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This updated report on the current charity sector fundraising trends 2024 uses Charity Excellence data to look at the impact on fundraising over the last 4 years, what future trends might look like and identifies ways in which charities could respond.
Charity Excellence has aggregated user data anonymously since 2018 and, for fundraising, uses a bank of 83 questions.
For ideas on what a wider and sector level response might comprise, go to the last section in our £1 billion Funding Cuts Report.
In our last update, we reported that the fragile fundraising recovery had been completely derailed by the £1 bn in Government Funding Cuts to charities. We also identified that small charities had been hit hardest. The graph below is fundraising performance over the period Jan 20 to end Oct 24. The dip far left is Covid in mid 2020, the dip middle right is the deeper impact of the Cost of Living crisis in Quarter 1 of 2024 as we predicted, followed by recovery from mid 2024 onwards.
| The 2nd dip far right is the impact of the Government funding cuts we predicted in our £1 bn Funding Cuts report. What we've seen since then is the slow recovery we predicted.
The good news is that small charities no longer appear to be lagging behind everyone else. |
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Almost all fundraising is ultimately driven by the economy, so we don't expect to see a full recovery until that happens. Overall, our near term outlook remains unchanged with slow recovery in the next 12 months. Our longer term outlook has deteriorated (beyond 2025). Sector level collaboration to deliver a recovery plan and AI are the 2 issues that we could use to change that trajectory.
Economic Growth. The OBR doesn't anticipate that will lead to significant growth over the next 5 years.
The Budget will only “temporarily boost” the economy, throwing into question the government’s promises to reboot growth. Office of Budget Responsibility (OBR).
To deliver growth, the Government will have to convince business to invest. Moreover, spending the money allocated to the public sector is easy. However, doing so well to deliver a return on that investment is a lot harder, as we saw with the PPE contracts, water company contracts and HS2. We can hope that the mistakes of the past are not repeated but delivering growth will take time, even if the Government is successful. And don't forget the numerous global risks that could impact the economy and over which the UK has little control.
Fundraising should slowly get better but the long-term outlook may be problematic.
Tax Increases. The tax increases, particularly the National Insurance Contributions are bad news, albeit this will have most impact on the larger charities. Some 95% of charities are volunteer run and the increase in Employment Allowance and lifting the limit on this will help to partly buy out the impact on smaller charities. Anecdotally, since we raised the alarm over the £1 bn in Government Funding cuts in 2023, we have seen increasing numbers of charities closing but we don't yet have the data to demonstrate a causal link. Irrespective of this, whatever is happening, has just become worse.
The sector is in deep crisis, which has just become worse.
We hope that NCVO's initiative leads to the Government rethinking this.
Public Sector Funding Cuts. We also remain concerned about funding cuts. Money has been invested into public services but quite a lot is infrastructure and how deep cuts in unprotected areas like justice will be remains to be seen. In 2022, we warned about this and, as our Sep 23 £1bn funding cuts report showed, the cuts derailed the sector's fragile recovery from the cost of living crisis and plunged us further into crisis. In our report, we explained how to avoid that and we can hope they might just have listened.
We estimate that you’d need an extra £9 billion or so to avoid cutting unprotected departments after next year. Institute for Fiscal Studies.
If this materialises and the Government is unwilling/can't increase taxes still further, then another round of sector funding cuts seems likely, unless the Government were to act on the recommendations in our 2023 report.
There is a very real risk of further deeply damaging cuts to Government funding for charities.
Sector Covenant. We hope that NCVO/Acevo are successful in engaging Government in a way to drive delivery, not just warm words and aspirations.
We hope that the proposed sector covenant leads to positive change.
But we'd like to hear what will be different this time that will make it work. We had a covenant. It didn't deliver. And the Social Value Act. Didn't deliver either. So they launched it again. Same results, plus ça change?
Hackney Council is to cut grants for local charities by more than £800,000. Evening Standard, Nov 24.
We believe that the sector bodies need to collectively take ownership and collaborate to create a strategy for recovery, then work with Government to deliver it. We laid out how this could be achieved in our Sector Roadmap for Recovery.
Digital Moats. AI could be used to drive up fundraising income overall, in the longer term, so this is very positive. However, our concern remains about the Digital Moats we've been warning about for some time.
CRUK has spent an extra £24m, reflecting an investment in supporter-focused digital transformation, which will lead to future income growth. Civil Society, Sep 24.
That is large charities using AI to develop overwhelming dominance in fundraising, unless the sector as a whole moves towards rapid, safe adoption of AI. The large charities already get the vast majority of sector income and even a small percentage increase in this would represent a very significant decrease for others.
