Donations should keep pace with inflation says report

Charities should encourage people to increase donations to ensure they keep pace with inflation, according to research published today.

The research by the National Council for Voluntary Organisations (NCVO) and the Charities Aid Foundation (CAF) investigates long-term trends in charitable giving.

The report shows how charities could be missing out on extra earnings by failing to prompt people who make donations by direct debit or payroll giving to increase their donations each year to keep up with inflation.

Donations that stay at the same level are unlikely to keep up with the pace of inflation and lose value. For example, a £10 donation made in 2000 was worth 8.46 in real terms by 2008, losing 15 per cent of its value.

Large charities are most likely to lose out in this way as they tend to buy more goods and services and are more dependent on individual donations.

Karl Wilding, head of research at NCVO, said: "Donations from individuals are an incredibly important source of income for the voluntary sector but in a period where giving is down because of the recession, it is even more important that charities get the most out of them. Prompting people to make small increases to regular donations could make a significant difference to their fundraising efforts."

Liz Goodey, head of research at CAF, said: "Charities need to be aware of the effects that inflation has on both their costs, which increase, and the value of their donations which, if they remain static over time, decrease.

"Although all fundraising charities are affected, the larger charities which have high outgoings and many regular donors using direct debit and payroll giving are most affected."

The research recommends charities do two things: first, adjust their inflation expectations when planning ahead, and second, begin conversations with supporters to explain that their regular donation might not be worth as much as it was when they first began to help.

The report is part of NCVO/CAF's UK Giving research programme. To access the UK Giving 2009 report or to download any other briefing papers in the series visit www.ncvo-vol.org.uk/research/giving