Optimism growing in the sector, claims report

The release of the 2011 Global State of the Nonprofit Industry report, features survey results from 2,200 international respondents covering non-for-profit operations, fundraising, technology and internet usage, impact reporting and board performance, with some conclusions that will be alien to the experience of most UK sector organisations.

The results, released by technology group Blackbaud at the International Fundraising Congress (IFC) in the Netherlands, found, rather surprisingly, that there is a growing sense of optimism in the global NFP sector regarding growth in staffing and earned and charitable income in 2012.

While this may be contrary to the experience and view of many UK organisations, this global report also anticipates an increased demand for services and increased expenditures.

“There is a very real sense of optimism growing in the sector,” said Andrew Watt, president and CEO, Association of Fundraising Professionals (AFP), who provided commentary in the report.

Citing a situation not many in the UK sector will share, Watt added: “Rising giving levels are what is driving the sense of optimism and, in turn, anticipated growth in staffing. Part of that optimism is the nature of our missions—NFPs work to create change and inspire the public. We tend to be optimists, but with a healthy dose of realism.”

The report also reveals:

Most organisations continue to leverage traditional channels, even while they are increasingly using new interactive channels.

More than half of the organisations surveyed raise funds online and in most countries have shown growth in percentage raised online from 2010 to 2011.

While most respondents use social media tools, they are directing their efforts towards potential donors, not communications with other constituent groups.

“Direct mail fundraising is at the core of most non--for-profits,” said Holly Ross, executive director of the Nonprofit Technology Network (NTEN), who provided commentary in the report.

Ross added: “Entire institutions, processes and support systems have been built to support the direct mail empire in our sector. It's baked into our DNA, and changing that is tough.

“Direct mail has been around for a century now. By comparison, this online stuff is still really new. NFPs are still experimenting, finding what does work, and our donors are still getting used to the idea of giving online.

"So at the end of the day, non-for-profits aren't replicating the success of offline fundraising, but they are defining success in a new venue.”

NFP organisations throughout the world feel that managing relationships with supporters, new donor recruitment, and impact reporting are critical; however, the report says they do not feel they are doing a great job with these practices.

Single biggest challenge
Again, contrary to the experience many UK organisations view the current environment in terms of challenges, Adrian Sargeant, fundraising professor and consultant, who also provided commentary in the report, said: “The single biggest challenge with supporter management is campaign integration. NFPs need to do more to integrate the online with their offline and their fundraising with their advocacy and campaigning.

"Donors want one coherent relationship with the organisations they support, not multiple relationships with half a dozen different teams.”

Regarding donor recruitment, Sargeant said that smarter acquisition is the key.

“We should move away from short term measures of acquisition performance such as the cost per donor, response rate, average donation, etc, and focus on spending a little more to recruit in donors that will have a higher lifetime value,” said Sargeant.

UK outlook
Even when the report breaks down views from a UK perspective the optimistic outlook still prevails, with the report stating, rather bafflingly, that UK charities are optimistic about their general operations for 2012.

It states: "In the face of increasing government cuts and continued uncertainty around the economy, UK non-profits remain optimistic about what the future holds."

Although it does concede rather contradictory, that while many of the other countries surveyed foresee increases in general operations in 2012, UK results appear slightly flatter than the rest of the world, with UK respondents not anticipating much change in 2012 compared to 2011.

Understandably it says that for 2011, more UK non-for-profits anticipate an increase in total expenditure (49%) than in total income (47%). When asked the same question last year, 53% said they expected an increase in total expenditure and 59% income.

Following on from this, just under three quarters (70%) expect an increased demand for their services in 2011, with slightly more (72%) expecting this in 2012.

Organisations in the UK are also more likely than in other countries to expect decreases in staffing levels, even though a higher percentage expects increases than decreases.

Corporate donations
Another surprising finding is that the report cites individual giving and corporate donations as potential growth areas – and most likely sources of increased funding.

Keeping on the upbeat theme, the report suggests UK charities appear confident that this is an area that will continue to grow – when asked about expected changes in funding from various sources for 2011, 40% expect increased funding from corporate donations; an increase of 10% more charities expecting growth from corporate giving that 12 months ago.

In terms of other growth areas, 50% expect individual donations to grow and 46% expect funding to increase from special events. UK results are in line with results from many of the other countries surveyed.

Social media
The report also suggests that charities are investing in social media to drive online donations.

While less than half of UK NFPs report using social media as a channel to market their impact, 81% report using social networking to drive donations.

This is the same figure reported by respondents from Germany and is a larger percentage than many of the other countries – in France, only 44% of those surveyed said they did so, while just under 70% of those in Australia, Canada and the US said they used social media to drive online donations.

Events and email to current donors were other channels that UK respondents mainly use to increase online giving, with 82% and 74% respectively saying they do so.

SMS was the least popular method. Just under a quarter of those surveyed said they used this, although 40% reported they had plans to implement this channel in the near future.

“This anticipation is particularly relevant when you consider that legislation in the UK has changed recently with the provision of tax effective giving mechanisms for text giving, such as the five digit 70XXX charity code that eliminates VAT,” said Adrian Cutcliffe, Blackbaud Europe’s marketing manager.

“Coupled with recent growth in SMS/mobile fundraising services in the UK, the mobile phone channel is opening up and presenting far greater opportunities,” added Cutcliffe.

The majority of those surveyed say they lack impact metrics for public reporting and marketing.

While UK NFPs recognise the importance of impact metrics, it is an area they continue to struggle with.

Just over one third of those surveyed (37%) said "my organisation has all the impact metrics it needs for public reporting and marketing."

Respondents from almost all other countries provided similar results to the UK – with those from the Netherlands giving the most positive response to this question – 40% say their organisation has all the impact metrics it needs for public reporting and marketing.

“There is a need, and an opportunity, for charities in different sectors to work together to create their own ‘dashboards’ of relevant performance metrics,” commented Cutcliffe.

To download the complete report, visit here

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