Expert View: Why are large charities scooping the funding pool?

While the public shows greater sympathy for small local charities, it is the larger ones that reap the lion’s share of funding, says John Baguley, Chair of the International Fundraising Consultancy. In this month’s Expert View, he talks about why this is the case and how smaller charities can level the playing field.

The age-old aphorism that the rich get richer and the poor get poorer seems to now include charities.

A new breed of mega-charities are growing apace both in number and scale, with large international NGO brands based across European capital cities and large national charities outpacing their smaller rivals.

Income rises for large charities
Whilst small charities with an annual income of less than £1m have seen a drop in their income, the UK’s largest charities, with an income of over £10m per annum, are growing by some 3.7%, according to analysis by the National Council for Voluntary Organisations (NCVO). And on top of this, mega-charities in the £100m and over bracket have seen their income increase by a staggering 26%.

In the UK, the media has warned us that the public has a huge disquiet about fundraising, and the Fundraising Regulator along with the Information Commissioner’s Office (ICO), which is hard at work issuing rather extraordinary gutter-press style headlines, are combining to curtail fundraising; to the extent that some large charities are now predicting huge falls in income and, it must be said, a consequential massive increase in suffering by those they help.

What exactly is going on? And if the European press follows suite, attacking and undermining charity fundraising practices, what will happen?

Battle for funding
It appears that – on the whole – while people may be more sympathetic to small local charities, the public itself actually prefers to give to large national charities. Of course, bigger charities tend to deal with many of the world’s biggest issues, and they have the ability to fundraise on a larger scale and to be clear about the support they need. But, could this also be because the large national charities can clearly demonstrate their effectiveness and efficiency?

Large NGOs certainly have the resources to monitor and evaluate their work, and this is usually both fed back to their donors and internally to improve their work in the field. So, maybe it’s a matter of trust, in that the public trusts them to solve these large scale problems. This is exacerbated by national and EU government’s programme of contracting out services to large charities, which improves large charities’ advantages of scale.

Public perception
In my consultancy, we are often approached by people setting up their own charity whose overheads are going to be far higher than the larger charities (because they lack the economies of scale), whose ability to do the work is not grounded in experience, and whose knowledge of management is limited. This is not to say small charities are ineffective, just that the public may appreciate the reassurance of donating to better known, obviously well-managed charities.

The public may be seeing that Government has cut social services until they fall apart and individuals are driven to food banks. They then have a real opportunity to help people directly by supporting the larger charities.

If we take cancer as an example, we may all know someone affected by it, but would anyone give to our national health services hoping it will solve the problem? Of course not, we give to the biggest national cancer charities instead. Indeed, the popularity and effectiveness of charities in carrying out work that the state should have been doing may have made them a target for the UK’s new legislation on fundraising practise. But the fact is that that the public is responding well to the sector’s fundraising strategies.

Readdressing the balance
The upshot is that smaller charities may feel larger ones are starving them of funds, but there are many ways of levelling the playing field, particularly by using the internet and focusing on the smaller charities’ unique reasons to exist. Embracing professional fundraising and getting the ‘case for support’ right, both emotionally and intellectually is something the mega charities are very good at, but there is no reason why the smaller charities’ fundraising should not innovate to be even more effective and efficient in their income generation.

About John Baguley
John Baguley is Chair of the International Fundraising Consultancy, author of The Globalization of Non-Governmental Organisations, a Fellow of the Institute of Fundraising (IoF) and an international speaker on fundraising. He has also started First Fridays, Top Table and Wikifund. In 2017 John received a lifetime Contribution Award from the IoF.