It is no secret that the pandemic is changing the way we all go about our day-day lives. Whether it is the small things like your local cafe not having the paper to read anymore (how long can covid live on paper for? 🤔) or the extreme of having to try and “hibernate” your whole business, only to hope for it to come out the other side alive.
The Philanthropic and charitable giving industry is not immune. The IMF predicts that the world economy is going to shrink by 3%, this is in stark contrast to the 0.1% contraction that happened in the 2008 GFC… that is an estimated 30x worse!
According to a 2012 Stanford University report, “Charitable Giving and the Great Recession,” the Post GFC Recession of 2008 reduced total charitable giving by 7.0% in 2008 and 6.2% in 2009. The report indicates that giving did increase slightly by 1.3% in 2010, followed by an increase in 2011 of just 0.9% — not a significant recovery.
So hypothetically if we assume that the estimates are accurate and that history repeats itself — a financial crisis that could be 30 times worse than the 2008 GFC that caused a 7.0% and 6.2% two year decline in charitable giving is going to be significantly worse (ie - 30 times worse multiplied by the 7.0% first year decline = 210% decline😕)… Obviously charitable giving will not completely dissapear, but you get the point.
Face to face giving, door knock appeals, telemarketers, marathons, covid-19 and economic uncertainty — a perfect storm.
One of the first areas to go was face to face fundraising… Face to face giving is still relied upon by many charities. This is despite the high-cost and poor experience for donor’s. I don’t like being hassled and guilt tripped into giving by someone on the street in the best of times, let alone when I am trying to social distance. People are slowly adjusting to the life of keeping a safe distance, avoiding hand-shakes etc. and this behaviour will likely be reinforced over the next 6–12 months. With no face to face fundraising for the foreseeable future, what are charities going to do to fill the gap?
Door-knock appeals are all but shelved. If I cannot hug or shake hands with my friends and family, there is no way I will be letting a random door knocker come anywhere near me… Telemarketers are a little more sheltered from the direct affects of social-distancing and isolation, however they are likely going to be impacted by the direct economic “belt-tightening” of usual donors and the embracing of digital solutions post-covid.
Marathons and Activity / Challenge based fundraising — One fundraising Marathon race alone can bring in Millions of dollars for a charity. Social distancing enforcement will shutdown these events for the foreseeable future and leave a huge gap on the balance sheets of charities that rely on these much needed funds.
Pledges are falling through. Companies and wealthy individuals who had pledged significant donations in the last 6 months are finding themselves in a predicament. Their financial positions have likely changed and the level of uncertainty is unprecedented. How could an executive explain to their board the decision of following through on a non-essential pledge of giving when it puts the whole companies future at risk?
How will the economic decline impact charitable giving? It is estimated that Australia’s unemployment rate will tip >10%. Globally this could be much worse and you could imagine that people are going to think twice about giving money to causes when they are likely going to need to help out friends, family and even businesses with a more direct personal link… there is only so much disposable income to go around and the need for that capital has never been greater.
If there is one positive to come from the Covid-19 situation, it is the advancement and (forced) adoption of digital technologies by developed nations. For example research shows that it is usually the emerging nations that are early to adopt these new digital technologies, normally because there is no other affordable alternative. The graph below shows the adoption of Mobile Money accounts — note that the US is not even represented on the graph as the number of people using mobile money accounts is near non-existent.
The short answer is comfort, cost, accessability and having a “if it’s not broken then why fix it” attitude. I could write a whole article on this topic alone (another day) but the point is that Covid-19 is forcing those that may have been comfortable with their traditional business practices and cruising through life on autopilot to adopt digital technologies and innovate, or risk going out of business.
“Covid-19 is forcing those that may have been comfortable with their traditional business practices and cruising through life on autopilot to adopt digital technologies and innovate, or risk going out of business.”
