In a deepening pool of charities, many struggle to keep their heads above water as they compete for the same donated pound. Charities are having to spend more on marketing themselves to be effective and this comes at a cost, not just to the charity, but to the cause it exists to benefit.
Research by Hugh McDonnell, a student at the Manchester Business School, into the 1992 and 1997 financial results of the top 25 cancer charities shows the proportion of money raised being given to charitable causes has decreased from a sector average of 90 per cent to 65 per cent. The report points to the increasing costs of fundraising, publicity and operating charity shops as key factors for the decline.
Charities, however, are aware that they have to behave like commercial organisations in order to compete for public and private money. In most cases that involves spending money on how they present themselves.
Peter Mills, client partner at London consultancy The Team, which has a history of working with charities including Comic Relief and Shelter, believes the branding of a charity is as important as that of a profit-making company. ‘Branding should not just be an image makeover, but a seamless philosophy about how an organisation works. I think people are then more likely to give money on this basis,’ he says.
Caroline Diehl, chief executive of The Media Trust, which works in partnership with media organisations to meet the communication needs of charities, says branding and marketing is even more important for charities than for commercial organisations when it comes to enabling them to compete more effectively.
‘There is much more direct contact with the public now and a greater awareness of what charities do. But as more charities enter into closer relationships with local and central Government and the role of charities blurs, public scepticism grows and communication with the public becomes a priority,’ she says.
Charities, however, need to be careful about how and what they spend on communications and, importantly, have to be accountable to their donors. ‘Too many charities spend too much money on marketing without being seen by the wider public to be spending it in the right way. They have to be accountable and not just get, for example, a new logo for the sake of it,’ says Diehl.
Andrew Passey, head of research at The National Council for Voluntary Organisations, agrees. ‘The public perception is that spending money on marketing is a necessary and valid cost, as long as charities offer a transparent record of their financial spend,’ he says. NCVO research shows that 20 pence in the pound is seen by the public as an acceptable amount of money to spend on marketing.
However, according to the research, the reality is that charities are only spending about 3 per cent of the money raised. But Passey concedes that this figure is an underestimate and research by the Charities Aid Foundation suggests that the figure is closer to 9 per cent.
All charities work within a budget that is significantly lower than most commercial companies. In recognition of this, The Media Trust matches charities with designers who are prepared to work for low fees or on a pro bono basis. It also runs regular design and branding surgeries in partnership with the Design Council, where charities can discuss branding issues.
Terrence Higgins Trust Lighthouse has no specific branding budget, but Andrew Ridley, group director of operations, believes charities can run a very effective brand if it is applied in a cost-effective way. ‘Charities need to be more active in apportioning the right amount of money to the right areas. We have kept on increasing the proportion of money given to our causes over the past few years, but we continue to spend money on communicating with the public,’ he says.
Ridley points to the obvious pressures on charities, which find themselves competing against other issues as well as charities in the same sector, and says they have had to become more professional because of it. ‘Both the people who give us money and the people we help expect a professional service.
‘It’s no different to the way commercial brands operate and in terms of fundraising the brand inspires confidence and helps us generate money and support,’ he says.
Rachel O’Brien, head of external affairs at Shelter, believes some organisations are still seen as unprofessional, despite great strides made by many charities in delivering their message to the public. ‘When I joined Shelter we had branding, but it was all over the place. We have had to become much more professional because if you want people to listen to you you have to present a message in a professional way,’ she says.
McDonnell, who conducted research into cancer charities for his Master of Business Administration, believes marketing can be an effective tool in drawing support, but thinks the money spent on it needs to be kept in check. ‘Individual charities need to work together as one sector. Pooling their resources would make them much more efficient,’ he says.
While McDonnell does not suggest that merging is the answer in all cases, he concedes that ultimately, this may have to happen if charities are going to be effective in pitching their causes against competitors in the same sector. The emerging consensus suggests mergers between charities will be an increasing trend with a subsequent demand for further branding work. Terrence Higgins Trust, as it was known before merging with Lighthouse, had merged seven times over the past two years before its recent and most high-profile union (DW 6 October).
‘Charities have to ask themselves ‘Why do we exist, what’s our mission? Are we best able to meet our objectives on our own or by merging with similar organisations?’ Charities have a moral duty to ask this question,’ says Ridley.
O’Brien of Shelter agrees. ‘If you can’t show that you’re value for money then you need to think of other ways to generate support and in some instances that will mean addressing the question of merging.’
Charities that have rebranded over the past 12 months (and the consultancies that carried out the work)
– Terrence Higgins Trust Lighthouse (Felton Communication)
– NCH (in-house)
– Sue Ryder Care (Berryman Ball)
– Queen Elizabeth’s Foundation for Disabled People (CADA Design)
– Comic Relief (Still Waters Run Deep)
– Imperial Cancer Research Fund (Knox)
– ParentlinePlus (Synergy)
– National Bowel Cancer Week (Cairnes)