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What Can Charities Do in 2019 to Improve Spend Efficiency & Donations?

08 March 2019

5 minute read

What Can Charities Do in 2019 to Improve Spend Efficiency & Donations?

Every penny counts for charities, so addressing negative judgements when it comes to their spend is crucial for building trust and closing donation gaps.

 

At the end of the day, all companies, including non-profit organisations, need to fund their operations. But for some charities, the secrecy around their spending has formed a negative perception in the eyes of their potential donors.

We surveyed the UK to obtain a clearer understanding of public perception and trust towards charities. The results showed that the public carries concerns about whether donations are well spent.

According to our study, more than half (63%) of Brits would be more inclined to donate if charities offered greater transparency over their running costs.

This goes beyond a non-profit enforcing tighter rules or explaining things better - it’s about behaving differently. The public wants charities to live up to their values and share openly how they’re spending funds. This is the only way non-profits can successfully repair this breach of trust.

At Basware, we believe that through using modern financial technology (Fintech), charities can improve their transparency and efficiency around expenditures, leading to an increase in donations.

New Technology is the Key to Trust

The financial stability of the public is a common worry for charities. After all, they can’t donate what they haven’t got. However, our study didn’t identify this as the main setback. 90% of respondents admitted they are currently in a position where they can donate to charity. But of this group, only one in four regularly donate to charity while 7% never do.

Based on research by the Charity Commission for England and Wales on how the public viewed the charity sector in 2018, 45% said their trust and confidence in charities had decreased within the last two years.

As trust in this sector has declined, it’s left a huge gap in the market for charities to utilise. But regaining this interest won’t be an easy challenge to overcome. Charities need to understand the consequences of these findings and provide transparency on what public donations have been used to achieve.

Shifts in public opinion towards technology and the security of their finances is a key player in this resistance. Our study found that 50% of Brits only feel comfortable donating online, whereas a mere 10% trust over-the-phone donations. 

Regulations have even been put in place to reduce persistent cold calls from charities. In 2015, The Fundraising Preference Service was introduced to give the public more control over the direct marketing they receive. Through this website, people can opt out of all telephone communications with any fundraiser. If charities continue to rely on phone calls as their only marketing method, they could face being added to these “do not call” lists and left without donations.

Brits no longer trust street fundraisers either, with only one in four willing to give personal details on the street. And the introduction of contactless payment hasn’t helped change this perception, as 70% said they don’t trust on the street contactless payments.

One solution for meeting the demand of digital donation solutions is Just Giving - the world’s leading online fundraising platform. 55% of Brits said they have donated via a Just Giving page. As of 2019, Just Giving have helped earn £3.6 billion worth of donations across 160 countries, distributed between 29,834 charities.

Technology is clearly the way forward for charities. And by introducing updates that adapt to a modern way of doing business, charities can not only regain the public’s trust, but also improve their ability to help the causes they represent.

No Transparency Without Efficiency

Given the decline in trust around charities, it’s hardly surprising 63% of Brits will only donate to charities who are open about their spending, while an additional 73% consider a charities’ operational efficiency extremely important.

And according to the Charity Commission for England and Wales research, when participants were asked whether they actually believed their donations reached the end cause, an average score of 5.3/10 was given (10 being the highest).

Even for some of the UK’s largest charities, the public has no easy way of knowing whether they are spending enough of their donations on their mission statements, nor whether the money is actually achieving anything. And although some of our survey respondents said they are still donating to charity, 46% admitted they are unsure whether their chosen charities are efficient with their running costs.

It’s clear that important non-profits are missing a significant portion of donations due to their lack of transparency (or lack of efficiency). However, without proper spending control, charities will never be able to provide the public with their expected level of honesty over how their donations are utilised.

Matt Durham, partner at Bimor Advisory, who advises charities on financial issues and fundraising, believes new technology is key for helping charities improve their spend efficiency:

“Embracing and investing in the right technology gives the board and senior management teams a clear picture of where the charity stands in terms of delivering services. Crucially, it also gives a real-time view of the financial position and level of donations”.

Basware Can Help

At Basware, we have helped several fundraising organisations gain better control over their spending efficiency. YMCA, the oldest and largest youth charity in the world, is dedicated to helping young people play fulfilling roles within their communities. Because of this, they need to use their donations in the best possible way - something that cannot be achieved without complete control of their spending.

Just a mere 18 months after getting up and running with Basware’s WeProcurement approach, YMCA of the Greater Twin Cities were able to showcase complete control over their funds through giving employees an easy-to-use system and demonstrating how they are contributing towards cost-saving initiatives.  

Not only did YMCA demonstrate 25% savings on spend from the previous year, they increased their user adoption by 30% and transformed their supplier management from tactical to strategic.

Louis Fernandes, Vice President & Country Manager from Basware:

“Reducing unnecessary cost and providing control over financial processes is important to any business. But implementing these changes can have a significant impact on a charity’s bottom line and help make a real difference to its cause”.  

From our findings, it’s obvious many charities aren’t demonstrating how they save money and spend donations effectively. This isn’t a strong position for charities to be in, and there’s a lot that can be done to fix it.

With the British public’s opinion of charities at a low point, they are facing a financial hit to their fundraising efforts. Charities have a special place in society for changing lives for the better, but along with this status comes high expectations from their donors. Without developing greater transparency over their running costs and adapting to modern donation preferences, charities risk losing consumer trust completely and seeing a continuous decline in contributions.

Ready to Learn More?

Learn more about the benefits of 100% spend visibility and digitisation in our brochure. Ready to get started and transform your organisation? Contact us!