What pops into your head when you think of the word ‘donation’?
To some, it may conjure up thoughts of capital campaigns or volunteers with a collection bucket or a glass case in a gallery foyer for contributions. The picture painted by MTM’s Private Investment in Culture Survey commissioned by Arts Council England, reports that individual donations form the most important element of overall private investment to the arts and cultural sector – accounting for just over half of the £480m achieved in 2014/15.
Moreover, whilst private investment (made up of business investment, trusts and foundations and individual donations) grew by 21% in 2014/15, the growth in individual giving alone was substantial – by a whopping 69%! Sound too good to be true? Well maybe, because if we look closely at the figures, this sizeable increase is the result of a handful of hefty donations to some of the largest arts and cultural organisations in England.
However, if we take those top arts and cultural organisations out of the equation, individual giving still forms the biggest proportion of contributed income for all small and medium organisations; greater than the combined total increases of both business investment and trusts and foundations.
Perhaps what’s striking about the research is that there are clear fluctuations in all three strands of contributed income since 2012/13. For the 50 largest recipients, a downward trend emerges for business investment in particular.
Yet that same sample of organisations stand out when it comes to individual giving, which has more than doubled over a one year period. Unsurprisingly London based organisations benefit disproportionately, with more than three quarters (75%) of private investment attributed to individual giving.
Small to medium organisations however, demonstrate far higher proportions of private income from trusts and foundations than other sources. The visual arts and music sectors also seem to have the largest individual giving base in comparison to any of the other art form categories listed.
This analysis therefore does not present as gloomy a picture as we might have expected, with more than half of organisations reporting that they are optimistic about growth over the next three years, (although the research was undertaken pre-EU referendum result).
So, we should celebrate the healthy signs, but also consider the potential for future improvements for arts and cultural organisations to consider.
Insights from previous Donor research undertaken by The Audience Agency highlight useful findings relating to low level donor and membership behaviour, which can help the arts and cultural sector understand who has propensity to give and under what circumstances.
There are many positive outcomes uncovered by this research including:
- That higher proportions of donors are to be found amongst an organisation’s core attender base when compared with audiences as a whole.
- That more than half of donations are made in person, by phone, online or by donation box, suggesting that small-scale transactional giving works.
- That 1in 5 attenders have joined some form of Friends or Membership scheme (the majority incentivised by the provision of benefits).
It is also worth noting that whether an organisation is a charity or not is considered of significant importance in the decision to give by over two thirds of respondents.
There is clearly potential for more people to give to the arts and cultural sector, but the research suggests that awareness of the ‘not for profit’ status of arts and cultural organisations is low. The fact that audiences do not always see arts and cultural organisations as charitable causes underlines the need for a greater level of transparency in communications. So although not all arts and cultural organisations are charitable ones, those that are should consider promoting their charitable status in more visible and targeted ways to potential donors.
The fact that two thirds (63%) of organisations in the Private Investment in Culture Survey felt that lack of in-house capacity/ time was either somewhat or significantly holding them back in their fundraising, can be viewed as both a strength and a weakness.
Whilst it demonstrates a commitment to investment by organisations, internal pressures will always exist when it comes to delivery. Increased competition in the marketplace, the impact of a slowing post-referendum economy, and decreasing public funding makes the money that organisations earn from contributed fundraising sources all the more important.
However, until fundraising is viewed and resourced in the same way as other core activities, an organisation’s ability to develop a long-term sustainable donor base will continue to be a challenge.
Generating donor income is far more than asking people for money to support your cause.
To be effective, you have to know your potential donors and their interests:
- What motivates them to want to give to your organisation?
- How much can you ask them to contribute?
- What is their capacity to give and in what ways?
- And most importantly – how can you sustain the relationship?
This represents challenges for some organisations based on the quality and quantity of data they hold about their audiences, members and donors – how and what data is collected and where that data sits in the organisation The lack of a Customer Relationship Management (CRM) database, or integration with marketing and the external management of data being particular issues).
Whilst there is little that can be done about anonymous giving channels such as donation boxes, use of systems that require full address details – tying these back to event/ticketing/ booking records – should be encouraged and developed where possible.
The message from the survey is clear. Put in simple terms – Get donors, Keep donors, Grow donors – your future depends on it.
