What is the cost-of-giving crisis?

The Big Issue Newspaper defines the cost-of-living crisis as simply ‘a scenario in which the cost of everyday essentials like energy and food is rising much faster than average incomes.’

Many factors are contributing to the cost-of-living crisis, including the conflict in Ukraine, the effects of the pandemic, regulatory challenges, supply chain issues, and environmental concerns. Perhaps the main concern for households, and by consequence for charities, is the cost of energy and bills.

According to the Office for National Statistics (ONS), 91% of adults have experienced an increase in their living costs compared to a year ago (based on public opinion of 5,000 households in Great Britain). Almost three-quarters (73%) reported that costs have increased significantly in the last month alone.

The impact of this crisis is leading to what is becoming known as the cost-of-giving crisis. In May 2022, a Charities Aid Foundation (CAF) survey found that almost 90% of charities are concerned about rising living costs, with almost 60% of charities “concerned about people having less money to donate to their causes”. There is reason for concern. In July 2022, UK Fundraising reported that 55% of the public stated that their current financial situation makes it harder to donate.

The situation may seem bleak, but there are plenty of ways that charities can mitigate the effects of the cost-of-giving crisis.

Diversify your income streams

To combat the impact of the cost-of-giving crisis, charities will need to find various ways to fundraise. Sufficient income diversity means that, if your main source of income (donations, for example) diminish or vanish completely, you will be able to continue operations while still meeting the demands of your service users. Charities could consider some of the below.

Partnerships

The right partnership can open up fundraising potential in a big way, from payroll giving with a corporation or business, to combined efforts on national awareness days with influencers and individuals.

CSR

Most large companies have some sort of corporate social responsibility (CSR) programme, because it can boost shareholder trust and increase long-term profits. But there are considerable benefits for charities, too. From year-round-fundraising opportunities to shared resource and technology, the opportunities are endless.

Merchandise

Selling merchandise is an effective way to raise awareness for your cause. Effective merchandise fundraising can attract, engage, and foster relationships with donors, turning one-time-donors into long-term-supporters.

Check out our guidance on How to create charity merchandise.

Legacy giving

Analysis by Legacy Foresight suggests that individuals will make an additional 26,000 bequests from wills by 2024, with an average value of £25,000. By redirecting revenue from short-term achievements and focusing on legacy giving, charities can prioritise higher long-term gains.

Check out our Top fundraising trends of 2023 for more examples on how to diversify your income streams.

Lean into flexible giving

The cost-of-living crisis, understandably, is forcing many people to reassess, reduce, and streamline their outgoings wherever possible.

Flexible giving enables donors to reduce their regular donations during hard periods and increase them when things are going well.

Digital payment expert PayPoint found that 64% of people who make regular donations to a charity would welcome the flexibility to change the amount they donated as they needed. This suggests that if charities are keen to retain long-term supporters, they will need to give donors flexible options. The below platforms can help charities with flexible giving.

Toucan

Toucan is flexible, trackable, and shareable. With the app, donors can track all their donations in one place, change the amount they want to donate each month, and share good deeds across social media easily and directly from the app. According to Toucan: “We’re changing the way we give to charity, making it fun and flexible, and in tune with the way we live now.”

Flow

Flow is flexible giving made easy. With the app, donors can set how much they want to donate each month. Flow claims to “automate saving, budgeting and investing so you can feel relaxed and confident about your money”.

RoundUp

RoundUp is a flexible giving platform because it allows donors to ‘round up’ their purchases, turning regular spending into monthly or one-time donations. According to RoundUp, “donors who give through RoundUp App keep giving for five months longer than average donors”.

Check Charity Digital Exchange for discounts and offers on software and tech for charities.

Adapt your campaigns

The cost-of-giving crisis will impact the charity sector. But there is a light at the end of the tunnel. According to UK Fundraising, 74% of the public donated in the first part of this year, the second highest figure since the start of the pandemic. Interestingly, 82% of donations came from Generation Z.

Social media is a vital tool for charity fundraising. In fact, according to the Giving Report, 29% of people consider social media to be the communication tool that most inspires giving. Thus charities may need to consider adapting existing campaigns to reach new audiences.

TikTok

TikTok has their own ‘TikTok for good initiative’, stating that non-profits can use the app to grow their audience, activate supporters, and raise awareness around specific causes. Generation Z make up 60% of TikTok’s user base.

Snapchat

UK Fundraising claims that “Snapchat has an extremely engaged, younger, and social media savvy audience that is willing to get involved with charities”. From ads to Geofilters, there’s opportunity at every tap. 90% of Generation Z have used Snapchat.

The donor decision to donate during a cost-of-living crisis should not go unnoticed by charities. Adapt your campaigns and communications accordingly.

Acknowledge the crisis, be honest and transparent about how donations are being used, and most importantly, express thanks when donations do happen.

Check out our guidance on How to talk about fundraising in a cost of giving crisis.