The importance of collecting donations for charities and not-for-profit organisations

Charities and NFP organisations exist to support and raise funds for specific causes from donkeys in Egypt to historic buildings, from hospices to raising awareness about debilitating diseases, from refugees in war-torn countries to homeless people in the UK. Many depend almost entirely on donations and legacies to carry out their work, though some receive government funding.

There are more than 180,000 charities registered with the Charity Commission – and that body only regulates England and Wales. The figure doesn’t take into account charities in Scotland and Northern Ireland, or unregistered charities with incomes below £5000 a year. In fact, no-one knows exactly how many charities and NFP organisations there are in the UK, but it’s probably more than 400,000. Suffice to say, it’s a tough sector and generating income, especially for small charities, is an ongoing challenge.

As one (anonymous) charity reported to the Scottish Government, there are ‘enormous tensions within the sector, between organisations, because they are in an absolutely cut-throat competitive environment. There are some very unpleasant dust-ups that go on between organisations.’[i]

In such an environment, organising fundraising campaigns in a systematic way is crucial to gain a competitive advantage, taking into consideration how people are able to donate. Will it simply be collection boxes on street corners and jumble sales?  Will you accept donations online? Which digital platform would be best?

In the complex realm of charitable donations, there seem to be more questions than answers. Let’s look at some of them now, to see if we can supply information that will be helpful when setting out on a fundraising initiative.

Do you need to be a registered charity to fundraise?

The short answer is no. It’s only a legal requirement when annual income exceeds £5000. Having said that, there are some advantages to being a registered charity. The first is that some funding bodies will only give grants to registered charities. Secondly, it gives a charity a degree of credibility so that potential donors will know that it’s a legitimate operation and that it’s being monitored by an independent body. There’s also the advantage of reduced business rates on premises, various forms of tax relief and Gift Aid – though unregistered charities can also benefit, by registering with HMRC. 

How do I collect donations?

There are as many ways to raise money for charities and NFP organisations as there are charities and NFP organisations! CAFOD, the international development charity, publishes an A-Z list[ii] if anyone is ever stuck for ideas. Cake sales, car washing, carol singing, fun runs, marathons, uniform-free days – then there are the crazy activities such as sitting in a bath full of custard and abseiling off buildings. They’re a way of donors becoming personally engaged in fundraising, taking actions themselves, which often leads to long-term loyalty.

On a more prosaic note, but very important to charities, there are street collections and little envelopes through doors. These are regulated activities and charities must apply for a permit from the local council. On the day, there are rules to follow as well, depending on council requirements. For example, collectors must:

  • Be at least 16 unless accompanied by an adult
  • Not obstruct any thoroughfare and should stand at least 25 m apart
  • Carry a signed letter of authority from a designated Chief Promoter

Donors can meet with representatives of a charity face-to-face, so it’s a valuable, though time-consuming method of raising money, relying heavily on volunteers, or professional fundraisers who come at a cost.

What about collecting donations online?

Now is the age of digital fundraising. Enabling supporters to make donations online, often with just one or two clicks, opens up a world of fundraising opportunities. These are particularly effective in reaching a younger demographic completely at ease with apps and digital platforms. For people with busy lifestyles, online charitable donations are a compelling option.

Charity websites – such as JustGiving, BTMyDonate, CharityChoice and Virgin Money Giving. Many charities are signed up to these sites, so it’s a simple matter for an individual to raise money which will be transferred directly to the charity.

Be aware that some sites charge a fee, so some of the donations don’t go to worthy causes. Recently, for example, JustGiving was in the news because it was used to raise money for the family of the police officer killed in the Westminster attack. Online donations were massive – and JustGiving earned £40,000… It’s worth checking out terms & conditions.

Collecting donations on Facebook – there is a set of fundraising tools available which allow you to collect donations when people visit your page or read your post. You can also add donate buttons to live video and ads.

Crowdfunding – platforms such as Crowdfunder, GoFundMe and Indiegogo are wonderful places to collect donations and raise awareness, by spreading the message on social networks to ask for pledges. These might be rewards-based – brilliant way to engage potential donors and to reach out to local businesses, for example, who might like to donate products or services.

Some crowdfunding sites are ‘all or nothing’ – so if a target isn’t reached within the timeframe then funds aren’t released. It’s vital to research, to find the best platform for your needs and to be realistic about how much you wish to raise and by when.

How do I accept donations via PayPal?

With no start-up fee required, you can add a PayPal donate button to your site, to take one-off or repeat donations, or go a little further and install a PayPal checkout, which keeps donors around on your site for longer.

What about Gift Aid?

If your organisation is registered with the Charity Commission or another regulator, or recognised by HMRC, then you’ll be eligible for Gift Aid. You can claim back 25p for every £1 an individual donates, though they must be tax-payers and make a Gift Aid declaration.

Managing charitable donations effectively

It’s clear that there are many ways to collect donations – in fact, it’s easy to be overwhelmed in the face of so many options and wonder which the best way is and how on earth you can manage it with limited time and resources.

Another thing to consider, as if there weren’t enough already, is that non-profit companies and charities can have many different revenue streams and each of these must be recorded in properly audited accounts. There are accountants who specialise in working with charities who may be worth their weight in gold for their ability to deal with all the complexities.

Charity CRM systems take the strain

Communicating with large numbers of people at the same time, accepting donations from multiple sources and responding to donors to thank them and build long-term loyalty involves considerable time and effort. Many charities are looking for a way to structure fundraising efforts by using appropriate software for donor management and to keep on top of their growing databases of contact details.

Using a bespoke customer relationship management (CRM) system, specially set up for the needs of charities is just one way of maximising resources, allowing more time, skills and capacity to be used for the on-the-ground work of the charity, rather than managing fundraising operations.

A charity CRM system can help with fundraising because it organises the charity data and provides useful analytics to influence marketing or fundraising campaigns, tracking donations and the platform that’s been used. It’s easy to segment databases so that your communications reach the right people, making fundraising more efficient. Especially since the advent of GDPR, it offers a secure way to store data and manage consent.

Searching for nonprofit CRM software on Google, 129 systems come to light in seconds. Donorfy is just one example, describing itself as ‘Fundraising CRM in the cloud for charities great and small.’ It promises to be easy to implement, possible to integrate with other apps such as MailChimp and JustGiving – and it’s scalable, growing as you grow.

How do I choose the best CRM system for our charity?

Ask us here at MAST ICT. We provide industry-leading advice on implementing fundraising CRM software and matching the needs of your organisation with the best donor software available.

[i] http://thirdforcenews.org.uk/tfn-news/charities-in-cut-throat-competition-with-each-other

[ii] https://cafod.org.uk/Fundraise/A-Z-of-fundraising-ideas

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