Giving in Australia could drop nearly 20% by the end of 2021, according to a new report from JBWere.
The sobering statistics come in the face of a global health and economic crisis caused by the COVID-19 pandemic, complicated by Australians’ generosity over the summer of 2019/20 in response to the bushfires.
The report, Where to from here? The outlook for philanthropy during COVID-19, estimates that giving will fall by 7.1% in 2020 and a further 11.9% in 2021. This is coming off the back of 5% increases in 2018 and 2019, and will bring giving levels back down to 2012 levels.
The report, authored by John McLeod, analyses the effect of the pandemic on mass market philanthropy; foundations and other structured philanthropy; corporate giving; and volunteering.
Mass market philanthropy
While historically Australians are very generous during times of natural disaster, and the inability to physically volunteer during to COVID-19 may translate into a desire to help financially, this ‘natural disaster’ is accompanied by an economic crisis. Complicating matters is that the health and economic consequences of COVID-19 will not be known for months and many donors may feel they need assistance and are now, in fact, beneficiaries.
Already we’ve seen numerous charity events postponed or cancelled, but the report offers a litmus test for giving in the pandemic: a long-standing annual event that usually garners great community support – Melbourne Royal Children’s Hospital’s Good Friday Appeal. Many fundraising activities associated with the event were cancelled and the full-day telethon morphed into a one-hour event. Just over half 2019’s total was raised, although the Victorian state government stepped in to match the funds raised and bring the total to $18.2 million.
Foundations and other structured philanthropy
Declines in giving by structured philanthropic vehicles are not usually seen until the year following an economic downturn. While foundations are bound to be cautious, it is also a time to use accumulated assets and balance sheets to assist charities by, for example, offering or guaranteeing loans .
The report notes that as with the fallout of the GFC, it is likely the growth in the number of new private ancillary funds will slow.
JBWere’s Support Report estimated that one-third of support for nonprofits comes from corporates – around $4.5 billion with the top 50 corporates contributing $1.25 billion. This could change as corporate profitability comes under pressure. US evidence, however, shows that during economic crises last century the proportion of giving compared to pre-tax profitability rose slightly (although the dollars fell). During the GFC, giving levels in the US remained steady.
The for-purpose sector has 1.2 million employees (full time, part time and casual) and their wages account for 50% of costs. Volunteers are hugely important and represent around 25% of the FTE workforce. Without them, the sector’s surplus would quickly disappear says the report.
The impact of COVID-19 has and will continue to seriously affect the desire and ability of people to volunteer.
What does this all mean?
Many for-purpose organisations will find their funding models under pressure.
The report offers a number of recommendations for the board and fundraising staff in organisations reliant on philanthropy. These include reassuring, if possible, your ability to survive and continue operations; clearly highlighting the way you charity can help, and if reaching out to the mass market keeping your messages simple and clear; being aware of what others are doing in the sector and becoming part of a boarder solution in your cause area; and clearly explaining to your supporters why you may be changing normal practices or implementing innovations.
The COVID-19 crisis is also an opportunity for change. It’s a time to rethink the way you approach and develop relationships with structured philanthropy and corporates beyond applying for grants and asking for cash. It could also represent a time to re-engineer volunteering as we move towards fewer volunteers with less hours to give.