Deciding on how to meet the challenge of falling personal giving

While it may feel like a crisis, it's crucial that senior leadership doesn't panic. The results of the survey only reveal what some donors plan to do; in other words, they haven't acted on their intentions. This not only gives charities time to put together contingency plans, but it also means that the drop may not actually happen at all.

Additionally, while 20% of respondents have said that they plan to cut their donations, it also means that 80% have said they don't, which is still a huge percentage of the public. While interrogating these findings does paint a more positive picture, it's vital not to get complacent either.

Financial resilience is key

The first thing all charities should do is a review their current finances and services. Financial resilience is key; this means looking at cash flow forecasts and reserves and being realistic about how long these could last. Review any contracts and commitments as part of this and put diary reminders in for when these will be reviewed. This will ensure that the charity can evaluate the need or effectiveness of these contracts, and either terminate them or look at more cost-effective options, if needed.

Once enough detail has been collected to paint a detailed picture of the current financial position, it's vital to plan for a range of different scenarios, not just the worst case. Stress test any assumptions. For example, the cost of running a service could increase and it's not a given that an inexpensive programme will continue to be cost-effective in six months' time. This stress testing will help guide charities as its finances fluctuate and also help prepare for the unexpected as much as possible.

Next, charities should identify which services, activities or offerings are core, and should be prioritised even in financial difficulties, and which are peripheral. This determination should be based on a number of factors including how impactful the programme is, its cost-effectiveness and how vulnerable the service users are. As part of this exercise, audit all the services and establish which ones are performing and which aren't.

This means the services will fall into one of four categories: core and performing, core and not performing, peripheral and performing, peripheral and not performing. Going through this process will help support critical decision making, if finances do become so stretched that cuts need to be made, allowing charities to easily prioritise which services can be halted and can act quickly, making the process smoother and further conserving money. Additionally, reviewing services with a critical eye gives good opportunities to improve underperforming areas at the same time.

Balancing demand and strategy

When planning for the future, it's crucial to balance short term demand with long term strategy. Charities which focus too much on being reactive, or, in other words, fire-fighting, risk putting sticking plasters over issues without solving the root cause, ultimately wasting resources, time and money.

While focusing on the future vision of the charity, not having a finger on the pulse of the everchanging political and socio-economic landscape leaves charities vulnerable to spikes in demand or expenditure that could otherwise have been predicted. While many struggle to find this balance, regularly reviewing the charity's current and future financial position can help to make sure small adjustments can be made as and when needed.

The other crucial immediate step that charities should take is ramping up donor engagement. Thanking regular donors and reminding them of the impact of their donations, who benefits and how, will keep those charities front of mind, and will minimise the chance that someone would stop their support. Including real stories from service users about the impact the charity has had on their lives, will naturally demonstrate the charity's importance and help to strengthen that relationship. Consider hosting 'open days' so that donors and the public can see and experience the work for themselves.

Some charities may have different audiences which require different messaging. For example, an individual who makes a personal contribution would want to hear about an individual's story, whereas a corporate donor may be receptive to statistics about how the charity is helping the local region, along with wider corporate social responsibility (CSR) messaging.

Tailoring the messaging

While it may be a longer task, tailoring the messaging to have the best effect is no doubt one of the most valuable exercises that can be undertaken for increasing a charity's regular income, and proactively stopping the general public's plans to cut their charitable giving.

Diversifying income streams is also crucial for safeguarding revenue. Relying on donations alone is a risky strategy, and with an ongoing cost of living crisis, it's expected that fewer people will be earning enough to give their surplus income away. Setting up trading subsidiaries, alongside being a registered charity, or making the shift towards becoming a social enterprise means the charity becomes more self-sufficient.

A great example of this is an animal shelter which recognised that it attracted visitors who liked to volunteer their time to visit and help take care of the animals. To encourage more visitors and increase revenue, they set up a small café that offered drinks and cakes onsite. With only a small initial set up cost, the café brings in regular income and means that visitors who would come once as a novelty, consider coming back regularly.

Scaling up current offerings

Another popular strategy for many charities is scaling up current offerings by creating a CSR arm aimed at businesses, an educational arm for school trips or the ability to receive coach trips. These don't need to be overcomplicated or expensive to run. For example, a wildlife charity could host a talk for school pupils about the importance of protecting the environment, host some wildlife-themed craft activities or worksheets, followed by a birdwatching session at a local nature reserve.

While this won't be appropriate for all types of charities, it does demonstrate how being creative and trialling new approaches can be beneficial.

Naturally, there is not a 'one size fits all' approach, as no two charities are alike. Size, sector and regional differences make distinct challenges for charities.

When it comes to size, smaller charities may feel they are the most vulnerable. However they typically have the best community engagement and are often able to rally a group of key advocates. The local community easily understand the mission and likely see the impact of the work every day or know somebody who has been supported by it. This makes donor engagement a key area of focus.

For medium-sized charities, taking the activity to the next level by diversifying income streams will likely be the most valuable. This will ensure long term financial resilience and move away from an overreliance on individuals.

Focusing on relationship management

Larger charities should focus on relationship management with major donors. Shoring up their backing now will likely pay dividends in the future. This isn't to say grassroots support should be ignored; indeed considering how to reach donors at all levels will help to keep a steady fundraising stream throughout the year.

In difficult economic climates, the demand for some types of charities, such as foodbanks, debt advice and homelessness, unfortunately spikes. These charities may, therefore, find it easier to attract support and should focus on the donor engagement strategies. Other types of charities which don't answer these types of needs should focus on diversifying income streams, or generating support in non-financial ways, such as increasing their volunteer base or acquiring goods for charity shop stock.

It's also important to bear in mind that some regions are hit worse than others. Charities based in affluent areas may want to focus more keenly on donor engagement. Those in less affluent areas, should look into securing support from trusts, foundations and local authorities to supplement their work in the meantime. There are myriad grants on offer, and dedicating time to researching and applying to these could help meet a shortfall.

Charities should be proactive in dealing with the real possibility that public donations will decrease, without panicking. By taking measured steps, planning for various scenarios and reviewing service offerings as objectively as possible, senior leaders will be more equipped to make informed decisions when the time comes. Doing this preparation now will help speed up processes later down the line as the team will likely already have an idea of and be in agreement about next steps. While this year is not looking like an easy one for charities, it certainly isn't a crisis just yet.