Charities across the country are facing a perfect storm of financial challenges, and for many, sticking to old strategies simply won’t work anymore. The landscape has shifted dramatically, and not in ways that favour traditional income streams. Funding from local councils, once a lifeline for so many charities, is now a shadow of its former self. Add to that rising employment costs, like the recent hike in National Insurance contributions, and the increasingly competitive world of trust and foundation grants, and it’s clear that relying on the usual sources is becoming riskier by the day.
THE SHRINKING POT OF PUBLIC AND GRANT FUNDING
It’s no secret that local councils have had their budgets squeezed over the past decade. Years of austerity and rising demand for statutory services like social care and housing mean councils simply have less money to allocate to voluntary organisations. Many charities that have relied on contracts to deliver local services are finding themselves out of pocket when funding cycles end, and renewal isn’t on the table. This problem is compounded by inflation, which eats away at the value of any funds they do receive, leaving charities stretched thinner than ever.
At the same time, grants from trusts and foundations, another key source of charity funding, have become harder to secure. Foundations are tightening their criteria, focusing on specific priorities, spreading their funding across more organisations, and some are even deciding to spend out and close. The economic backdrop also plays a role. Foundations often rely on investment income to fund their grant-giving, and with fluctuating markets, they’re becoming more cautious.
For many charities, this shrinking pot of public and private funding is a harsh reality. And just when organisations thought things couldn’t get tighter, operational costs continue to rise.
WHY INDIVIDUAL GIVING IS THE ANSWER
Faced with these challenges, more and more charities are recognising the importance of individual giving as a key part of their income strategy. Unlike grants or contracts, donations from individual supporters offer something precious: flexibility. These funds are usually unrestricted, which means they can be used where they’re needed most, whether that’s covering core costs, funding new initiatives, or building a financial buffer for the future.
Individual giving also provides a level of stability that other income streams can’t match. While government budgets and grant criteria may shift with political or economic trends, the loyalty of individual donors, when cultivated properly, tends to endure. Even during tough economic times, people continue to give, often prioritising causes they feel personally connected to.
MAKING INDIVIDUAL GIVING WORK
If your charity isn’t already focusing on individual giving, now is the time to start. Here are some practical steps to help you make the most of this opportunity:
1
Understand your donors:
Use data and feedback to learn about your supporters – what motivates them, what they care about, and how they prefer to engage with your cause. This knowledge will help you craft messages that resonate.
2
Tell your story:
A compelling story is your most powerful tool. Explain the difference donations make in real terms, whether that’s feeding a family, offering a safe space, or providing specialised support. Make it personal and relatable.
3
Use digital tools:
Platforms like social media, email campaigns, and fundraising sites allow you to reach a wide audience with minimal costs. Ensure your website has an easy-to-use donation page, and consider investing in tools like customer relationship management (CRM) software to track and manage donor interactions.
4
Build relationships:
Donor stewardship is key. Thank people promptly, update them on how their money is being used, and keep them engaged with regular communications. Loyal donors are more likely to give again and may even increase their contributions over time.
5
Think long-term:
Individual giving isn’t just about one-off donations. Regular giving, legacy fundraising, and major gifts can all provide sustainable income if you nurture relationships with your supporters.
6
Invest in fundraising expertise:
Consider hiring or training a dedicated fundraiser to focus on individual giving. While this requires upfront investment, the returns in both income and donor loyalty can be significant.
Despite its potential, many charity leaders hesitate to prioritise individual giving, often due to misconceptions about cost or difficulty. However, it’s important to recognise that building an individual giving programme is an investment, not an expense.
While it does require upfront resources to develop the necessary infrastructure and expertise, the long-term benefits; financial stability, donor loyalty, and greater autonomy far outweigh the initial costs. Additionally, the tools and platforms available today make it easier than ever to connect with donors and manage relationships in a meaningful, yet low-cost way.
In an era of shrinking government contracts, rising costs, and unpredictable grants, individual giving is no longer optional, it’s essential. Embedding this approach into your income generation strategy can provide the stability and flexibility needed to navigate an uncertain future.
By investing in individual giving now, your charity can build a resilient foundation that ensures you can continue delivering impact for years to come. The question isn’t whether you can afford to prioritise individual giving; it’s whether you can afford not to.
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