Bonny Colville-Hyde

Product Director

Ten ways charities can diversify their income streams

9 mins read

Having an over reliance on a single, or few income streams, comes with high risk. Diversifying the sources of income of your charity or nonprofit is a good way to plan ahead for financial challenges in the future, as well as counter those that you face today. The cost of living crisis has put all charities under increasing pressure, and finding new ways to raise funds has become both crucial and challenging.

The trouble with pressured situations like we’re in, is that trying new things can feel especially daunting, because what if they don’t work? But, if you don’t explore and experiment, the bigger question is how will you ever adapt? We have grouped together eight practical approaches you can explore, that we hope will help you confidently take steps to diversify your income streams.

1. Deepen your understanding of your supporters

Start by looking at the range of supporters you already have, and assessing as a team:

  • How well do you really know them, beyond their touchpoints with you?
  • Is your knowledge of your supporters confined by your own internal organisation siloes (e.g: you find it hard to see if supporters are donors and fundraisers and volunteers)?
  • How well do you understand why they support you in the way they do?
  • How different are your supporters to each other?
  • What makes them choose to support you, and how much does this reason change between your supporter segments?

Gaining a stronger understanding of their context, background and motivations will give you a map of where you could have some ready-made opportunities to build deeper relationships and greater engagement.

For example, by reviewing existing user research, or running new sessions, you might realise some of your regular donors feel detached from what they give, and don’t see or feel the impact of their donations. Updating your email strategy to send them more customised impact reports based on their contributions could encourage them to donate more, or take steps to engage more deeply with you by volunteering, campaigning or signing up to do a fundraiser.

Having a clear measurement framework will help you to do this too, as well as clear ways of mapping your supporters and how they segment. It's a team sport to get these to work well as you need input from across your organisation and they can’t be made by one single person or team. Encourage using qualitative data to bring these to life, with real stories and experiences. This is where you might find interesting groups of people that bridge the siloes of your organisation, such as the Direct Debit donors that also are service users and do fundraising for you, or the people that donate all their goods to your charity shops and would love to do a sponsored event but haven't found a good option yet.

2. Explore regular giving in new ways

Unpredictable incomes, alongside low incomes, make it hard for many people to plan who and how much to give to. Young people in Gen Z are particularly affected by this, but it doesn’t mean they don’t want to give regularly, they just can't commit to a Direct Debit so easily.

Offer flexible regular giving

We heard in research we ran with Gen Z participants that some people want to donate each month, but they need to flex the amount they give. One month it might be £10, another month perhaps just £2 or £3. Looking at ways to flex regular giving could shift single donors into regular donors. Options to explore here could include sending monthly prompts to ask if supporters (that opt-in) can make a donation, or if they want to skip that month.

You could test giving regular donors the option to pause, rather than cancel a donation. Giving this open flexibility could encourage some donors to stay signed up rather than cancelling outright, and could even encourage more to sign up if they felt they were not going to get locked in by the guilt of possibly needing to cancel in the future. If mortgages can offer payment holidays, why not charities?

Donation pledges

Donation pledges allow supporters to set a total amount they want to give, and they donate incrementally to reach that amount. This gives donors a way to give a more significant amount, over a period of time that they can plan for, and take at a pace that suits their circumstances. For example, they might pledge to donate £100, but to make it achievable, they set it up so they donate £2 every week for 50 weeks.

Combining impact messaging with this approach could be a fantastic way to motivate supporters to look creatively at how they give, and how they generate impact over time. Your impact messaging needs to clearly communicate the relevant, useful and meaningful change a supporter’s money will make, in a tangible way, which is true for all donations, but when asking for a larger total amount could make a significant difference to supporter’s perceptions.

We’d recommend carefully linking and tailoring your email communications to this approach to ensure supporters get tailored updates based on their specific giving and keep them bought into the vision of their donation pledge and the impact it will have for the cause.

3. Revisit your email strategy

Newsletter and email donation conversions give some of the best and most consistent returns on investment, yet email strategies are often neglected in favour of higher visibility work such as advertising and social media activity.

Experimenting and optimising your approach to your email and newsletters has the potential to develop it as a significant income stream, as well as a source of more engaged supporters. We’ve got three key tips to get you started:

  1. Begin by reviewing your newsletter onboarding journey (if you have one) and checking that you actually deliver what you’ve promised people when they register.
  2. Make sure you include your impact in each newsletter: people that have registered have indicated they care about the cause(s) you support, its now your turn to show them the difference you make (which in turn will demonstrate how supporting you will make them a part of that story).
  3. Give readers a positive next step to take: make sure each newsletter gives the reader an opportunity to support your cause, with clear impact.

4. Unlock your supporter network

People are more likely to donate if they are asked by their friends and family to support a cause, in fact, according to research conducted by Blackbaud, the network of people around your supporters could be your easiest route to generating new donors: 46% of people donate to help a friend or family member fundraising (rising to 53% of less frequent givers reasons for donating). When asked to donate by a family member, people report the highest rate of being “very likely” to donate (32%) and with friends (25%).

We’ve heard this during our own research into why people donate, with participants telling us how they make snap decisions to support their friends and family who are fundraising as they value the connection it gives them. We think there is potential to explore other types of group giving in this theme, where a group of people may join together to achieve a more significant donation that individually they couldn’t do.

