Have charity donations been hit by the recession?

By Anna-Louise Taylor
BBC News

Just as the recession really begins to bite comes Red Nose Day, Comic Relief's biennial fund-raising extravaganza. So should we expect donations to be down this year?

Red Nose Day is not even here yet and already it seems Comic Relief has been plugging away at parting us from our cash to aid the poor in Africa and the UK.

A clutch of celebrities have climbed Kilimanjaro for the charity, red noses are being sold up and down the country and Let's Dance for Comic Relief has proved a Saturday night TV hit.

In 1999 Red Nose Day raised £35m, a figure which has steadily risen biennially to £67.7m in 2007.

But no-one seems to want to predict whether this year's events will provide a recession-busting record total, least of all the charity's chief executive Kevin Cahill.

He says simply that there has "never been a greater need for the public to support Comic Relief and all the other organisations working to help the poorest people hold their lives and families together".

Yet some believe the disproportionate publicity generated by the charity will help protect Comic Relief from the recent ravages visited on other charities.

"If the BBC turns its power to fund-raising it will always be phenomenal," says John Low, head of the Charities Aid Foundation, "it is almost the Holy Grail of fund-raising - primetime TV, all the stars out and a national institution - classically British - it doesn't surprise me it holds up well.

"Of course it's hard for other charities to compete with it, but it's not the time for charities to being going out to find new cold donors.

"Now is the time to look after committed donors who have given in the past."

Hard to compete with, indeed - many of the UK's 170,000 charities are unable to attract or afford such mega-watt star power, massive merchandising and promotional opportunities.

Already the celebrities who trekked up to the top of Kilimanjaro have raised £1.5m for the Comic Relief cause.

But Stuart Etherington, who runs the National Council of Voluntary Organisations (NCVO), sees Comic Relief as a barometer for the sector.

"Each year the expectation is that the last one couldn't be beaten, and this is interesting as it is the first major one since the recession began."

• The growth in charitable giving in the UK slowed during the last recession in the early 1990s, prompting concerns today among many charities
• Individuals have generally been giving more money as national wealth has increased, although in recent years there have been fluctuations
• The red line shows how much the average household gives to charity each week. These figures are inflation-adjusted (at 2007 prices).
  Sources: Family Expenditure Survey, Expenditure and Food Survey
• The blue line is the UK's Gross Domestic Product per head as an index, with 1981 = 100. Also inflation-adjusted. Source: Office for National Statistics

Many not-for-profit organisations, says Mr Etherington, are cutting staff. And he predicts more job losses.

At Clic Sergeant, which supports children with cancer, chief executive Dr Carole Easton is stepping down.

It is also making savings to keep its reserves from falling below the operating threshold of £1.7m.

Bigger charities too are feeling the pinch. Oxfam, one of the UK's best known charities, has seen donations plateau, says spokesperson Magda Walter.

Its "strong brand" leaves it in a better position than other groups, she thinks.

But it has begun cutting some of its 700 or so jobs.

However, she pledges that "Oxfam's humanitarian work would not suffer at all", although longer-term development projects will be adjusted.

Another major third sector organisation, Shelter, has been hit by legacy (gifts made in wills, most often property or shares) and corporate income dropping although it says regular donors are still giving very generously.

Spokesman Alan Gosschalk says as house and share prices dropped, legacy income (gifts made in wills, most often property or shares) have fallen by up to 30% - a loss of about £750,000.

Corporate income was badly affected when major donor Bradford & Bingley was nationalised and it was forced to cut its spending.

Shelter too has had a couple of rounds of job cuts.

Recent NCVO research showed cash donations to charities fell by £367m in 2007/08 - from £1.7bn 2006/7 to £1.3bn. And new figures also show the number of direct debit payment cancellations has also increased.

Average monthly cancellations rose from 3.32% in 2007/08 to 4.64% in 2008/09, said Rapidata, which handles four million payments for charities a year.

'Attract them back'

Managing director Scott Gray reiterates that organisations need to hold on to existing donors rather than touting for new business.

"There are a number of things charities can do to keep donors on board, including giving them the option to reduce the amount they pay, or allowing them to take a payment or gift holiday.

"If they clearly want to cancel, the charity should acknowledge that cancellation as soon as possible and work on attracting them back."

The Charity Commission is due to release fresh research into the state of the sector next week. It could make stark reading.

Chief executive Andrew Hind says while donations have dropped overheads and demand for charity services are up.

It exactly this pattern that has driven the NSPCC to launch an emergency appeal - domestic violence cases are rising but direct debit payments have dropped by 15%. It has shut 12 of its 174 services and made some redundancies.

But not all types of donations have been hit. Mr Low says payroll giving - "give as you earn" - is holding up.

But big one-off payments from people who had been awarded bonuses, have predictably dropped.

And it's not all doom and gloom out there.

"The charities seen helping people in difficult times are the ones people give up luxuries to support," says Mr Low.

"Giving can be higher at the end of the recession than when we entered it, that happened in the 1930s in the time of the Great Depression."

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