Having strong finances is a priority for every charity, and one that is more salient than ever in the context of rising inflation and the cost of living crisis. Recent CAF research has found that as well as worrying about the increased cost of bills and supplies, nearly three in five (59%) charity leaders are concerned about people having less money to donate to their cause – and, as a result, a third of charity leaders (35%) are worried about their organisation struggling to survive.
These figures show how important it is for charities to be financially resilient, not least in order to weather crises. Here are some options for charities to increase and safeguard their income. Not every option will be suitable for every charity – funding streams are unique to charities and will not necessarily be suitable for all, however, these options could provide avenues to explore further.
Most charities want to find new donors. Your charity might have more connections than you realise, especially if you consider the networks of your trustees. This is something CAF explored in our recent research with the ICAEW (spell out) into the opportunities and challenges inherent to trusteeship.
New donors and sources of funding could come from individuals, businesses, trusts, local authorities, and other non-profits and grant-making organisations. Try thinking creatively about whether your charity has connections that are potentially under-utilised.
Explore innovative ways of giving
The decline of cash is impacting charities. During the pandemic, we worked with UK Finance to encourage people to collect the loose change they had at home and donate it to charity.
However, there are also potential opportunities for charities in an increasingly cashless society. Contactless payments are rapidly increasing, now accounting for 69% of all debit card transactions. Establishing contactless payment points and QR codes enabling donations can be a highly effective way of generating income. It is worth exploring providers like GoodBox, who support the charity sector by providing charities with a range of innovative tools, including contactless donation points, to help them reach new donors.
We should recognise that some charities do not have the investment required to technologically advance in this area. However, there are some simple steps charities can take to improve their website and social media presence, which are relatively cost efficient. You can learn more about how to boost online donations on the CAF website and via CAF Donate.
Many businesses are keen to find ways of partnering with charities and corporate donations can provide an invaluable revenue boost.
Charities can benefit immensely from establishing mutually beneficial charity-corporate partnerships – both in terms of profile and finances. To set up such a partnership, charities can approach potential corporate partners and sponsors with a clear pitch of how a partnership might meet both organisations’ aims, what can be achieved, what success will look like; and why that business in particular is a good match for the charity.
Encourage the use of Gift Aid
During the current cost-of-living crisis, it is especially important to make every effort to remind donors about the value and vital importance of Gift Aid and ticking the Gift Aid box on donations, which effectively adds 25% to every pound given. It is estimated charities lose out on more than £500-600m every year from unclaimed tax relief.
All registered charities are entitled to join the scheme. You can learn more about Gift Aid on the CAF website here.
Financial resilience is front of mind for charities in 2022. Exploring new funding streams can offer ways to exert control over finances and help create a more resilient future for organisations. CAF offers further resources regarding ways to strengthen charity finances, which you can access here.