Will the charity trends in 2020 impact 2021

The Australian bushfire crises and global pandemic have influenced the charity trends of 2020, but not in ways you might imagine. Good2Give sat down with David Crosbie, CEO at the Community Council of Australia to discuss the charity trends seen in 2020 and how they will impact 2021.

Charity trends prior to 2020

David gave us his insights about the decline in not-for-profit sector income, saying it’s not simply a result of 2020, it has been happening for some time. Although the not-for-profit sector has shown a 50% increase in employment in the last 10 years, the sector’s income has been declining since 2014. This decrease in income is the result of a few different factors, including;

  • Higher staffing costs
  • More competition between charities
  • The return on investment for fundraising has decreased
  • Government funding has become more difficult to receive
  • Increasing fees as for-profit organisations started moving into the non-profit space

Charity trends in 2020

Which charities are doing well?

Emergency relief services saw large scale generosity during the Australian bushfires. While an abundance of donations came through to charities supporting bushfire relief, charities that did not provide those emergency services saw a reduction in income. In the wake of an all-consuming national emergency, it was difficult for them to gain any attention for unrelated causes.

Consequently, there has been huge variability in the success of charities this year. Charities that provide emergency relief have received a significant increase in funds.  For example, OzHarvest’s additional available resources have enabled them to increase the size of their organisation. From a technology perspective, we have seen five years of digital transformation happen in just five months. The charities that succeeded in the pivot to digital solutions have most likely not only furthered their reach but managed to maintain their income streams. Those organisations that still use manual financial management systems will have struggled significantly. 

Charities excluded from JobKeeper

Like most industries, the charitable sector was significantly affected by the pandemic. However, unlike other sectors, charities were originally excluded from the Government stimulus package and cash incentives even if they showed a loss of turnover. After successful advocacy from the not-for-profit sector, charities were included in JobKeeper for a reduced rate – only having to show a 15% reduction of income.

Projected charity trends in 2021

Consumer confidence

While some are predicting the imminent return of consumer confidence, David cautioned it will take some time to go back to previous levels. Consumers are still cautious about where they spend their disposable income, including how much they are able to commit to charitable giving.

Working efficiency

Due to the rapid digital transformation seen this year, many charities will be working more efficiently and effectively than before. Also, charities that focus on engagement rather than just ‘stand and deliver’ services alone will be more able to continue their work, and therefore more successful.

Will these charity trends result in charity bankruptcy?

It is unlikely that charities will go bankrupt in the same way a corporation or traditional business does. The impact of decreased funding will be gradual as many charities are familiar with working under a ‘starvation cycle’. This means that they may already have an operational model that can accommodate times of low income. They will try to keep programs and services running even if that means reducing staff, IT, cars, and other resources. Rather than feeling a direct pinch, we will see thousands of ‘zombie’ charities performing their services only part-time.

Frequently asked questions

How do I know what charities need?

Finding out what charities need is easy, just ask them! The more you engage with a charity, the more you will know what is needed and be able to respond. Very often corporates will come in with the perspective ‘We know what you need,’ it is important to listen and engage rather than assume to know what charities need before you work with them.

What can I do to help charities?

Engaging with charities to find out what they actually need is key. Some charities need funds while others might need expertise. Some charities might need help transitioning to online banking or creating virtual events. Recognise that their needs will vary, don’t presume you already know, it’s as simple as asking them!