The new charity middle man

Almost 5 years ago I wrote this article, I stumbled across it again the other day, it still feels relevant. Yes some things have moved on, Jessops, one of my examples has fallen by the wayside but the principles outlined still apply. Those charities with real clarity about why they exist, what they do and how they make a difference and that use this to create compelling stories, messages and reasons to support will be and are the ones that thrive!

20 years ago the world was a different place – no iphones, mp3’s, and no legal trading on Sundays. Consumer choice was more limited and in general the consumer was less sophisticated, less demanding and very much more trusting.

Charity donors gave money relatively unquestioningly – putting their trust in the organisation – few questions were raised about administration costs, salaries and earmarking.

Things have changed …. the customer is now champion – part of the 24/7 generation to whom having “rights”, “knowledge” and” choice” are an expectation.

Now charities need to prove that they are delivering. Donors are much more interested in transparency and tangibility – they want to know exactly where their money is going and what it will achieve. For many charities, there is a major barrier – a significant number of people simply don’t believe the money raised will end up where the problem is or even that it will make any difference in solving the problem. As a consequence earmarked appeals are much more enthusiastically received than a blanket request for money.

A big driver of consumer change has been the internet. It has revolutionised our world. From the humble beginnings of internet shopping back in 1995 (yes it was really that recent!) when a book was bought from WH Smith via Compuserve, it has grown to the point where British households now spend more than £3billion every month on internet goods.
Now around 75% of holidays are booked online, seven gifts a second were despatched from the Amazon warehouse last Christmas, and there are almost limitless opportunities to gain access to information.

Some of the industries that have been most affected by the internet have been those controlled by “middle men” – the travel, insurance and consumer goods industries have all been forced to radically change their business model to compete. Jessops the camera shop have issued 3 profit warnings this year – one of their issues being people come to the shop, get the advice they need and then go and buy cheaper on-line.

Most charities are “middle men” – they take their cut in administration costs. It’s not about making a profit but paying for salaries, infrastructure, fundraising, communications and all the rest.

This new environment provides both a threat and an opportunity for charities.

Do an internet search on child sponsorship in Gambia, and as well as the recognisable UK charities you will find a whole host of schools promoting
themselves direct. For a fraction of the cost of sponsorship via a UK charity you are now able sponsor a child’s education and see the building projects develop online. In addition you can get more involved as the schools recognise that a visit will probably lead to increased giving. By giving direct you can support more children, get to know them and their families (if you wish), and really make a connection with them.

Whilst these direct charities don’t have the brand or the trust of recognised charities they do have that direct emotional engagement. In effect the internet is acting as the “broker” between donor and recipient. It is delivering the tangibility and transparency that the supporter wants, together with choice – as they can control which project and how they choose to support.

There is an opportunity to become a new “middle man” like, a new “middle man” that keeps it simple, keeps costs down, allows supporters to do what they want, rather than try and control them.

One charity that has already recognised the opportunity is they offer a people-to-people model, allowing private individuals to make loans to specific borrowers seeking to establish small businesses in developing countries. This allows people to build relationships and engage with the beneficiary without going through an intermediary.

None of this is easy – in fact for some causes it’s very difficult. The beneficiaries might need protecting and it may be highly inappropriate to create direct linkages. But the opportunity is significant and like many other forms of fundraising ideas can be tested and trialled often at low cost to gauge success.

From a supporter perspective it’s simple. More choice, more control and the option for a direct relationship with the beneficiary.

All of this and their donation can go even further…more cows for villages, wheelchairs for disabled, vaccines for kids, shelters for animals, homes for homeless…….