How charities can survive an economic crisis

Charities have faced a multitude of crises in recent years. After the Covid pandemic, the charity sector was dealt a further blow with the cost-of-living crisis, which saw costs rise, donations dwindle, and demand for support among the most disadvantaged communities grow.  

For some, it has been too much and they have been forced to close. A “desperately difficult fundraising environment” was cited as a factor by loneliness charity Cares Family when it announced its closure in 2023. 

Similarly, Cornwall Museums Partnership said a “challenging funding climate” and the loss of Arts Council England funding was behind its decision to close in the same year. Also in 2023, charity infrastructure body Children England said “financial challenges” were a factor in its closure. 

As well as the cost-of-living, charities are facing other unique challenges. Children’s charities, for example, also face a long-term threat to their survival as a result of an ageing population and reduction in the birth rate, which are eroding the public’s personal connection to them, according to analysis by nfpResearch in 2023. 

While ten years ago, two in five people listed these charities are their favourite cause to support, this proportion now stands at a quarter, the research firm found. 

Survival mode during economic recession

According to the NCVO, one in five charities may have closed by the end of winter of 2023/24 due to a ‘cost-of-giving’ crisis as charities battle demand as donations and income falls and costs rise.  

Many others in 2024 will have to make tough choices on who receives help. One in eight have already been forced to turn away people in need of help due to the financial challenges they are facing, according to a Charities Aid Foundation survey of 600 charities that was published in September 2023.  

Using reserves is another tactic for survival. But this is often only as a last resort as this pot is finite. In September 2023, a third of youth charities surveyed through the National Youth Sector Census said they only have enough reserves for up to a year of normal operation.  

Target young people through digital 

Among more positive measures charities can take, they can review their promotional strategies. In particular, charities are being urged to ensure they are targeting the next generation of long-term donors by focusing on campaigns that appeal to young people.  

A survey by Barclays Corporate Banking in 2022 found that nine in ten young people aged 18 to 24 donated over the previous year, more than any other age group. A quarter of this age group donated via social media.  

A separate survey by online fundraising platform Enthuse found that almost three in ten donors belonging to Generation Z are inspired to give to charity by social media posts, double the proportion among all age groups.  

Scott Logie, Chief Commercial Officer at consultancy Sagacity, which works with among others Macmillan, Marie Curie, and MS Society, urges charities to turn to multichannel fundraising strategies to attract young donors.  

He says that, while “door drops may appeal to Dorothy donors”, referring to older charity supporters, he believes that more charities will look to use their fundraising “to bring in younger generations through digital platforms”. 

Consider partnerships during economic crises

Another strategy for survival is for charities to work in partnership with each other to attract support and donations to their joint causes. 

For example, children’s charities could help each other “to crack younger demographics”, according to nfpResearch, through “increased involvement or commentary across wider campaigns and movements such as the mental health epidemic”. 

Such partnerships can also be vital to attract the attention of funders and policy makers to unlock further vital funding. For example, more than 50 charity organisations, including NCVO and Charity Finance Group, have come together through the Civil Society Group on a variety of campaigns. In autumn 2023, this included their joint call on government to tackle underfunding in its public service delivery contracting and grant making for charities.  

Similarly, In June 2023 more than 1,000 small charities came together to write to the Prime Minister Rishi Sunak calling for better recognition of their role in society and investment in their work.  

Meanwhile, in July 2023, a group of 92 environmental charities and other organisations through the coalition Climate Action Network UK launched a joint lobbying push urging the government to honour previously made commitments to tackle climate change. Charities involved included WWF-UK, Action Aid, Oxfam, and Save the Children. 

Highlight expertise during economic hardship

Charities are full of highly skilled workers and volunteers who know their communities and their needs well. nfpResearch urges charities to ensure they are well positioned among the public as experts in their field. 

“The public like specificity”, says the research firm, “so long-term, transparent plans and a clear mission statement can help charities to reclaim audiences”. 

This clarity can help attract high profile donations and support too. For example, in 2023 the comedian Joe Lycett chose homelessness charity Crisis to support as part of a spontaneous campaign he launched on Instagram. This focused on his protest over comments made by then Home Secretary Suella Braverman, that rough sleeping is a “lifestyle choice”.  

More than £66,000 was raised for the charity, which clearly appealed to Lycett thanks to its expert simple messaging around tackling homelessness.