Over the last few months the media have reported on a forecast for a looming recession. The Bank of England have forecasted economic growth to be at 1.2% for 2019, blaming the uncertainty of Brexit for the serious toll on the economy. We’re heading for our weakest year for a decade, and with that in mind we ask this question:
What effect will this have on charitable giving?
Let’s go back to the last recession we had and see what impact that had on charitable donations in the UK.
During the economic downturn in 2008, just over half of the adult population continued to donate to charity in an average month. The amount of adults giving saw a slight decline, but the levels were equivalent to a couple of years prior.
With fewer people giving, and average donations being smaller during the financial crisis, the total amount of charitable giving declined by 11%.
This trend wasn’t just seen in the UK but the United States as well, seeing a decline in charitable giving between 2007 and 2008 of 6%.
What does history tell us?
Historically, evidence would suggest that the length and severity of a recession would negatively impact the levels of charitable donations made.
It would seem that the type of donations changes in a recession too. Whilst the downturn itself caused a decrease in value of legacy donations, the actual amount of legacies received increased.
Whilst, of course, personal finances do play a part in charitable giving, the motivation behind individuals to give to particular causes goes well beyond that.
Perhaps it would impact how much a person would be able to give but if the motivation is still there to make a donation, then they will still choose to donate. And no donation is too small when it comes to raising vital funds!
What should charities do?
The message seems to be for charitable organisations to not stop asking for donations – If people want to give, they still will, despite a recession, just the amount may be slightly smaller.
And with new contactless donation technology on the cards, those spur of the moment donations when people are on the High Street or in church on a Sunday will become even easier.
People worried about their finances might feel less inclined to set up or continue a direct debit donation each month, but a few pounds here and there to charities collecting money in public places are still likely to be met with a yes – especially if people are able to donate with a quick tap of their debit card.