Fall in donations puts more pressure on third sector

New research suggests donations to charity fell by £70m over 2009/10 - making life even tougher for beleaguered charity bosses.

by Angus Walker
Last Updated: 23 Jul 2013
Some of Britain's top charities are being subject to a 'pincer movement', according to a new report from the Cass Busines School: donations fell by £70m in 2009/10, which is just what you don't need when your costs are rising and your Government funding is about to be slashed. As the public sector is cut back, the Government really needs the third sector to fill in some of the gaps - but instead, charities are finding themselves trapped in a vicious circle, where declining income leads to cuts in staff and marketing spend, further reducing their ability to raise funds. Then again, perhaps they ought to count their blessings...

After all, that year-on-year fall of £70m equates to a decline of just 1.1% in percentage terms - not ideal, of course, but a lot better than many people expected. A couple of years ago, research among corporate leaders found that 60% expected charitable giving to drop by up to a third; relative to that, this research suggests giving has held up remarkably well. Some sectors actually saw donations rise, notably those involved with the armed forces and animal welfare. And corporate donors haven't gone away. The mining industry was the most generous, followed by the banks: even state-owned Royal Bank of Scotland found nearly £64m in donations, second only to HSBC (which gave nearly £70m, up £8m). First Direct has raised more than £2m for the NSPCC's Childline service since partnering with the charity two years ago; surely even the most ardent banker basher could find nothing to grumble at there.

This isn't just about the irrepressible goodwill of UK plc. Companies recognise that being seen as good corporate citizens has a reputational benefit: it helps to attract staff and keep them once they've joined. The MacLeod review under the previous Government found that CSR programmes were an easy and cheap way for companies to motivate their employees, as long as there was a close connection between their charitable activities and their values and purpose as a business. So it makes perfect sense for companies to be seen to be generous donors, and to encourage staff to donate their money (and time) to charitable causes. This also means there's a clear benefit in building stronger relationships with charities, and not abandon them when times are tight.

Of course, there's an argument that things are likely to get worse before they get better; the current squeeze on disposable income from stagnant wages and soaring inflation means that the 2010/11 donation figures could well be worse again. So it's up to charities to find ways to work smarter. Still, the good news is that their corporate donors are unlikely to desert them altogether, because the benefits they receive go a lot further than the fuzzy warm feeling you might get from keeping a few donkeys out of the knackers' yard…

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