Luxembourg non-profits have warned that budget cuts for 2021 could prove fatal for the sector. But new revenue streams are emerging.

The Cercle de Coopération des ONG and Clae, which represent 258 not for profit associations in Luxembourg issued the stark warning in July when pandemic restrictions was just starting to impact charity finances. In Luxembourg, larger non-profits are financed with grants and subsidies up to 80% of their running costs, making up the difference through fundraising.

“Various factors are at the origin of financial difficulties that may jeopardise the viability of some associations […] the decline in self-financing mainly due to the interruption of activities, but also the decline in donations, sponsorship and also the questioning of certain subsidies,” the two consortiums wrote.

Adapting fundraising models

Many organisations have adapted their trading and challenge fundraising models as a result of the pandemic. The Red Cross switched its annual Christmas bazaar, which in 2018 raised €180,000, to a series of pop-up stands. The Lëtz Go Gold charity race, from the Kriibrkrank Kanner, became virtual in September, raising €305,601 for paediatric cancer research. Aide à l’enfance de l’inde et de Nepal (AEIN) opened an online shop and is exploring the possibility of smaller events to replace its annual bazaar planned for February.

“I think that generally those sorts of events are raising money, but not replacing the amount of money lost from people being able to do the in-person events,” Alex Blake of Keda, a UK-based charity fundraising consultancy told Delano in November. “While they’re not making huge amounts of money, the audience they reach is really significant.” As participants opt in to mailing lists, the returns on this engagement could be reaped later, he said.

Selective giving

In the UK, from January to June 2020, charitable donations increased £800m, according to a survey by the Charities Aid Foundation, while the number of donors remained stable. There was, however, a shift in beneficiaries, with donors favouring hospices and charities supporting the national health system, to the expense of segments such as medical research which lost £174m over the same period.

“We’ve seen that the general public wants to give at this time, and have done that in various ways,” said Blake. “But equally, we’re seeing that economic impact of people losing their jobs so there’s a definite risk and anticipation that there will be lower levels of giving over the next year.”

Françoise Binsfeld is pictured centre-left at the last annual fundraising bazaar in February 2020. Photo: LaLa La Photo

In Luxembourg

AEIN raised an “exceptional” €420,000 in 2020 to help its stakeholders, which it credits in part to the fact its biggest fundraiser, an annual bazaar, took place before the pandemic. But it is unclear how sustainable this will be moving forwards.

“We are predicting that 2021 will be a much more challenging year to raise funds. We are not sure whether some of our current or potential donors like service clubs, municipalities, schools, etc. will be able to support us, as their 2020 fundraising events were also hampered or cancelled,” AEIN’s Françoise Binsfeld told Delano, adding that the back-up plan is to “send out an appeal for donations to all the people who usually” attend the bazaar.”

Digital communication

The Fondation Partage, which reallocated funds to offer covid relief work instead of planned projects, recorded a 15% loss in private income as a result of cancelled fundraisers. The foundation’s Denise Richard was, however, hopeful it could “close the gap a little more and perhaps end the year with a loss of under 10%”. Its strategy has been to organise smaller events and focus on its “strong base of private donors”.

“We focused mainly on digital communication towards those private donors so that they would continue to support us. This was essential as we saw in the past that private donors tend to taper down their support during times of crisis. Without this, our loss in private income would have been much bigger than 15%,” said Richard.

Alternative models

One solution explored by some in the UK is charity mergers. But for the majority, they will have to rely on grant funding and cuts to get through 2021. For those that were struggling before the pandemic, the outlook seems bleak. “It’s difficult to say what the impact will be over the next year, it depends on what government support looks like and the wider economic impact.”

But, it is not all doom and gloom. A positive observation made from CAF’s survey found that trust in charities increased in 2020, with 56% of respondents agreeing most charities were trustworthy, compared to 50% in 2019.