundraisers in the streets, trying to attract your attention as you desperately stare at your phone in a vain attempt not to be noticed.

Opinion polls suggest high levels of public hostility towards street fundraisers, also known as “chuggers” (a portmanteau of “charity mugger”), with as many as 80 per cent of those interviewed being against them. Even I’ll confess to not liking them, and I’ve worked in charities for years.

Recent articles, like this one, have come out swinging against these fundraising tactics. Not only that, but these services are famously costly for the charities. This is a reputational risk for the charity as well as a monetary loss.

So if they annoy donors, are hugely expensive, and give the charity a bad name, why on earth do they keep being hired?

The chugger balancing act

For charities, street fundraisers represent a tradeoff. They know that face-to-face fundraising isn’t well liked, and it does put a bit of a dent in their reputation. But it’s very effective, especially at finding people willing to give a recurring donation.

It’s long-term sustainable revenue like that (people giving a few dollars a month) that allows charities to plan for the future slightly better. Most charity revenue is one-time – an event, a fundraiser, a day, or a bequest. This means that one rained out event, or one cancelled fundraiser, has the potential to seriously dent the numbers. Recurring donors, by contrast, give charities a fairly stable stream of money which they can then allocate to research, advocacy, or whatever they choose.

People with recurrent donations also give more – one study found average recurring donor will give 42% more in one year than those who give one-time gifts. Cynics would argue that donors forget about the recurrent funding and thus spend more on the charity than they would if you asked them for a lump sum, but it’s also intimately tied in with the psychology of how humans value money now vs money in the future.

Donors with recurrent funding are rarely donors for life, but they last much longer than ‘one-time-only’ donors. The average length of time they maintain their donation is 4 years. “Over 70% of people that we recruit into organizations never come back and make another gift,” says Dr. Adrian Sargeant, Professor of Fundraising at the Lilly Family School of Philanthropy at Indiana University. Whereas 80% of monthly giving donors are still there a year later.

And donations aren’t the only factor. Street fundraisers also help to raise awareness of a charity, though this is somewhat counterbalanced by the slightly negative associations with chuggers.

Effectively, the simple fact is that charities wouldn’t employ these fundraisers if they didn’t believe the tradeoff was worth it. Indeed, I know a number of charities held off on doing face-to-face because they were worried about the reputation damage. But then they, like a lot of other charities, realised that they were simply ceding donors to other charities who were willing to do it.

 

The numbers don’t lie

To look at just how influential face to face and recurrent donors are, you need to look deep in the bowels of charity financial reports. Most charities won’t pull out their face-to-face numbers but thanks to the Charitable Fundraising Act (1991), NSW charities have to provide some details on where their fundraising comes from. After a quick trawl through some annual reports I’ve found two that actually give broken down numbers: Cancer Council NSW and Amnesty International. They tell different but related stories.

Amnesty International is, thanks to its ‘sponsor a child’ program, one of the most heavily weighted towards recurring donations. Looking at the Amnesty International financial breakdown (Note 19, page 31), you can see just how heavily they rely on regular giving. Of their $25m in fundraising revenue, a full $21m is regular giving.

Looking at the Cancer Council figures (note 22, page 39), you can see that face to face revenue is not as significant ($15m in revenue out of $83m) but it’s still the second-largest source of funds after bequests. By comparison, Daffodil Day raises less than $3m.

Of course, we’re confusing two very different issues here – recurrent donations are not only raised from face-to-face fundraising. Most charity websites now offer a ‘regular donor’ option, and often irregular donors will be contacted to try and get them to upgrade to being more recurrent. Yet face-to-face remains a key part of the fundraising mix and the one of the most successful at getting regular donors.

I do feel for the poor fundraisers. I’ve worked with several face-to-face fundraising organisations during my time at charities, and they’re generally full of young, friendly people. It’s a thankless, soul-sucking job, and they’re actually doing a better job for charities than most people realise. Of course, you’d be far better to donate directly to a charity on a regular basis, thus cutting out the middleman, but in the absence of everyone doing that they will continue to walk the streets.

How to give money over the holiday season

Christmas, the saying goes, is the season for giving. While the giving of gifts is a relatively recent invention (post-1880), the spirit of generosity is now inseparable from the holidays. A third of people say that they are more likely to give a donation to charity over the festive season. This willingness to share and connection with our fellow human beings is indisputably a wonderful thing. But with so many ways to give, it’s not always easy to know what the best ways are. Here’s some things to keep in mind.

