Charity Fundraising Update
The effect of the pandemic on charity fundraising
In many cases the Covid-19 pandemic has had a negative effect on charities’ finances and operations. Many charities will have experienced an increased demand for their services, coupled with a loss of fundraising income.
Charities have not been able to hold their usual in-person fundraising events or activities and, even though running virtual events has helped to an extent to bridge the income gap in the charity sector, it is clear from a Charities Aid Foundation report in October 2020 that many charities suffered a big drop in donations in 2020.
Whilst there may be grants available from Government or grant making charities to assist a charity’s finances, whether related to the impact of Covid or other types of grant, their availability may depend in practice on the particular nature and circumstances of each charity.
The Government is pursuing a “levelling up” agenda, but it appears from research that there is unlikely to be enough funding directed at charities, in particular because much of it will go to hard infrastructure projects (e.g. roads and buildings) whilst ignoring social issues.
These negative effects on many charities have certainly been bad news, but there was some good news. Whilst many charities lost out on donations, the level of donations to the charity sector as a whole appears to have risen significantly during the first half of 2020. Over the last few months it seems that the level of donations has remained stable and, in the circumstances, at a relatively good level. All being well, the second half of 2021 should see continued stability in the level of donations. From mid-April onwards, as Covid-19 restrictions are reducing, charity shops can re-open, door to door, private site and street fundraising can resume and in-person participation events can return, all of which will provide some much-needed fundraising opportunities.
Many individuals have been able and have chosen to continue to make substantial donations to the charity sector since the lockdown in March 2020. What factors may explain this:
(1) Some donors may be motivated by their awareness that charities have suffered during the pandemic and that they need donations more than ever.
(2) Some individuals may be fortunate not to have suffered a loss of earnings or savings during the pandemic, and so have been able to make donations from their income or savings.
(3) Those in receipt of a reasonable level of income or with existing savings have not had many opportunities to spend on travel, entertainment or other things since March 2020, as they would normally have done. Their outgoings fell from that date onwards and they were able to donate to charities as easily as, if not more easily than, before March 2020.
Fundraising in the medium/long term
Going forward, what might charities do to tap into this potential source of fundraising income from individual supporters?
Often individuals think of donations to charities in terms of lifetime donations (as opposed to donations given in Wills), and of course the thoughts outlined above only relate to donations from such donors. A decision by such a “living donor” to give a donation usually means that they then swiftly send a donation to a charity. The advantage of such immediate income to a charity from a living donor during the pandemic is obvious. However, whilst charities will be keen during the pandemic to receive such immediate donations to preserve cash flow, it is also necessary to think and plan for income in the longer term.
Legacy Income for charities
In the medium to long term, charities should not overlook another potential source of donations, namely legacy income (i.e., a specific sum of money left to the charity by its supporters under their Wills).
Supporters’ willingness to leave legacies to charities may well be greater now than it was before March 2020.
The “target market” for legacy income should primarily be those who, despite the negative financial impact of Covid-19, have the means to leave a legacy to charity. Property prices and other investments have tended to hold up quite well generally during the pandemic, and, if that remains the case, it will promote the giving of substantial legacies under Wills, by charity supporters, to provide a good source of funds for charities. Furthermore, despite the pandemic there are still a large number of individuals of all ages who are high earners (in employment or self-employed) with substantial assets, and “baby boomers” with substantial assets who are now retired or near retirement. In addition, demographic changes affecting death rates are likely to drive up the level of legacy incomes for charities.
Charity legacy document templates
The updated Charity & Non-Profit documents include sets of template wording to be included in a Will by a supporter wishing to give a legacy to a charity. It is suggested that a charity should recommend use of this wording to their charity supporters.
New Legacies Guidance Note
The new Guidance Note – Wording for Charity Legacies explains:
- The potential for, and the ins and outs of, raising charity income through supporters’ legacies given under their Wills.
- The reasons why the charity should recommend to its supporters that they use suitable legacy wording in their Wills.
- The dangers of not using suitable wording, as highlighted by the recent High Court case of Knipe. In that case, given the inadequate legacy wording used in the Will in that case, the court had to consider whether it would have to rule that the gift to the charities concerned would fail, leaving them without a substantial donation.
Other charity fundraising documents
Many other template documents are available in the Charity & Non-Profit portfolio, relating to various means for charities and their supporters to raise funds, including fundraising agreements, charity lotteries (fundraising raffles), charity grants, gift aid, commercial participation and sponsorship.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.