Understanding competitive dynamics in the Charity sector

It’s a cliché but Charity is big business; Consumers gave £70.1bn to Charities in 2015, up from £65.7bn in 2014. However with 165,290 registered charities in UK, it is a market where only some can thrive. In fact, less than 1%of charities had an annual income above £10m in 2015. When there are many charities with similar philosophies, causes and target audience, becoming and staying relevant and top of mind is a must.

One important thing Charities can do is to be aware of what their competitors are doing. Here in Business Science, we have found that when smaller charities working for the same cause advertise, we can see an increase in donations for the more well-known charity. The work of the smaller charities raises awareness of the “cause” itself, encouraging people to donate to whichever charity in that line of work comes to mind first, allowing bigger charities to benefit.

However, as smaller charities come up with higher-profile fundraising events and campaigns, these can have a negative effect on the larger charity as cause-aware consumers switch allegiances.

In the wider world, global crises such as the Syrian crisis and the Ebola disease can have a significant impact on Cash donations. The attention given to these events and the public drive to help means Charities not related to the event can see a negative impact on their donations. Advertising during times of crisis has to work harder and charities may find it more effective to reduce advertising until these external events have been resolved or the publics focus has moved on.

On the flip side, a Crisis in the same area as your cause can raise a great many number of donations. Being aware of what could happen and being ready to support fundraising with marketing activity in the case of emergencies and crisis’s will allow a Charity to promote their cause and raise much needed funds.

In the charity sector there are many things out of our control. However, what we can control, is our reaction to them and it is this that can determine success or failure.