Solving ‘The Big Squeeze’ for charities.

The NVCO Almanac currently only tracks total spending and income up to 2021. However, by using the raw data from their website and extrapolating these rates, we can observe that the breakdown of financial sustainability is occurring now.

Due to the economic challenges the sector has faced since then, as highlighted in Hospice UK’s recent Financial Benchmarking Reports*, costs have continued to rise significantly while income has struggled to grow at the same pace.

Even if we conservatively forecast linearly instead of exponentially, the sustainability crisis point occurs only a bit further down the road in 2028.

It’s not just charities facing sustainability challenges.

Financial challenges faced by households and businesses are evident. We are constantly bombarded with crisis news, particularly regarding the country's economic stability.

Higher costs of living, rising mortgage rates, and increased taxes are all adding up to 'The Big Squeeze,' and only those organisations prepared to adapt and innovate will weather the storm.

Reducing costs and optimising process efficiencies is a top priority for commercial organisations because they need to deliver profits for their shareholders.

Businesses constantly seek ways to improve process efficiencies and cut costs, from manufacturing robots to supermarket self-checkouts. Charities should be no exception to this trend. In fact, charities have an even greater responsibility to ensure that a larger share of their income is allocated to providing essential care services.

The rising cost of generating income.

Our recent article titled "How sustainable is more, more, more" examined the typical job description for a Head of Fundraising position within a hospice. We noted that there seems to be little to no mention of the need to address the challenge of rising costs.

We questioned who should be responsible for improving process efficiencies and reducing costs within income generation departments and why more actions weren't taken to address the noticeable rise in costs and the decreasing profit from a typical donation.

A review of the figures presented in the recent "Hospice Accounts Report 2023" reveals that the cost impact of every £1 spent on income generation has risen over the past decade. Similarly, the return on investment (ROI) for fundraising efforts has declined since 2012.

In fact, Hospice UK state:

"Due to an aging population, patient numbers and complexity are rising, but unless hospices can find a way to reverse this trend, they will not be able to expand capacity to meet this increased need."

Charities face rising energy costs and pressure to pay staff according to higher cost-of-living standards, increased minimum wage limits, and the need to attract skilled professionals.

The hospice sector has been significantly affected by the recent increase in pay rates for nurses and palliative care specialists, which rose by 5.5% in line with NHS rates. To make matters worse, charities have not yet been able to secure an exemption from the recent increase in staffing costs due to the rise in employers' National Insurance taxes.

Examining the 2023 Hospice Accounts Report (see Figure 19 below), we can see that staffing costs have long been on a rising trend, even before these latest and notable cost increases.

Without wanting to over-press the point, Hospice UK’s latest financial benchmarking report states that:

"2023/24 was by a distance the worst financial year we have ever seen for the hospice sector. It is therefore very concerning that the first quarter results in 2024/25 have been significantly worse than for the same period last year”.

It is evident that sustainability faces severe threats without significant change and adaptability.

Automation: Solving ‘The Big Squeeze’ for charities.

If we acknowledge that one of the most significant costs in the hospice sector is staff overheads, maximising the return on wages makes sense.

Your human resources are costly but essential. Delivering specialised in-person care is at the heart of a hospice’s mission. To offer this care, your fundraising team must optimise their time efficiently to maximise the income generated from their efforts.

Considering these fundamental principles, paying skilled professionals to manually enter donor data into a database or manage spreadsheet imports from numerous third-party processors is illogical.

While your charitable organisation may benefit from having a CRM officer, it’s essential to ease their workload. Without doing so, they will be limited in their output and could eventually need to hire additional staff, which would only increase overhead costs.

Hospices need to adopt digital automation to ease the financial pressures they currently face and ensure long-term sustainability. By implementing simple yet effective automation processes, hospices can streamline their operations, significantly reducing the time spent on administrative tasks.

The path to digital automation is straightforward and does not have to be expensive. Many hospices can implement digital automation within weeks and at insignificant cost impacts. The real challenge lies in raising awareness of these opportunities and fostering a cultural acceptance of the necessary changes.

Automation in action

For those less familiar with automation opportunities, let’s examine a typical example of how charities can utilise it to reduce costs, enhance income potential, and improve supporter experiences.

It’s Christmas time, the season of giving. It’s also a hectic period for hospice fundraising teams. While finalising plans for Light Up A Life, you must also activate your Christmas Tree collection campaign.

Maximising income, time, and cost efficiency should be a top priority, but achieving this can be challenging when you’re overwhelmed. This is precisely where digital automation can be beneficial.

Planning ahead

By using online automation systems, your fundraising team can set up and configure your Christmas tree collection campaign well in advance of launch dates, reducing pressure and clarifying the process.

You will need an online data collection and transaction page to direct your supporters to. These pages can be set up well in advance without technical support. If you’ve run similar campaigns in the past, you can easily reactivate them. It’s that simple!

Configure how you want data to flow

Using automation tools, you can ensure that all gifts collected will be attributed to the correct source, fund, and appeal campaigns for your CRM system.

Do you want a recommended gift value per tree collected? Not a problem. You can configure your donation widget to present these values to your supporters, along with relevant information about how their generosity will support your hospice.

Integrate your CRM system

Connecting your website transaction points to your CRM system is quick and easy. Donorflex, for example, offers an API service that allows online data to flow directly into the CRM in real time without manual intervention.

Your data officer/s can configure a moderation service that checks if existing constituents exist and appends details to their CRM account or when to create a new constituent.

“I can’t reiterate enough the huge impact these CRM automations will have on reducing administration time and costs for fundraising income!”

Kelly Gerrard, Individual Giving Manager, Bluebell Wood Children’s Hospice.

Improving supporter experiences without breaking the bank

Lastly, automation enables you to deliver improved stewardship experiences, including custom landing pages that raise awareness of the donor’s impact and other meaningful ways to support your organisation.

Delivering highly personalised yet fully automated thank-you correspondence also helps to alleviate the pressures on your fundraising team. Depending on various variables, charities can automate thank-you emails or sequences or email correspondence can be fully automated with delivery and read statistics available. Furthermore, records of this correspondence can also be automatically added to your CRM platform.

What’s not to like? What’s stopping you from using fundraising automation?

The main issue that appears to be stopping charities from implementing digital automation is an inherent resistance to change.

As presented earlier in this article, sustainability is at a critical point, and ways to decrease admin overheads, alleviate pressure on existing resources and improve supporter experiences must form a high-priority action point in any charity’s strategic vision.