Perhaps we’re more familiar with the idea of a Funding Gap. Certainly there are days in our life as a startup that we have become very familiar with it. Days long since gone, because of sheer stubbornness and faith. But the one thing we’ve always been passionate about is brand.
Last week in the NCVO UK Civil Society Almanac, new numbers about the third sector came out. In particular one number caught my eye. It’s long been the case that the biggest brands in the charity sector attract the most funds. The latest data shows that 3% of charities attract 81% of funds. That’s powerful, and we need to start to ask why it's the case. One reason cited in the Almanac is that the very large organisations (0.4%) actually draw in over half of the sector’s income so already that top 3% (which includes the 0.4%) have a fair head start.
But why else do the very large organisations attract the most income? In the hundreds of funder focus groups we’ve done, I’ve come to understand that yes, there’s a funding gap; but there’s also a Branding Gap. Individual donors, whose donations NCVO now report make up nearly half the sectors income (see the video here for an overview), have expressed a fervent desire to discover new charities to donate to. But it can be impossible to find one that resonates and even if a donor succeeds in this, if that charity doesn’t have evidence that what it does works, it’s a leap of faith. Donors want to donate to the best charities doing something about an area they are passionate about. It can, simply, feel safer to rely on a trusted brand because brand quite often, and size, are markers of trust and approval, aliases for ‘best’. It’s the same reason we buy Heinz ketchup, or Coco Pops. At Makerble I've heard donors state “I wanted to find a small childrens’ charity to donate to but I couldn’t, so I gave to a well known one instead’ (Names removed). They have asked friends but not all of our friends are mines of information when it comes to unearthing small, resonant charities for us to fund.
The Branding Gap means that on the one hand, charities find it difficult to attract donors. They can’t say “HERE WE ARE AND WE’RE FABULOUS!” loudly enough for a donor passionate about what they do, to notice them in amidst the noise of the internet and other media. On the other side of the coin, donors do want to find them but they don’t have the tools, the resource or the know how. Importantly they also don’t have an alternative mechanism of trust. The current donor experience, which many including myself and our team at Makerble are seeking to improve requires a donor to donate with very little real, lucid information to read up on before. Once a donor makes a donation, it’s not clear what has happened to it, so why risk it at all?
This branding gap is one reason why myself and Matt as founders linked arms back in the day. I had worked in charities and Matt was an ad man who had also worked in this world. From the start, we’ve been conscious that smaller charities need a powerful brand to compete with the larger charities and Makerble we hope, can help. I want for us to be the friend and champion of the small and medium sized charities who do incredible work but don’t have the resource to shout as loudly as we can as a team. Because once we shout about small charities and their medium sized counterparts, we know from our research, we’ll attract some of that 81%.
In fact it’s not even about the limited pot of 81% that larger charities receive. Back in 2013 New Philanthropy Capital published a report which found that in the UK £665 million would be given by people who already donate, in addition to current donations if they understood where their money went or if they were able to see that charities 'did a better job'. So there’s a truth there that needs to be acknowledged which is that evidence matters. Data, opens up conversations with donors and also has the capacity to grow the number of donations available. Data can be not only an incredible source of information for teams but also the new benchmark of trust.
So surely, if you are a small charity and you want to increase your chances, measure what you do. Share it with donors and shout about it via sites like ours. Because there is ample opportunity out there to re-balance the scales and to draw more funds into the sector if we all work together to draw the spotlight onto what we achieve and inspire more generosity.
You can read the highlights of the NCVO Almanac here: https://data.ncvo.org.uk/