The pros and cons of charging charity beneficiaries
Can (and should) charities charge their beneficiaries to make up for falling fundraising income? And what happens when they do?
The Covid pandemic has demonstrated how vulnerable many fundraising techniques are to the effects of lockdown. Events, street collections, shops, street fundraising, and door to door fundraising have all been devastated this year. So as fundraising income is depressed, in some cases possibly for years, how can charities make up for the loss in income? This paper looks at the legal, practical, mission and pricing challenges of charging beneficiaries, as an alternative source of revenue.
Charities offer a diverse range of services, from addiction recovery programmes and pet hospitals to community minibus services and art galleries. Deciding whether to charge beneficiaries for these services can elicit strong views, even outside of a pandemic. The significance of the decision, and the potential implications resulting from charging, varies enormously depending on several factors. Legally, charities are entirely permitted to charge beneficiaries for services they provide, and financial data for the sector suggests that there are significant benefits of doing so. We then consider evidence from a wide range of research to help answer some key questions facing charities when considering their approach towards charging. This includes:
Evaluations of the impact of pricing strategies for specific development and health interventions
Research into pricing and the psychology of consumption There is limited research directly comparing charities that charge and those that do not. Two recent research studies both found that there are no significant differences between organisations within the same sector that charge and those that do not. In 2018, Flóra Raffai compared charging and non-charging UK sight loss charities through an online survey and analysis of 94 charity accounts, around half of which were charging for services.1 This study considered the quality of charities, mission focus, staff morale, volunteer commitment, and their relationship with beneficiaries. In 2016, the Association of Independent Museums (AIM) commissioned a survey of over 300 museums, plus stakeholder consultations and 20 in-depth case studies, to investigate the impact of different pricing strategies on factors including: visitor numbers, diversity of visitors, income, visitor satisfaction/quality of visit, and reputation.2 The narrow focus of existing research highlights a need for further research into the effects of charging, and considering more fully the views of staff, volunteers, and beneficiaries – particularly among organisations that change their pricing policies.