How Virgin Money Giving’s closure effects fundraising

Virgin Money has announced the closure of Virgin Money Giving (VMG). The announcement follows a strategic review of the platform following the end of its partnership with the London Marathon.

 

The company issued a statement, saying: “Given the significant investment required in [VMG] for it to remain competitive, and without the brand exposure provided by the London Marathon, Virgin Money has decided to wind down the platform.”

 

Charities currently working with VGM should expect a full service for fundraising and donations until 30 November 2021. Virgin Money has also committed to helping charities find alternatives wherever necessary and says that it will contact all charities registered with the service.

 

VMG was established in 2009, coinciding with Virgin Money’s sponsorship of the London Marathon. The platform was presented as a non-profit entity that would direct a greater proportion of donors’ gifts to charities, with fees only covering operation costs.

 

The platform proved popular and quickly became a staple of fundraising efforts in the UK. Since 2009, for example, VMG has supported more than 20,000 charities and raised more than £900 million. Alongside JustGiving, VMG was one of the most recognisable platforms in the UK charity sector.

 

The closure of VMG raises questions about the future of online fundraising platforms. It highlights concerns around commercial viability, demonstrates the increasing popularity of alternative fundraising models, and emphasises the importance of risk assessment for charities using third-party options.

 

In this article, we discuss the impact of VMG’s closure on the UK charity sector. We look at some of the above concerns and provide some advice for charities to help them prepare for the future.

 

 

The question of viability

 

The most obvious concern is the commercial viability of fundraising platforms. VMG was one of the most popular options on the market, but it’s pricing structure was not dissimilar to other platforms . So, the closure of VMG draws attention to wider questions about financial sustainability.

 

Simply put, the issue might not sit solely with VMG, but with the viability of the peer-to-peer fundraising model. One obvious outcome is an increase in costs, with price hikes aiming to secure viability, which could in turn change consumer behaviour. This means charities could instead explore other fundraising models that provide a greater return on investment (ROI).

 

Alternatively, if price hikes do indeed occur and the peer-to-peer model remains a strong option, less money will reach charities, which means less money will reach service users.

 

Another concern is that VMG is part of a trend already in motion. Other fundraising models seem to gain increasing traction, such as fundraising through social media platforms – particularly on Facebook.

 

Social media platforms arguably offer charities greater incentives, allowing them to raise funds with little to no cost, meaning charities can receive more of the money they have raised.

 

Critics of social media platforms, however, point to the complexity, often suggesting payment can take a long time to reach the charity, which can cause issues with budgeting and scheduling, among other problems.

 

Others have suggested that, historically, social platforms can create dependency, monopolising certain operations, before sharply increasing costs, forcing organisations to meet such costs.

 

Either way, the VMG closure raises some serious concerns about future viability. It is entirely possible that online fundraising platforms cannot sustain themselves financially with the current pricing structure, or that many platforms will simply be priced out of the market.

 

Two potential problems emerge: closures and price increases. And charities need to be prepared for both eventualities and include them in their risk assessment.