Every generation, the non-profit sector experiences a new set of challenges. Much as businesses have come and gone according to the waves of capitalism’s ‘creative destruction’, charities that have been unable to keep up with changes have fallen by the wayside, replaced by those more willing to adapt.
Ten years ago, the Fundraising Institute Australia noted that the sector was dealing with two types of upheaval. On the one hand, there was technological change – or the rise of internet-based fundraising – and on the other, there were organisational shifts wrought by the ascendance of cause-related marketing and venture philanthropists. The challenges faced by today’s non-profits may be different, but they are equally consequential.
1) Public understanding
In an increasingly cynical time, one of charities’ greatest challenges is managing public perception of non-profit organisations. Studies have found the public has little knowledge of how charities are run, or worse, holds unfavourable beliefs about how they are managed.
For instance, according to a 2013 whitepaper from strategic consultants More Strategic, only 18 per cent of the public has a good idea of how much money goes to the actual cause. Another survey, carried out by research consultancy nfpSynergy, found that people think charities spend 37 per cent of their income on administration costs, more than double what they would consider acceptable.
Faced with these kind of figures, it’s increasingly important for charities to demonstrate their value to donors, both existing and potential. Thankfully, charities are still among the most trusted entities in Australia, behind only doctors and the police, and well above how they’re thought of across the ditch. This trust is a key resource that charities have to be careful not to lose.
2) Image management
Related to this, a charity’s image is integral to its success. A trustworthy brand makes all the difference when it comes to successfully soliciting donations, receiving grants and funding and even making connections across different industries.
Digital technology is largely a positive force, bringing us innovations like smartphones and online cash flow management. However, it also has its anarchic side.
In the digital age, when news can go ‘viral’ and grace the computer screens of observers across the world before you’ve even gotten out of bed, managing information is increasingly tough. Every organisation should have a plan in place for a number of different potential disaster scenarios, so that if a round of negative publicity does strike, there’s a response in place.
3) Tighter economic conditions
Although the mining boom has kept Australia’s economy afloat while other nations have struggled, it has recently been experiencing some underwhelming economic conditions. GDP has been experiencing below-trend growth, hitting only 0.5 per cent in March 2015 and a slightly improved 0.9 per cent in June, according to the Australian Bureau of Statistics (ABS). Similarly, ABS figures show that wages grew at their lowest recorded rate over May.
All of this means less room in people’s budgets for charitable giving – inconvenient, as tougher economic conditions are also typically when demand for charitable services rise. There is also the possibility of further cuts to grants and government funding. The Fundraising Institute Australia’s (FIA) Australian Fundraisers’ Survey found these were all top concerns as far back as 2012.
4) Increasing competition
Lastly, there is the steady proliferation of charities that the sector has been experiencing over the last two decades, another of the issues named in the FIA survey. According to a 2015 paper from the Australian Charities and Not-for-profits Commission (ACNC), the number of charities in Australia has grown by around 2 per cent a year since 1990. Since December 2012 alone, it has registered a whopping 5,100 organisations.
Perhaps more than anything, this is the largest ongoing issue that charities face. What are struggling non-profits to do if they want to stand out among the growing throngs of philanthropy?
5) Making your charity catch the eye
There are a variety of ways to make your charity stand out. Perhaps the most important is to harness what has often been the cause of disruption for the industry: Technology.
Any charity that hasn’t embraced the use of social media and digital marketing in 2015 can expect to fall behind the rest of the market. According to a recent Sensis survey, Australian Facebook users are now spending the equivalent of a whole work day on the site every week, and the number of people checking it for updates during work has increased. This represents a significant resource to draw on to draw eyeballs to your organisation.
Make use of social media to forger a closer connection between you and your donors, and update them regularly on the results you’re achieving with their money. Not only will a regular and savvy use of social media make you stick out in people’s minds, but it will also assist you to counter two of those other challenges.
On the one hand, social media creates a greater level of transparency, allowing you to better inform your donors about how their money is being used. At the same time, a well-managed social media strategy can help you contend and possibly mend any publicity problems you experience. Be sure to make your online presence personal and emotive – you want content that targets the heart as much as, if not more than, it targets the brain.
Another way to gain a technological edge in the non-profit sector is to make use of different payment processes, such as by taking advantage of direct debit software. The ability to sign your donors up for small regular payments that are automatically debited from their account can have an outsize impact on the success of your organisation, as you’re saving time and money on preparing invoices and chasing your donors up for money.
If your donors have a perception that too little of their money is going to the cause, measuring and publicising the cost savings that you make from adopting this could be a great branding exercise. At the same time, donors will appreciate that, unlike other organisations, they don’t need to go through the usual fuss and hassle to donate to you. It will make your charity feel like a sleeker, more effective option than the rest.
It’s important to look at these factors not as challenges that make your work harder, but as an opportunity to tighten up your practices and evolve your organisation. In the process, you may find you weather the storm of changing times better than your competitors.