Ideas

What made charities thrive in the past is now threatening to hold them back

by Nick Graham, Digital Strategist

‘What made charities thrive in the past is now threatening to hold them back’

Every year there is a new obstacle that brands must overcome, be it GDPR, online safety or rapidly changing consumer habits. But the issue that is having the most impact – with no sign of abating – is disruption. Whether it’s Uber taking business from London’s iconic black cabs, Just Eat and Deliveroo stealing market share from physical takeaways, Boohoo and Asos encroaching on high street fashion brands or Amazon pinching sales from just about everybody, disruption is here and it’s not going away.

For the longest time charities have felt a kind of immunity from disruption, a sanctity driven by the donor’s emotional connection to a cause they support. But it is rapidly becoming clear that even the third sector is not immune from disruption as brands start tapping into consumers’ consciences. In what is proving a fascinating study in psychological purchasing behaviours, many advertisers have realised they can add a dash of the feelgood factor to a shopping experience simply by allowing customers to donate money to charity as part of their purchase – sometimes even at no cost to the individual.

Add to that the proliferation of new charities and fundraising drives that are set up all the time – from sponsored events to abstinence months – which are then promoted far and wide for free on social media, and long-standing charities are suffering. In particular, the established international organisations who must work harder to gain an emotional connection with the UK consumer.

In the past charities have relied heavily on regular gifts, knowing many people are happy to donate a certain amount to charity every month and, once the direct debit is set up, rarely change allegiance. However, the fundraising landscape has been disrupted beyond all recognition and charities are facing the biggest challenge in their history.

Thankfully, this is not a problem about which the sector is complacent. Those living and breathing the industry recognise these major obstacles and recently Marcus Missen, the director of communications and fundraising at WaterAid, shared his thoughts on the matter, suggesting we’re “locked in a cycle and need to start redefining our success criteria”.

No prizes for understanding how this sort of thinking occurs. Organisations start out working in a certain way and, because it’s successful, they consistently stick with that structure, optimising their efficiency day in, day out.

While this is happening the world adapts to the changes going on around them, only for the business to suddenly find an upstart competitor challenging their way of thinking in a way that is more effective and capitalises on the once loyal fan base through which the original organisation once prospered. See, disruption.

Indeed, the problem is now so severe that an unnamed senior fundraising expert recently told a gathering of top-level fundraisers at the 2018 International Fundraisers Committee that “large charities fuelled by traditional fundraising will disappear in the near future if they do not fundamentally change the way they operate”.

But how easy is it for big charities to change?

Perhaps, instead of looking for external innovations, businesses should focus their efforts on ‘architectural innovation’, a term coined by Rebecca Henderson, a professor at Harvard Business School. This demands that the organisation remake itself or put simply, disrupt your organisation before someone else does.

While this isn’t a quick fix which can resolve the problem overnight – else I’d be a rich man – I’ve used my experience of working on the advertising strategies of several major charities to propose a few actions that could head off the impact of disruption before it becomes too devastating.

  1. Break the silos

It’s easy to point the finger but there is no single person or team in any organisation that is to blame. The problem is a deep-seated issue which affects us all: The Silo Effect. Disruption occurs because organisations work in silos which causes any industry innovation that doesn’t fit neatly within their existing structure to fall between the cracks.

Some charities have multiple teams working to different KPIs including acquisition, retention, legacy, events, audience, innovation. Some may talk to each other regularly, others may never talk at all. Break these down and start collaborating. If you’re already talking, try to work out how you can merge KPIs to innovate and drive cross-collaboration.

  1. Don’t become over-reliant on one source of income

Regular gifts have proven profitable over a five-year period but as donors are less likely to commit to a direct debit, what other solutions can charities offer? We know, for example, that micropayments are an easy way for consumers to transact for digital products or services, and over a long period of time they can actually drive more value for a business – something we have seen happen successfully within the gaming industry.

  1. Think like a business

In my experience charities can be quite risk-averse as they need to show the money they are investing returns – and quickly. Other businesses would not exist if they operated in this way as they wouldn’t expect to profit in the first ten months. If you are looking towards a new innovation, give yourself the time to do so.

  1. Understand your customers

Focus your attention away from your organisation and on to your customer, what do they want and how will you give it to them? Yes, we all know the pen portrait of our audience but do we really know them? Their fears, their beliefs, their expectations, their perceptions? I doubt many charities see their customers beyond their direct interactions which, let’s not forget, is less than a fraction of their life.

 

However, it’s not all doom and gloom. Marcus Missen himself believes the charity of the future “won’t focus just on transactions and techniques. Instead, it will be centred on engagement”. For this to happen many will require architectural innovation to grow their business and that is a challenge I’m incredibly excited about. To be on the frontline of sector -transformation is a career-defining experience and I can’t wait to continue working on this next chapter for our charity clients.