Slippery Slope of Fundraising: Australian Charities Financial Analysis 2002

1 December 2003

Givewell Research Centre’s analysis of the financial statements of charities for the 2002-2003 year has found that ‘donor fatigue’ has arrived.

It is significant that donor fatigue has set in despite increased wealth, better education about needs and government encouragement of philanthropy. It would seem that the donations cup is full.

Key Findings:
1. continued strong growth of total income;
2. continued strong increase of government contributions;
3. growth of net assets;
4. a significant rise in cash holdings;
5. a rise in fundraising income that has only just kept pace with the rate of inflation;
6. a more significant rise in fundraising costs;
7. a lower rate of return for fundraising dollars spent;
8. the largest charities have the lowest return on increased fundraising budgets.

The data shows a rise in fundraising income for the 2001/02 financial year that has only just kept pace with the rate of inflation; as well as a rise in fundraising costs and a lower rate of return for fundraising dollars spent. These trends would indicate difficult times ahead for Australian charities, which have been accustomed to growth in fundraising income over the past five years. Surprisingly, the largest charities – those with gross annual revenues more than $10m – are those whose fundraising growth has stalled. On the other hand, total incomes for charities overall have continued to rise and government contributions have increased. Net assets have also grown (by 5%), but at a slower rate than average of 8% over the previous two years, whereas cash holdings have risen significantly.

In summary, the ebbing tide of donations, which was predicted in June, has been confirmed. Although this survey has shown the trend to be confined to the big charitable organisations, a preliminary analysis of data from the 2002/03 financial year suggests that Australian charities could now be experiencing a decline in donations: the first since our surveys began in 1997.

The full survey is available to subscribers to the Givewell Research Centre.

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