Are you the disrupter, or the disrupted?

In this specially-commissioned feature for the Commission on the Donor Experience Terry Hunt was asked to give his candid opinions on the future prospects for fundraising charities. His views may make uncomfortable reading for some.

Written by
Terry Hunt
Added
October 12, 2017

Is there a sector of the British economy that hasn’t been fundamentally disrupted in recent years? 

Financial services? Think moneysupermarket.com. The book trade? Think Amazon. Newspapers? Think Buzzfeed. Urban transport? Think Oystercard or Uber. You name a market and it’s busy being shaken up. Bold thinking coupled with revolutionary technology throws everything in the air, allowing the innovators, consolidators, discounters and disintermediators to rush into the space vacated by traditional business models. 

So, is there a sector left untroubled by modernity? Well yes. I would suggest that charitable fundraising is as recognisable today as it was 30 years ago. But not in a good way.

Apart from dabbling in digital media, some marginal product innovation and experiments in distribution (give it up for the chuggers!) the UK’s 195,000 charities employ much the same fundraising techniques to promote the same donor propositions that they did throughout the last quarter of the 20th century, but with diminishing returns. To a semi-detached participant like me, someone who makes direct debits to a dozen charities and has consulted for several of them over the last 35 years, there seem to be more charity brands competing in over-crowded segments for smaller slices of the fundraising cake. Which means everyone has to spend more to get less, achieving lower response rates from fewer supporters and, more importantly, suffering declining trust scores.

I don’t believe that the Olive Cooke tragedy, the Age UK controversy, the data sales scandals that emerged in quick succession this year are isolated mishaps. They are symptoms of structural weakness in an overly fragmented sector; the results of the chase for cash in a stagnant market. Over-stretched managements are trying to keep the same old show on the road, but failing to ensure rigorous compliance. Corners are being cut and the commentators in media and politics queue up to criticise the industry’s failings. 

Meanwhile serious competition for public attention is emerging beyond the established charity sector. Multinationals like Unilever, retail giants like Tesco and popular brands like Ben & Jerry’s are appropriating the leadership of social causes into their worlds. They have the cash, skills and the shareholder mandate to invest in social purpose marketing in order to add meaning to their brands. Senior managements want to pump up their NPS numbers, enhancing their company valuations by demonstrating their commitment to doing good and leveraging the close relationships and goodwill they enjoy with millions of paying customers.  

So are charity fundraisers facing a double whammy? The growth of social purpose marketing is accelerating at a time when the ethics and competence of traditional fundraisers are being challenged. As public belief and confidence in the efficacy of donating to conventional charities erodes, brands are providing a new channel to ‘support’ a cause.  Particularly for cash-strapped millennials, who have grown up in the brand-dominated, digitally responsive world in which traditional UK charities are bit players, branded social purpose propositions can look very appealing.

UK fundraisers may have noticed that this is happening, but are they responding? They seem to still see themselves competing with each other within the rules of an unchanging marketplace. It’s reminiscent of Kodak’s dismissal of digital photography as an inconvenient distraction. 

But look at the players and the growing scale of investment in social purpose campaigns. The Persil ‘Dirt is Good’ initiative, for example, is now operating in 78 countries, tackling the growth in sedentary lifestyle by helping children rediscover outdoor play. Multinational pharmaceutical giant Novo Nordisk has committed millions of euros to reversing the pandemic of type 2 diabetes, partnering with healthcare professionals and policymakers to promote earlier intervention, diagnosis and screening. Ben & Jerry’s focuses on call-to-action campaigns to raise awareness of climate change and social inequity and is devoting 20 per cent of its US marketing budget to fuelling its ‘Democracy Is in Your Hands’ movement. Unilever has adopted ‘make sustainable living commonplace’ as its long-term corporate goal, setting up a crowd-sourcing investment fund to innovate in sanitation, hygiene, and nutrition. Lloyds Bank is helping to fund business start-ups in deprived areas. Häagen-Daz supports honey bee research. Google, Sky, Danone, BT, Aviva, SABMiller, Nestlé are all investing in social purpose to show their worth as corporate citizens.

Where are the charity partners in these brand-led movements? How many of them have been advised by charity experts to direct resources and spend the money to achieve the best outcomes? Where are the membership propositions that spin out of the campaigns, turning consumer interest into committed personal support for the causes?

