Cost of Living is the all too common shorthand for the increase in our daily expenses whilst the value of our dollar falls.
This experience is not restricted to individuals. The not for profit sector is also experiencing an increase in demand for services along with cost pressures, such as wages and other overhead expenses. This comes at a time when mass market fundraising is flatlining.
Australians are generous. The ACNC reports that in 2023, Australians donated $13.9 billion and 3.5 million people volunteered their time to a charity.
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However, these encouraging figures mask a worrying trend. The year-on-year growth in giving declined from 5.3 per cent in 2022 to 4.4 per cent, and what’s more, fewer donors are giving larger gifts.
The NAB Charitable Giving Index shows that smaller level donors have not returned to giving at a pre-covid rate. This makes sense; smaller gifts, such as those from tax appeal initiatives, are derived from disposable income. With the cost of living squeeze, Australians may still have the desire to give, but they simply do not have the capacity to do so when every penny is going towards day to day living expenses.
Giving may be making a recovery from Covid, but the cost of living is hampering that recovery,
In conjunction with this worrying trend in giving, is the steady decrease in volunteering since 2016. NFPs not only rely on volunteers to deliver their services and raise funds, but volunteers are more likely to be donors themselves. Generally, the more involved a person is with an organisation, the more connected they are and, therefore, more likely to make a donation.
Therefore, the challenges NFPs face are twofold: how to raise the dollars to deliver their services and how to attract and retain the donors and volunteers who will supply those funds.
These challenges also provide the opportunity to innovate and develop new programs to attract and retain a community of supporters who will provide long-term financial stability to NFPs. This requires funding to attract and retain specialist staff to develop new marketing and donor relations programs.
Donors are often reluctant to fund such overheads, instead choosing to fund frontline services. In addition, funds raised via traditional fundraising programs that provide a tax receipt in return for a gift – commonly referred to as DGR giving – often have restrictions imposed on them from the donors themselves and/or the ATO guidelines that govern DGR giving. This provides little wriggle room for developing the back-of-house programs that can increase cash flow to deliver on NFP’s mission.
An alternative to DGR fundraising is, conversely, non-DGR fundraising; that is, donors don’t receive a tax receipt because there may be a substantial benefit from the gift, such as funding from an auction. This kind of funding doesn’t have the same types of restrictions on the use of the funds and, therefore, could be used towards developing programs to engage more donors and increase the value of gifts in more traditional fundraising programs.
Whilst simple enough in theory, raising funds in this way is often tricky. While donors are giving to their favourite charity with good intent, there is no doubt that the financial benefit from a tax receipt is an incentive to give.
The Entertainment group tries to give NFPs a fighting chance by providing marketing materials, advice and support to develop fundraising campaigns. Since 1994, the group has helped their partners raise over $110M through book sales and, more recently, their membership program.
Membership helps supporters save on day to day expenses such as groceries and petrol, entertainment, including movies, sporting events and travel while 20 per cent of the sales goes towards NFPs.
Universities who sensitively acknowledged their community’s financial difficulties during the GFC did better in their fundraising campaigns in the years that followed.
With the Australian government’s goal to double giving by 2030, it is critical to keep donors and volunteers engaged and front of mind through this period so that NFPs can build deeper relationships that they can harness as the economy recovers.
