12th November 2020
Coronavirus: The need for charities and agencies to share their problems with one another
Published by Kelvin Hopkins, Managing Director at The Professional Fundraiser on LinkedIn, 1 October 2020
There are things I understand in life and things I don’t. I don’t understand how planes stay in the air and I can’t for the life of me fathom why some people go on national television and shows such as BGT when they really have no discernible talent whatsoever. I don’t understand Russian; I struggle at the best of times to understand my wife; and if you read my article from a couple of weeks ago you will know that I cannot understand nor agree with any reluctance from the few charities that are yet to return to face-to-face fundraising.
Returning safely to public fundraising is easy to do. Jobs and livelihoods are on the line. Just get on with it. Such was my message of two weeks ago, although far more diplomatically told!
While we’re on the subject of my last post, and for my many, many followers (all 37 of you), you were no doubt left on tenterhooks, with one burning, all-consuming question. “What is the name of the Italian restaurant?” The answer to which is Sale E Pepe, which I believe is Italian for Salt and Pepper.
Sale E Pepe is one of many great and authentic Italian restaurants that I could recommend, and I could quite easily talk about a number of brilliant non-Italian restaurants too. But we’ll have to leave this for another time, as the best places for a great culinary experience is not the purpose of my article today. Instead I want to talk about budgets. I’m losing you now, I can tell, but stay with me.
For most charities and agencies, the first hurdle that is getting back out in the field is largely overcome. And if you’ve taken this first leap towards some return to normality you will quickly discover that the next hurdle is a reduction in how much charities are willing, or more precisely, are able to invest in face-to-face fundraising. And this challenge and reduction in spend is something I am able to understand.
Please pardon all the acronyms but when the CIoF, CFG, and the NCVO, supported by PwC, carried out their survey between March and May this year, they found that charities responding to the survey were expecting an average reduction of 24% of their total income for the year. Multiply this across the sector as a whole and this would mean a £12.4bn loss of income. For the likes of Jeff Bezos whose Amazon empire has thrived to even greater heights during this time, a measly £12.4bn is loose change; but for the rest of us, for charities and their beneficiaries who are dependent upon such sums, there can be no getting away from the enormity of this significant loss in income.
It is understandable therefore given this phenomenal reduction that budgetary restraints exist throughout the sector. What charities need now is instant cash, to invest in channels that provide an immediate return while at the same time keeping one eye on the future.
And it is this one eye on the future where face-to-face belongs, but when break-even points before the end of year two are good; well that’s not good enough when charities need to fill their coffers now.
Not all charities though are in the same boat. Those with a diverse portfolio of channels, the flexibility to move budget quickly, and also those with a higher dependency on more stable income streams such as legacies have fared better than most; but at the other end of the spectrum are those who are largely reliant upon events, public fundraising, and even trading income for commercial services rather than voluntary donations.
But for the majority, it was inevitable that investment either across the board, or in channels with a longer-term ROI would be reduced for now; leaving the sector, and perhaps for the first time ever, in a position where the supply of face-to-face will outweigh demand, and for both agencies and charities this is a problem. I’ll come back to this in a bit.
Last week Dishy Rishi proved once again that he does indeed have a new printing machine, although one that is clearly not as good as his first and unable to pump out the vast amounts of cash as he once did when the furlough scheme was introduced.
This is not the second time though that Mr Sunak’s ATM has spurted out money, that was with the ‘Eat Out to Help Out’ Scheme, now replaced with ‘Get Out, it’s ten o’clock’. But at the same time, he lavished money through stamp duty cuts and even the Job Retention Bonus, the logic to both, like planes and foreign languages, I fail to understand.
Now though we have a new means to help avoid redundancies. The Job Support Scheme, the JSS. I’m not overly fond of this new scheme if I’m honest, and you may think me hung up on restaurants, but I’ll explain. A restaurant requires its chef every day they’re open, but under the new JSS they can’t afford it. Why not? Because they need to bring back and pay at least a third of the hours for more waiting staff than is initially needed, as well as pay up to 22% of an employee's full salary for the hours they’re not working, not to mention the costs of National Insurance and pension contributions.
