Why smart leadership, not just economic conditions, determines fundraising success

In conversations across the sector, I hear a common refrain: fundraising is struggling, and the cost-of-living crisis is to blame. And yes, it’s real. Donors are under pressure. People are thinking twice before committing financially. But here’s the risk: when we pin everything on external factors, we stop looking at the choices we’ve made and the opportunities still within reach. Because when you step back and look at the data, the story is more nuanced. Some of the challenges are economic. However, many barriers to income growth are strategic, cultural, or entirely within an organisation’s control. We need to separate the two. Otherwise, we risk using the cost-of-living crisis as a cover story for stalled ambition, poor decision-making, and underpowered fundraising strategies. In this article, we explore fundraising in 2025: why it’s not just the cost-of-living crisis.

What the Latest Fundraising Data Actually Tells Us

Here are five key trends emerging from the fab reports available from Charities Aid Foundation, Charity Commission, LarkOwl, Charity Digital, Blackbaud, etc., and what’s really going on beneath them.

1. Donor numbers are down, but giving hasn’t collapsed

Yes, it’s true that only 50% of UK adults gave to charity in the past year, the lowest level on record. But that doesn’t mean fundraising is collapsing. In fact, the Charity Commission reports that total charity income grew by nearly 7% in 2023/24. What we’re seeing isn’t decline, it’s concentration.

Some income channels are under pressure: donor numbers are down, and regular giving is fragile. But others are holding firm or growing, especially high-net-worth giving, donor-advised funds, and legacies. Average gift sizes are on the rise.

The takeaway? The overall picture is more nuanced than a simple “up or down.” Some audiences and income streams are thriving while others struggle. So before concluding that income growth is off the table, the better question is: Are we investing in the right audiences, propositions, and journeys for today’s environment?

2. Regular giving and volunteering are declining, but that’s only part of the economic picture.

It’s tempting to attribute this to household budgets, but CAF reports also show emotional disengagement and shifting priorities.

People haven’t stopped caring, but are less likely to feel connected. And many charities haven’t adapted their stewardship or supporter experience since COVID. The relationship has drifted.

The reality: Loyalty is being tested, and retention is as much about relevance and relational effort as it is about disposable income. If someone cancels their direct debit, are we asking why or just assuming it’s the cost of living?

3. ROI is falling, but not everywhere

LarkOwl’s latest benchmarking reveals that smaller charities are delivering far stronger returns than many larger ones. Some are achieving £11+ per £1 spent, while many large charities are stuck below £6.

This isn’t just about scale. It’s about focus. Smaller organisations often have:

• Leaner portfolios
• Sharper decision-making
• Less internal noise

The issue here isn’t the economy. It’s complexity, clutter, and strategy drift. If your ROI is down, the first place to look is inside, not out.

4. Some long-term channels are working, but are being cut too early

Legacy income is steady but set to rise. High value is growing. Events are bouncing back. But all of these need time, consistency and stewardship.

Too often, leadership teams lose patience, cut investment early, or kill initiatives that haven’t returned in-year.

The problem isn’t performance, it’s expectations. Sustainable income growth needs patience.

5. Digital maturity is stalling, and disjointed systems are holding us back.

Charities may be adopting digital tools, but digital maturity remains stuck at 5.1/10 (Charity Digital, 2025). The bigger issue? Poor integration. Fundraising, finance, and service systems often don’t talk, limiting journey development, insight, and investment decisions. AI alone won’t solve that. Leaders must prioritise connected systems that enable real-time insight, cross-functional alignment, and stronger business cases. Until that happens, digital will keep generating noise over value.

What’s Actually Causing the Challenges?

Yes, the economic context is tough. But it’s not the whole story. When I work with fundraising teams, these are the deeper and often more fixable issues I’m seeing:

Post-COVID underinvestment

When the pandemic hit, many organisations understandably paused or cut fundraising budgets. But some never fully restarted. Just recently, I spoke to an organisation that is merging with another. Both are fantastic charities, but they have two very different stories. One was still investing less in its fundraising than it had during pre-COVID times. The other had brought its investment back to pre-COVID levels almost immediately and had incrementally invested each year since. Guess which charity’s income was growing faster, and who had the better ROI?

Shrinking ambition leads to shrinking income

Your fundraising income is often directly tied to your organisation’s ambition. Moreso now than ever, people want to be part of something bigger than themselves. But too many charities are still operating with cautious plans that prioritise risk avoidance over boldness.

From where I sit, there seem to be two types of organisations right now: those that are playing it safe post covid, and those that have reset with renewed ambition. And the difference shows. The bold ones, the ones with a clear BHAG (big Hairy Audacious Goal) and a strengthened case for support are growing. The others? They’re stagnating or sleepwalking into managed decline.

That may sound harsh, but the pattern is clear. Income follows clarity. Growth follows ambition. And the basics still work if you’re willing to back them properly.

Internal misalignment (aka the S-word)

One day I hope to retire the word “silo” from my vocabulary. Sadly, that day isn’t today. In far too many organisations, fundraising is still treated like a standalone department rather than a strategic function woven into the fabric of the charity.

