Rate of Growth in Charitable Giving Dips for the First Time

The rate of charitable giving in Australia has fallen for the first time following a spike in the previous year and evidence of ongoing cautious consumerism, according to new research.

The NAB Charitable Giving Index shows the overall rate of giving to charity fell by 0.3 per cent, down from growth of 5.1 per cent a year earlier. 

The index said the drop was in line with softening retail sales growth over the past 12 months, a post-mining boom adjustment in some state economies and a reluctance by consumers to spend on other “non-essentials”, including eating out, entertainment and major household items.

However, the index found that despite the contraction, the average donation size remained the same at $348 per donor.

Older Australians continued to give more than younger generations with those over the age of 65 the most generous in terms of both dollars donated and the rate of growth in giving (2 per cent). In contrast, charitable donations by 25 to 34 years old fell by 3.9 per cent.

“The economic environment is having an impact on the rate of donations with more cautious consumer sentiment and the end of the mining boom impacting on the rate of giving,” NAB economist Rob de Iure said.

“The index has also been impacted by the lower incidence of highly visible and emotive humanitarian campaigns – such as that which followed the Nepalese earthquake in 2015 – which impacted giving to humanitarian services, which have historically had the largest market share of charitable giving.”

With an average donation size of $340, Bellevue Hill in NSW for the first time became the suburb making the highest average donation, toppling Middle Park in Victoria and Mosman in NSW where average donation size was $318 and $291 respectively.

In terms of giving as a percentage of income, Castlemaine in Victoria continues to lead the country for generosity, donating 0.36 per cent of their annual incomes, closely followed by Sturt in South Australia with 0.35 per cent, Blaxland in NSW and Glenelg in South Australia with 0.34 per cent and Fitzroy North in Victoria and O’Connor in the ACT with 0.33 per cent.

The index showed that humanitarian services continued to enjoy the largest market share of charitable giving, accounting for 33 per cent of all donations, but the rate of growth of this sector has been in decline in recent months.

On the other hand, charitable lotteries now account for 15 per cent of donations followed by health and disability at 12 per cent and community services and children and families were the next biggest at 11 per cent.

NAB’s associate director of government, education and community business banking, Tim Hardy, told Pro Bono Australia News the index reflected what he saw happening in the market.

“We are seeing the impact of technology-driven changes such as a rise in the rate of giving via charitable lotteries, many of which are conducted in whole or in part via online platforms,” Hardy said.

“This is certainly creating digital disruption to traditional giving. Online lotteries are appearing everywhere and it would be good to think that people are buying them to support a cause as well as win a new house.

“We continue to work with the not-for-profit sector and business to respond to changes in economic conditions and innovate to respond to digital and other disruption and to diversify revenue streams, building a vibrant and sustainable sector for future generations.”

Hardy said there was no clear indication of why there was a drop in donations from younger people aged 25 to 34.

“I think we are seeing that younger people being more responsive to immediate giving such as to international disasters like the Nepalese earthquake,” he said.

“This has been the first regressive result since we started the giving index so we are not yet seeing a downward trend. This is just a snap shot and often reflects how well the economy is doing. Those organisations that are ahead of the curve will stay ahead.”

National charity, the Heart Research Institute said the NAB Giving Index provided some food for thought for the sector and the need to look to new digital channels to attract new donors and keep regular donors.

“We are a little worried about consumer sentiment without getting political. I feel like consumer sentiment isn’t too strong at the moment so that is a little bit of a concern but beyond that I think that the not-for-profit space in Australia is very competitive, there is a lot of activity in this market now and so I don’t think it’s going to get any easier to fundraise in the year’s ahead,” head of global fundraising and branding Richard Wylie told Pro Bono Australia News.

“In fact I think it is going to get a bit more challenging. It’s really a case of us not resting on our laurels and we need to be looking at lower cost channels and more innovative ways of connecting with donors and not relying on the third parties that we’ve traditionally relied on in the past.

“Any forward thinking not-for-profit organisation in Australia has to be spending significant time and energy looking at different channels. At the moment we all know that probably the holy grail in the last 10 years and around the world has been regular giving.

“We know the benefits that come with donors that have made a commitment to support that is ongoing so face-to-face fundraising continues to get more expensive, telemarketing gets more expensive… for us we are changing channels of acquisition that are more cost effective for our organisation… so for me that is why digital is such an exciting proposition.”

Wylie said that in the last few years everyone has probably had a positive experience with peer-to-peer fundraising.

“The area we are really excited about is in basically in-house lead generation – so again data is key – where that’s names and addresses or emails to contact people to encourage them into single giving or regular giving data is the key.”

The NAB Giving Index found an upsurge in funds raised from lotteries in South Australia.

“I think a lotteries program is an important part of our portfolio so lottery players are slightly different to traditional donors. They enjoy games of chance so from my point of view we want to accommodate our different donor groups,” Wylie said.

“Traditionally South Australia and Western Australia had been difficult markets to run lotteries from a regulatory point of view and so the feeling is what’s happened over there in the last 12 months is that the regulators have gotten in step with other state regulators and it has made it easier to run large scale lotteries there and that is why we are seeing a spyke in that market.
“Because of the South Australian report I am certainly going to direct our lottery agents to take a greater interest in South Australia that’s for sure.”