Zoom — a cloud based video conferencing tool is the perfect example of how businesses are being forced to adopt technology. Thanks to work from home with Covid, Zoom grew from ~10m Daily Active Meeting Participants in December 2019 to 200m in March 2020… three months and around 20x growth in usage… There are plenty more examples of digital technology that is now being rushed to be implemented and will likely affect how we all live and do business in the future. See - How Coronavirus is changing Education in Australia
Sure - there will likely be a decent amount of users that will drop off using products like Zoom once lockdown restrictions are eased… but that does not take away from the fact that the exposure and extended time using these digital solutions will influence how people adopt and embrace technology in the future.
We believe that like all other businesses, charities and not for profits will need to adopt innovative digital solutions to serve their fundraising needs. It is no longer only the next generation who are embracing technology. Facetime, Skype etc are being used in aged care homes to connect family with their loved ones remotely - this serves as an example of adoption that may well have not occured in the current mature generation (over 60’s). There is a clear opportunity that people young and old will be more receptive and dare I say even have a preference for using digital fundraising solutions in the future.
The above slide was designed over a year ago and was our views on where we see the progression of the fundraising market. Digital and Gamified Fundraising solutions are the natural progression as the older generations move into retirement or are no longer with us. This estimate may actually need to be reworked once we get a better understanding on how much the older generations begin to adopt digital solutions solutions later this year…
It has been known for some time that emotional connections to a cause or beneficiary can lead to increases in donations. The problem has always been the execution of how to create and facilitate these emotional connections timely and cost effectively. Technology allows for a more direct, engaging and transparent linkage between the Donor, Cause, Charity and Beneficiary and will create an emotionally engaging and more cost efficient experience.
Concepts of creating emotional connections have been around for years. Sponsor a child style charities send you a postcard, charity dinners bringing beneficiaries as special guests to meet with wealthy philnathropists etc, however the technology has lagged and the slow nature of adoption of digital technologies by the Boomer and Mature generations has hindered the growth and development of this market… until now.
Would you prefer to receive a generic postcard of some stock image child covered with big statistical numbers talking about impact every 6 months, or would you prefer to receive an update directly to your mobile phone with messages and pictures on how your donation, big or small has impacted the receiver as soon as the impact has occurred? No more mailing rooms and printing blanket marketing collateral that feels like a fast food chain, just relevant updates on the causes you care about and the chance to see how you are really helping.
Set and forget, guilt tripped sales tactics and offline methods of direct donation and subscription need to be rethought. There are so many options for fundraising that are indirect and using technology to create better experiences for donors, charities and beneficiaries, without leaving givers with a case of donor regret. We believe Charities whom embrace digital, transparent and positively engaging fundraising solutions will end up becoming the future leaders in their respective categories, regardless of their current orgnisation size.
“Because the ones who are crazy enough to think they can change the world, are the ones who do” — Steve Jobs
There has never been a better time to explore and take a chance on technologies, startups and ideas that you may have thought were “crazy” before Coronavirus struck. Whether that was an idea that a volunteer had about on online gaming fundraiser or a new digital fundraising solution that is in beta testing. When the other channels have dried up, is it worth just sitting on your hands hoping for grants and the world to go back to normal?
“Not everybody can afford to fly around the world like Bill Gates and hand out vaccines and clean water… would I like to? YES but unfortunately thats not possible…” — B. Harvey
The power of micro-philanthropy has yet to be fully harnessed, yet this is the future of giving. The next generation of givers expect control, transparency and engaging experiences when they give. After all, this is the digital native generation who have grown up with everything from food, entertainment, dating and the likes only a few taps away on their smart-phones.
If your fundraising mix does not include a plan for engaging this demographic, you should seriously start questioning why not. Covid-19 is only going to strengthen and reinforce the preference for digital solutions. When people are coming out the other side of this, do you want your organisation to be left behind?
Who is Little Phil?
Little Phil is a small team using technology to radically transform the giving experience. People can better connect emotionally with causes that resonate with them, see exactly where their money is going & ultimately experience and share the rewarding pleasure of giving.
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