The second quarter of 2020 was the strangest in most of our lifetimes, upending all the norms of daily life and business. Much of the time, it felt like a surreal game of Consequences, as we all tried to figure out the effects of first social distancing and then complete lockdown on our lives. And from a business perspective, a key question for Immediate – and our clients – has been: what will the consequences of coronavirus be on supporter loyalty?
In normal times, the content we produce is part of a multi-faceted relationship between supporters and the organisations they value. We work with clients across the conservation, arts, heritage and general membership sectors, so the nature of donor relationships varies widely. Some memberships are about supporting a cause, others more about fulfilling a lifestyle.
But usually there are physical events, real-world experiences and often material benefits which sit alongside a member magazine or supporter content. These all round out the supporter experience, adding up to commitment. If you take those physical experiences and benefits away, and then factor in a sizeable economic hit to many households – what are the effects on loyalty? Covid-19 promised to be an unforgiving testing ground.
Four months in, and we have the first research findings into how people are actually reacting – and the results are broadly encouraging.
The supporter perspective
Immediate’s Insight team has been running attitude-tracking research since late March, looking at UK consumer attitudes to household spending and confidence in the future. In the most recent wave, we looked specifically at charitable donations and paid memberships over the past three months (Apr-June 2020). We found:
- 9% of respondents have cancelled charity Direct Debits – but 9% have also set up new ones
- 23% of respondents have contributed to a one-off fundraising campaign, reflecting widespread support for NHS charities as well as hard-pressed charities in other sectors
- 59% said they were spending the same or more on donating to good causes compared to before lockdown
- 18% have cancelled a paid membership, with another 14% reducing the amount they pay regularly
- Against that, 9% have started new memberships and another 4% increased contributions to existing memberships
Here’s the deck in full:
This data suggests that charitable giving is holding up remarkably strongly during coronavirus, with respondents largely maintaining both regular support and one-off donations. Most charities can expect a monthly Direct Debit attrition rate of around 2-3% (according to the Charity Direct Debit Tracking Report), so 9% over three months is close to par. And with a majority (59%) spending at the same or higher levels, philanthropy appears to be weathering the storm.
Rising membership attrition
The indicator for paid memberships is slightly more concerning: a net attrition rate of 9% is clearly not sustainable for any membership organisation long-term. But this is a headline figure, and we would expect to see significant variations between different types of membership – the local gym vs a national charity, for example – and between different demographics.
For example, if we narrow our focus to readers of Immediate’s consumer magazines (older and more affluent than the UK average, and closer to the supporter base of many established membership organisations), paid memberships are down only 3% – a third of the UK average.
Of course, many membership organisations are also charities. And the fact that charitable donations are holding up rather better than membership payments also suggests the need for a renewed focus on cause. We’ve written recently about the potential to shift memberships towards a new idea of citizenship, with members feeling far more connected with and involved in the organisations they support. The signals from this data suggest there is no shortage of support for the right causes, but that some membership organisations may need to reframe their mission – or re-engage their supporters – to feel the benefits.
The charities’ perspective
While we were crunching consumer data on loyalty, the charity payments platform Rapidata released an interesting survey into the third sector’s efforts to protect regular giving. Its Navigating times of crisis to protect regular giving report – launched at this week’s Institute of Fundraising conference – combines payments data with insights from senior fundraisers at charities including Marie Curie and Water Aid. The headlines are:
- The beginning of lockdown in March saw a significant spike in Direct Debit cancellations, but this settled back to normal levels (2-3% per month overall) in April
- 67% of charities changed the way they communicated with regular supporters during lockdown, moving to more direct and digital channels for stewardship
- The three main channels used to reduce attrition during lockdown were social media, additional impact reporting and ‘thank you’ mailings
- Charities are increasingly recognising regular giving as being fundamental to their financial resilience, as other income sources have dried up
Overall, the report supports our own findings. Yes, there’s been a dip in regular giving, but – so far – not a catastrophic one. But given the huge financial impact of Covid-19 on other lines of charity income, such as events and retail (an estimated £12.4 billion shortfall for the sector in 2020) retaining and growing regular supporters has become absolutely mission-critical. That requires organisations to double down on the value and meaning they offer to their supporters, ensuring every communication is relevant.
As the Rapidata report concludes: “While the past few months have certainly been wrought with challenges for the charity sector, it’s been immensely encouraging to see regular supporters mostly sticking with their chosen charities, despite the broad impact of Covid-19. Many lessons have come out of this pandemic so far, including… recognition of the need for renewed focus on regular giving and for real supporter centricity.”
We couldn’t agree more. Putting supporters and members at the heart of content is an often-stated ambition. Covid-19 is making it non-negotiable.