Far from allowing businesses to continue their recovery in a logical manner, re-onboarding the hours they require in the roles they most urgently need, they are instead forced to make a decision and to choose between redundancies, or paying for everyone – potentially under-resourced in the areas they immediately require and over-resourced in others. But that I suppose is the point. The JSS is not about saving all jobs, but rather about saving the viable ones, and ones that businesses are confident they will require come the end of April.
Fundraisers in the sector that are either self-employed or worker status are likely to have found alternative work during this time, no doubt helping Mr Bezos build his empire. But if employed with an agency that has lost considerable budget, well those agencies are likely to have to make the difficult decision as to whether to make redundancies on their fundraising team, or through the JSS incur the additional costs and have fundraisers work short-time hours.
Either way, agencies may have spare capacity now, but as budgets and demand shrinks, agencies may have little choice but to scale back and shrink with it.
Where agencies have worked on tight margins and have relied on volume in the past, this volume is now diminishing. Without being able to increase the cost per acquisition, the only alternative is efficiency savings elsewhere in the business. It also means tighter cashflow, a smaller infrastructure, a reduction in fundraisers; or even the inevitable consequence that such an agency would need to close their doors for good, leaving behind a sector with less choice and less capacity.
That was all a bit doom and gloom, and quite unlike me. I’ll try to cheer things up a bit. Our tiny corner of the sector that is face-to-face, is recovering. It’s great to see and to hear about agencies and charities having returned to the field, raising funds in the safest way possible. But we’re not out of the woods just yet. Charities have lost income, are reducing investment, and agencies are feeling the pinch. Both parties have the same problem, but how many of us are tackling the solution together?
During lockdown we at The Professional Fundraiser undertook a survey and instructed an outside company (our good friends at Mobas) to speak to a number of charities on our behalf. It was an anonymous survey and extraordinarily insightful. One of the things that was told to us by a charity was “we want to be able to pick up the phone and share problems, your problems are our problems and vice versa.”
Well let’s face it. If problems were to exist at any time, it’s probably more so now than ever before! But how many of us can say they have a real understanding of their charity or agency partner’s problems. Have we shared our problems with our partners?
How much income have they lost? What does this mean for their future and the employment of others? What impact does this have on investment decisions? What is their recovery strategy and what part can we play? What are their priorities? What does this mean for their cash flow, for their income? What common problems do we both share?
For certain most agencies and charities talk weekly. They talk about recruitment numbers, about gift aid percentages and average donation values. I dare say they talk about complaints and penalty points too (I wouldn’t know, we don’t get many of these!). But how often do charities and their agency partners have strategic conversations. How often do we all talk openly and transparently about costs, margin, and return on investment?
A problem shared is a problem halved, but in this case a problem shared could be the answer to realising a mutually beneficial gain. To talk weekly on an operational level is one thing, but if as a sector we’re to safeguard future capacity, to maintain a competitive market with choice and all the benefits of pricing, service and innovation that competition provides; if we’re to safeguard those fundraising agencies, and safeguard jobs and livelihoods, if we're to be a part of the solution, these strategic conversations are what every agency and every charity should be having together right now.
If ever there was a time (and I hate this expression) to think outside the box, this is it. How can face-to-face pivot to provide a quicker breakeven and instant readies for their charity partners. What can agencies do to make face-to-face more affordable and enable their charity partners to increase investment. Charities and agencies should be working together to innovate, to adapt. We’re past the point of talking about hand sanitiser and ways to ensure social distancing. That was stage one. We’re at stage two now.
Your problems are our problems, and vice versa. Charities reducing investment in face-to-face is as a direct result of their problems, and only adds a further challenge to the myriad of difficulties that agencies have at the current time. Rather than a decision that says we can’t invest, lets opt instead for a joint conversation that says we want to invest, how can we make this happen?