Interestingly, Tesco has recently provided an example of good partnership practice. Responding to research that found that 80 per cent of UK parents believe their children to be less healthy than they were at the same age, Tesco launched an ambitious food education programme called the Tesco Eat Happy Project. Their aim is to encourage youngsters to have a healthier relationship with food. Created and managed by Zone, the digital marketing agency specialising in social purpose campaigns, they created a partnership with Diabetes UK, the Children’s Food Trust and the National Farmers Union, to enable primary age school kids to go on educational Farm to Fork field trips in factories, on farms and in supermarkets, enjoying practical demonstrations of where food comes from and how it is made. One in three primary schools signed up and 1.4 million school kids have had an Eat Happy experience. Is this a model for more collaborations between profit and not-for-profit? Should traditional fundraisers be taking more notice of this sort of initiative? Maybe driving it rather than following the corporate leader?

There are obvious reasons why fundraisers should expect increasing disruption from this direction:

  1. Social purpose marketing makes issues look clear cut, focusing on tangible outcomes. The world may not be that simple, but for most people most of the time that’s not the point. We respond most readily to specific, well-defined goals. We want to support solutions rather than ameliorating problems. We want to feel we are helping progress happen.
  2. Big brands have more marketing money to invest than charities. Once the likes of Nestlé convinces its shareholders to promote sustainable rural development they get the funds to make something significant happen.
  3. Big brand owners are better at marketing than charities. They know how to build sub-brands and sustain campaigns. They know how to create public and PR momentum.
  4. Big brands have large pre-existing audiences, people who buy from them frequently over many years. They have lots of customer data too.
  5. Big brands have access to media and channels in their normal course of business that charities don’t, so they can control the cost to publicise and mobilise customers, supporters and colleagues.

So what’s to be done? Heads in the sand is not an option. In fact there’s every reason why charity fundraisers should actively embrace the growth of social purpose marketing and, rather than stand on the sidelines, offer leadership as ambitious, creative, expert solution providers. 

Here are a few suggestions:

  1. Find out which companies are already spending big money on social purpose marketing; work out which are the ones you could add serious value to as their strategy evolves. 
  2. Find out which companies are dabbling and might be considering investing more. What would be your proposition to convince them to go big to achieve their aims?
  3. Identify who isn’t investing in social purpose marketing but should be. Imagine what they could do that would fit their brand and generate support for your cause. Create ideas and a plan, then fix a meeting with their chair or CEO.
  4. If there’s no brand to partner with, do it yourself. Create your own social purpose brand by bringing together a coalition with other organisations – including your direct competitors – dedicated to a shared theme or mission.  Why did it take entertainers rather than charities to invent Red Nose Day? Why couldn’t all the development charities combine to create one big multi-media fundraising event, sharing costs and revenue?
  5. Consider the potential of co-op fundraising all year round, rather than single charity brand appeals. After all, it works in emergencies with the DEC campaigns. If there were a number of theme-based fundraising campaigns underwritten by a coalition of relevant charities, the public would recognise the efficient use of marketing investment, the appeals would gain scale and impact and the individual charities could concentrate on delivery, unburdened by messy realities of cash generation. 
  6. If it works that could introduce a model where general fundraising is outsourced to specialist third party co-ops with the capacity to sustain best professional practices while individual charity brands become membership organisations, offering intense relationships with highly committed supporters who have the most affiliation to your brand and operational approach. 

The point is that no one can avoid disruption. It’s as inevitable as ageing. The trick is to instigate the disruption, or at least contribute positively to it, rather than wait for someone else to disrupt you out of existence.

© Terry Hunt 2017

About the author: Terry Hunt

Terry Hunt

Terry Hunt FIDM, partner, The Future Customer 

Terry was co-founder and creative partner of the pioneering DM agency, Evans Hunt Scott.  As EHS Chair, Terry led the merger with Brann to create a fully integrated direct, digital and data agency.  Since leaving the agency world he has been a serial entrepreneur (four start-ups in four years), founding partner at The Future Customer as well as president of the Institute of Direct & Digital Marketing.  Terry has developed major CRM and membership strategies both in the UK and overseas, most famously Tesco Clubcard. With Clive Humby he co-authored Scoring Points, how Tesco wins customer loyalty, the international best-seller on Tesco’s pioneering customer programme. Terry is trustee/board member of World Child Cancer and is advisory board member of Aimia, owners of the Nectar and Aeroplan brands.

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