AI could grow overall sector income in the longer term but there is a risk large charities might out-compete the medium to large charities.
Near Term Outlook.
Which may eb very unlikely, if Donald Trump imposes tariffs on the UK, when he becomes President in January, or if the tariffs he imposes lead to a global economic downturn. That could make a very bad start to the year.
Long Term Outlook.
In light of the recent assessments of potential tax increases/funding cuts and poor economic growth in the medium term, and the risk from a Trump Presidency, we think a full fundraising recovery in 2026 is now significantly less likely.
'tariffs would halve GDP growth in the UK — amounting to a £21.5 billion hole in Rachel Reeves’s tax and spending plans — push up inflation by 3 to 4 percentage points'. National Institute of Economic and Social Research (NIESR Economic Outlook 4 Nov)
So, we just have to hunker down and sit it out? No. Currently, only 18 of the 82 income generation metrics are at green. That is, charities reporting these are not being done well. Whilst some are externally driven, many are amenable to management action. Yes, funnily enough, having enough people with the right skills/experience and a sufficiently large pipeline of funders, are both poorly rated. The situation doesn’t look grim, it is grim, but I offer you 3 possible responses.
Tax Reliefs. Firstly, whilst tax reliefs aren’t ‘proper fundraising’ they represent a huge source of income. We don’t need to bid for this, we’re entitled to it and all we have to do is submit claims. We fail to claim about £500m pa in Gift Aid alone, that’s just one of many tax reliefs, which can be claimed up to 4 years retrospectively. That’s £s billions.
Donors & Systems. Secondly, other areas reported as weak include having processes to identify and engage potential funders, and re-engage lapsed funders, and systems to maintain and grow engagement with existing funders/supporters. And having a CRM system that is used to improve fundraising effectiveness is and always has been rated poorly. Fundraising isn’t just about asking for money, but I suspect too many trustee boards and some CEOs still don’t get it.
Fundraising AI. Finally, I think AI represents one of the biggest opportunities for the sector in a very long time, particularly for fundraising, because it can’t do one thing, but it can do 2 things. It’s not going to replace fundraisers because it’s not human – it just doesn’t have the creativity and flair needed to be a good fundraiser. But it can substantially augment your capabilities and it can also do the heavy lifting with admin, freeing you up to do more of what you’re so good at – creativity and flair.
The last 4 years have been brutal, and fundraising isn’t going improve rapidly, but we have one huge asset – our people. The data shows that fundraising is the key to rebuilding a resilient sector, but fundraisers are as hard pressed as anyone. CEOs and trustees need to get behind their teams and support them. The data shows trustees doing so is an area of weakness. If your charity doesn’t yet have a fundraising culture, now would be a good time for your trustees to begin creating one.
Sector & Government. We've launched our #LoveYourSmalls campaign by using our reach to promote individual small non profits and encourage people to buy from each other, created various proposals that would help and highlighted the need for bodies at sector level to genuinely collaborate to deliver a sector recovery plan. Neither the sector nor the Government can magically close the huge funding gap but we could make the situation far better and accelerate recovery, if we were bold enough to act collectively and decisively. Here's our road map to make that happen.
Grant Makers. In our Trustees Benchmarking Survey 2024, it was clear they felt fundraising is a key issue but, in terms of positive action that could be taken, it's about more than just more funding. With funding now so desperate, bid success ratios have fallen in recent years. For charities to have to write up to 15 bids to secure one grant is not unusual.
For too many funders the grant application process has always been bureaucratic, but it is now even more time consuming. And whilst we all want exciting new projects, that is no substitute for finding the money to keep the lights on. In our annual Trustee Benchmarking Survey Oct 2024, charities told us they need less bureaucracy and more core funding.
Steps that could be taken:
This report uses our Microsoft Power data tool which has 8 interactive dashboards, tracking about 150 metrics, that we use to extract data from our Charity Data Store. The Data Store has data for the 500+ assessment statements in the model, that cover every area of activity and to date holds 0.75 million data points going back to 2018, so includes both crises. We augment and validate our data store using our benchmarking surveys for Salary & Motivation and Trustees in the Spring and Autumn each year. These are based on the system's core model but are rated by individuals from across the sector.
A registered charity ourselves, the CEF works for any non profit, not just charities.
Plus, 100+downloadable funder lists, 40+ policies, 8 online health checks and the huge resource base.
Quick, simple and very effective.
Find Funding, Free Help & Resources - Everything Is Free.
To access help and resources on anything to do with running a charity, including funding, click the AI Bunny icon in the bottom right of your screen and ask it short questions, including key words. Register, then login and the in-system AI Bunny is able to write funding bids and download 40+ charity policy templates as well.