Leaders often assume fundraising can deliver growth on its own. But the truth is, sustainable income comes when the whole organisation pulls in the same direction, when service teams, finance, comms and fundraising work together and become greater than the sum of their parts.

I worked with a brilliant charity that recognised things weren’t quite clicking post covid. Their fundraising team were capable but isolated. So we took a step back, reviewed their organisational design and ways of working, and created space for proper alignment. Within a year, they’d secured their first strategic corporate partnership, not because their pitch changed, but because the organisation behind it did.

Yes, it’s tough out there. But this isn’t just an economic issue; it’s a leadership one.

Disconnected systems and fragmented data

In my work, I have many conversations with CEOs and Finance Directors who want to invest in fundraising. However, they operate in a context of risk-averse boards and tight budgets. The will is often there. What’s missing is the data to build robust, confident business cases for investment.

And here’s the rub: that kind of insight doesn’t just come from the fundraising team. It relies on connected systems across fundraising, finance, digital and service delivery. But in many organisations, those systems don’t talk to each other. Fundraising teams are left trying to build the case with patchy data, while IT infrastructure and digital strategy sit in entirely different silos.

The smart organisations? They’re tackling this head-on. They’re prioritising tech compatibility and cross-functional integration, not as a ‘nice-to-have’ but as a strategic enabler.

In a world where donors are more selective than ever, these journeys matter. Supporters are choosing to back charities where they feel seen, valued, and part of something bigger. That connection is impossible without joined-up insight and infrastructure.

What Leadership Teams Should Be Doing Instead

The best charities I work with aren’t denying the external pressures, but they’re also not letting those pressures dictate their future impact. They’re asking tougher questions, making braver choices, and building smarter strategies. Here’s how:

Separate fact from fiction

Yes, the cost-of-living crisis is real. But not every fundraising challenge is economic. Some are strategic, cultural, or structural. Charity Commission data shows total income is growing.

If your income is down, ask the more challenging questions before you blame the economy:
• Is our strategy still ambitious or has it flatlined since COVID?
• Does our case for support still resonate with today’s donors?
• Are we making it easy for people to give or just expecting them to?
• Is our team resourced and empowered or simply stretched and in survival mode?

Invest Where It Counts—Brave Decisions Today Build Tomorrow’s Impact

The returns are still there in many channels. Let’s also be clear: a fundraising ROI of 5:1 (large charities) or 11:1 (small charities) still outperforms most other investment opportunities available to your organisation.

Yes, it’s tough out there. But cutting fundraising investment too early, or defaulting to freeze mode, risks locking in decline for years to come. If you have reserves, now is the time to use them wisely to survive the storm and increase your impact beyond it. Because the alternative? Managed decline. And that serves no one, not your beneficiaries, not your team, and certainly not your mission.

Reconnect fundraising to your organisational ambition

Income doesn’t grow in a vacuum. Donors don’t give to help you balance the books; they give to help you change the world. That means setting a bold direction, aligning your fundraising strategy behind it, and getting everyone in the organisation to buy in. If your plan doesn’t inspire you, it won’t inspire anyone else.

Think long term because real impact takes time

Everyone wants income growth now. But the biggest, most sustainable returns, major gifts, legacy pipelines, strategic partnerships, and direct mail don’t work on a quarterly cycle. They take years to mature.

We often overestimate what can be achieved in 12 months and underestimate what’s possible in 3–5 years. The charities seeing results now? They made bold choices post-COVID reinvesting, reshaping, re-aligning. It’s not too late but if you want to avoid being in the same, or worse position in three years, you need to act now. That might mean using reserves wisely or making tough trade-offs elsewhere. Long-term impact demands long-term thinking.

Create the conditions for joined-up thinking

If you want to convince sceptical boards to invest or build supporter journeys that increase lifetime value, your teams must work together. That means more than just shared goals. It requires shared data, shared systems, and shared ownership.

Ask yourself these questions:
• Is the will there?
• Is the organisational design enabling it?
• Is the culture reinforcing it?

It’s not the glamorous stuff that grabs headlines, but these are the foundations your growth depends on. Without them, even the best strategies won’t stick.

Make fundraising everybody’s business

If fundraising is seen as someone else’s problem, income will flatline. The most successful organisations treat income generation as a shared responsibility. That means comms, service delivery, digital, and finance align not just tactically but strategically with a shared sense of purpose and accountability.

Fundraising can’t thrive in isolation. It must be embedded in your culture, leadership, and everyday decision-making.

Final Thought: Don’t Settle for the Easy Narrative

Yes, the cost-of-living crisis is real. But so is growth. So is return on investment. And so is your charity’s potential if you’re willing to focus on what truly counts.

At Honest Clarity, we help charities move beyond easy narratives. We don’t just treat symptoms; we uncover root causes. We don’t blame; we build. We work alongside you to make smart, strategic choices that grow income and maximise mission impact.

If that sounds like a conversation worth having, we’re ready when you are.

Further Reading:

How a Good COO Can Help Transform Your Fundraising