Where is the money?

We all know that overall charitable giving in the UK hasn’t moved in decades, and that it needs to grow (a lot) to get near to meeting the need.  But how we raise funds seems not to match the society we find ourselves in.  The UK is lopsided in terms of wealth, with basically all the gains in the last 30 years going to several thousand London-based financial services executives.  Economically, the UK is a big city that happens to have a country attached to it:

Poorest wealthiest regions EU picLondon wealth graph pic I’d love to be proven wrong, but some technologies of fundraising seem not to be geared to raise significantly more than they already are from a society like the one described in these charts.  How many teams focus on neglected ‘middle donors‘?  How may Legacies departments have a ‘HNWI unit’ to capitalise on rising home prices?  I wonder.

Then there is ‘wealth’.  Using rich lists and wealth screenings has conditioned us to focus on (often illiquid, asset-based) ‘wealth’.  But the key concept should surely be liquidity or affluence.  In a fascinating 2013 Sunday Times article, research by credit rating firm Experian showed that there is very little overlap of their house price and affluence indices (affluent households are those with high home equity/no mortgage and low identifiable debt/outgoings).  The article highlights the disparity between SW7 1, around Rutland Gate in Kensington & Chelsea, and N20 8, around Totteridge Village in North London, which top the house-price and affluence indices respectively.  Although house prices in Totteridge are lower, the area has many large detached properties, some in several acres of land, which sell for up to  £20m.  The area is home to many footballers and two members of One Direction, and 40% of home buyers pay cash.  These are liquid, cash-rich households, and are consequently more likely to be able to offer charitable support than those loaded up with mortgages and other outgoings.  This is not even the largest discrepency between the lists, with WD17 3 (around Cassiobury Park in Watford, Hertfordshire) coming 14th on the affluence index, but a mere 247th on the home price index, and SW1Y 5 (St James’ in central London) the 9th most expensive post code sector, but only the 425th most affluent.  And we can take the analysis of affluence further by looking at equities.  These are trackable, for the princely sum of £200 a year, via the ‘Director Deals‘ area of the FT website (many websites offer similar services, including email alerts).  For me, these are a far better qualifier of wealth than a database screening, and, as Director dealings give insights into the performance of the company, are useful as well for corporate partnerships and trusts.  Prospect researchers can add real value in this area, by shouting from the rooftops about the value of analysing affluence, and steering away from simplistic wealth estimates in campaign planning.

Furthermore, as Marianne Pelletier highlighted in a previous interview on this site, we could do more to understand when our donors feel most confident to give.  Charities often use research on the timing of competitor appeals (to avoid clashing with established events such as Movember, Comic Relief, World’s Biggest Coffee Morning etc).  But do we track times of the year when major outgoings are due for relevant constituencies (Eton’s school fees of £35,000+ are payable in advance of enrollment in September, UK bank bonus season is often in February), and build these into our ask schedule?  Again, I wonder if this happens often enough.

And at the other end of the spectrum, there are a remarkable number of low-income households in the British regions, relying to some extent on benefits for their income, with even greater disparities in London (world financial centre Canary Wharf is in Tower Hamlets, one of the UK’s most deprived boroughs).  Indeed, as the map above shows, nine of the ten lowest income regions in Northern Europe are in the UK.  Granted, many charity supporters will come from the (upper) middle classes and associated professions, but the first chart above and the one below (from the great Flip Chart Fairy Tales blog) gives a sense of the degree to which many households will struggle to make ends meet, let alone make any kind of charitable contribution.  This should surely be factored into charity campaign strategy.  How many DM packs drop each month onto the doormat of households claiming tax credits or housing benefit?  How confident are these households likely to be to make a charitable donation?

flipchart rick screen-shot-2015-05-26-at-12-49-29The UK is still undeniably a major economy, with a significant middle-class and long history of giving time and money to support charitable work.  And there may well be mega-opportunities in changing demographics, engagement with corporates and building stronger donor relationships.  But to grow giving (and consequently reach), charities must break the cycle of low value, low commitment relationships with donor constituencies a mile wide and an inch deep.  As Mark Phillips very rightly says: “[d]onors don’t give enough to warrant special treatment, but without special treatment, the donors who can afford to give more, simply won’t…just as there’s no skill required to open up a pound shop, there’s no skill required in asking people for very small gifts…What’s harder is creating an offer that supporters will pay a premium for. It might not bring in as many donors as discounting, but the long-term value and loyalty of the donors it does attract will far outweigh the quick wins of being just another charity [in] the £3 a month club.”

We know more than ever about ‘where the money is’.  But it will not be easy to steer the fundraising oil tanker to a more relationship-focused, evidence-based way of working, nor to move to a more nuanced conception of ‘affluence’, rather than a blunt wealth estimate.  Until either or both these things happen, however, it seems that charitable giving, and the amount of good work we can do and people we can help, will struggle to grow to any degree.

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