You need to be careful about how you prompt this, so we recommend discussing what might feel appropriate during user research sessions you run with supporters to explore what might make them feel comfortable sharing a post on their social media, or via email.

5. Payroll giving

Payroll giving doesn’t generate the amount of donations it has the potential to. That's probably because it feels too challenging to set up compared to other methods of giving, which is frustrating because it enables people to give more (as it’s pre-tax). Look for ways to break down the friction to unlock additional donations.

Explore partnerships with large employers to increase awareness of payroll giving and the steps needed to sign up, or look for local employers in the areas where you are based to form meaningful relationships within your communities.

6. Corporate involvement

As well as being a potential source of new donors through payroll giving, companies can also be a gateway to new volunteers, fundraisers and supporters in general. Look for companies to approach that are likely to align with your mission and values, a good place to start is on the register of B Corps (there are now over 2000 in the UK alone!) as each of these organisations has passed a strict vetting process that looks at their social and environmental impact. It would be fair to assume that B Corps are likely to attract team members who care about their impact on their communities and the world at large, so could find affinity with your mission too.

7. Develop a product with value

Many charities have been experimenting with subscription-based products that give supporters added value and connection to their cause. Refugee Action has developed a recipe subscription box called “Homemade”: each month subscribers are sent recipes from refugees which don’t just provide a steady income stream, but build empathy and understanding across cultures.

Photograph of an Action for Children Nature Rangers subscription box and its contents arranged on a wooden background. The contents include printed worksheets, a compass and a box of colouring pencils.

Action for Children’s Nature Rangers subscription box includes a range of nature inspired activities for children to enjoy.

Action for Children has also launched “Nature Rangers” a subscription box that features activities to encourage children to get outside and explore the natural world. This feels complementary to their mission and values, and places child wellbeing firmly in their strategic approach to engaging supporters.

Shelter Box created a book club that people can subscribe to, which gives them access to voting on which book to read next as well as being able to discuss the book with fellow supporters. This builds a sense of community alongside supporting their cause.

Refugee Action, Action for Children and Shelter Box allow supporters to choose from a range of monthly amounts, allowing supporters to give extra on top of the cost of buying the subscription box.

Not all subscription services will resonate with your supporters though, or be able to generate a significant long term income stream. It's worth testing the idea or working on it iteratively to find what really connects with your audiences before making a big resource intensive commitment.

8. Explore partnerships with influencers

There is great potential to reach new supporters if you work with influencers who already have large followings on social media and streaming services. Building an engaging, consistent and tailored profile on every social media platform is time consuming and expensive, but if you partner with someone that already has a relevant following you can leverage that to introduce your cause to them.

The Twitch platform is predominantly used for live streaming computer games, where individuals can build up huge followings of people that often subscribe (free or paid) to engage with them - so their audiences are used to the idea of giving money. While gaming may dominate Twitch, there's plenty of other activities getting streamed. These include “just chatting”, drawing and painting, model making, music performance and DJing, comedy, gardening, ASMR and people exploring the cities where they live. It has its own charity tool that connects to PayPal’s Giving Fund who process the donations to charities, and can connect to the Tiltify platform that enables you and your streaming partner to set goals and rewards for donations.

The British Red Cross have multiple gaming and streaming campaigns that show how this method of reaching different audiences can be used to generate new donations and supporters. Take a look at their current Quest for Kindness campaign on Tiltify.

Influencers can also be used to reach new supporters on Instagram and TikTok, where there are plenty of passionate campaigners building audiences that are likely to care about similar causes, whether you’re trying to reduce plastic use, alleviate poverty, or improve human rights.

9. Experiment with your paid media campaigns

It's possible to find new supporters if you explore different channels, or even just different demographics to what you typically target with your pay per click (PPC) budget. Sometimes a fresh look at how you’re setting up your campaigns can mean that your budget can be made to go further, and/or deliver a greater ROI.

Advertising on social media platforms, especially Meta (formerly Facebook), has changed dramatically over the past few years and its certainly getting more challenging to reach target audiences. Thinking in phases can help to offset this though, and looking beyond established and aware audiences. We’ve worked with many charities to do this, with some great success. With MS Society we ran a phased Meta campaign to initially engage new audiences and build awareness before running a second phase to convert new donors, which led to a 11% decrease in the cost per acquisition.

We’ve also had success for clients exploring different channels to advertise on, such as Spotify. You can read about the campaign we ran with Samaritans on the Spotify blog.

10. Create a compelling service

Providing a service can be a surprising mechanism for generating new donations. When the RNID launched their online hearing test it became one of their top-performing donation drivers because people found genuine value in it - and that happened by accident rather than design. After 320,000 hearing tests there had been 1,300 who signed up to become a regular giver and 120,000 new email subscribers.

This brings us back to our first point: deepening your understanding of people will give you insight into the problems they have that are opportunities for you to fulfil - be they through digital services that solve problems, or through understanding their contexts and the messages they need to hear in order to trust you and take action.

Want to explore more ways to diversify your income?

We’d be happy to work with you to explore your options and what methods could be the right fit for your organisation, teams and supporters.

Get in touch to book a call with one of our experienced team.

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