 

Where you donate matters

Charities have come up with a huge variety of different ways to raise funds in connection with the holidays. Some of them are better than others, however.

Online

From a charity perspective the best way is almost certainly a direct donation. Most charities will have some kind of online or phone donation option, and these are almost certainly the fundraising option that costs charities least. It’s worth noting as well that recurring donations are far more valuable to charities, if only because they’re a stable and reliable source of income in an industry sorely lacking in them.

Street donations

Chuggers are everyone’s favourite punching bag in the charity space. Nobody likes being approached by them when they’re just looking to go quietly about their business. Yet because they are a sustainable source of long-term income, charities use them. Chuggers are a vital part of many charity’s revenue streams. But for you, the discerning donor, they’re not a great way to donate. Having people on the streets is labour intensive, so it’s costly for the charity. A good proportion of your donation will go straight to the company running the

Charity balls

The holidays also seem to coincide with party season. Events can be an excellent way to raise money for charity, but be careful. The more glitzy the event, the more expensive it is to run. Charities wouldn’t do it if it wasn’t helpful, of course, but be aware that a significant proportion of the money raised on the night goes to pay for all the fancy food and wine and entertainment. Small events, especially community-organised ones, are often much more efficient at passing money on (but earn less individually).

Holiday cards/gifts

Charity holiday cards are also a significant donation strategy. These are actually a relatively good way to give money, as the charity can generally make a fair margin on the cards and they also act as promotional material. Be wary if you’re not buying cards directly from the charity themselves, though – the proportion of the purchase price that goes to the charity can vary wildly. 25% is a good minimum benchmark.

Volunteering is donating too

Your time can be more valuable to a charity than any amount of money you give them. There are a range of ways you can help, from running fundraisers at your workplace, to traditional soup-kitchen style volunteering, to donating your specialist skills and expertise. Ask the charity of your choice and they will have a range of ways for you to get involved.

Volunteering isn’t just for Christmas, though. Unlike donations, charities can’t “store up” volunteering until they need it. Often, they will get a big uptick in volunteering during the holidays that then disappears for the rest of the year. This feast or famine situation can give charities a serious headache. So when you volunteer, commit to doing so for at least a few months after the holiday period – it will be a lot more valuable to the charity, and you’ll get a lot more out of it as well.

 

How you donate matters

It’s not just the method you use to give money, there’s a few other things to keep in mind to make your donation most effective.

Don’t be specific

In general, it’s far better to let charities decide where your donation should be spent rather than being prescriptive. The more specific donors are, the more hamstrung the charity will be and the less strategically they can plan. For example, if a charity wants to run an exciting new program but all the donations are tied to specific issue, they may not be able to. Charities can also find it difficult to fund necessary day-to-day expenses (from auditors to phone operators) if their funds are constrained. In general, if you trust a charity enough to give them money, you should trust them enough that they know the best way to spend it.

Don’t spread yourself thin

Donating relatively large amounts to a few charities is, in general, better than a lot of small donations to many charities. This is mostly due to transaction costs – the smaller the donation, the more gets eaten up by credit card fees or handling fees or other things like that.

 

What you donate to matters

This shouldn’t come as a surprise – what you donate to (both in terms of cause and specific charity) makes a huge difference in terms of the change that your donation can create.

The best places to donate

If you want to make sure that your donation goes where it will do the most good, there are a few organisations that do rigorous assessments of charities to really pick the cream of the crop.

Of course, there are a lot of assumptions that underpin these sites (they mainly assume that saving human lives is the best thing a charity can do, which is an uncontroversial but not universally held belief), but in general they will recommend charities that will do enormous amounts of good with your donation.

The best of the rest

Not all of us are quite selfless enough to donate to where the need is absolutely greatest. And that’s not the only factor to consider – if you’re more likely to donate to a particular cause because it’s close to your heart, and thus likely to donate more and more often, then it can actually be better for the charity sector if you focus on what you care about most.

That’s where ChangePath comes in, to help you select the best charities in the Australian not-for-profit sector. Use our guide to find the charities that most resonate with you, then select organisations that spend your money wisely and tell you how it is spent.

 

Don’t forget – charity isn’t just for Christmas

Charities work all year round. A donation during the holiday season is excellent, but charities that have huge peaks and troughs in their fundraising may find it difficult to think strategically. Plan out how much you want to donate this year now (both money and volunteering), and strive to meet that goal. You’ll feel better about it, and the charitable sector will thank you.

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