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Sarah Hedley
- Sunday, October 26, 2008
For most charities, running shops has never been an efficient way of raising cash. Compared to other methods of fundraising, shops cost a lot to run and don't deliver a great return. For all the supposed and unquantifiable brand advantages that come from of having a charity operating in the local community, when it comes to the figures, the return on investment seems to be poor.
The economic slowdown, however, offers shops an opportunity. As the public starts to reign in its spending, charity shops look set to benefit from people on the look-out for bargains. Shops should be looking like a sound fundraising investment.
But it seems that many charities are finding it hard cope with this new demand. As Rosie Chapman, one of the biggest cheeses at the Charity Commission, pointed out this week, many charities are struggling to find enough donated stock to fill their shelves. As we stop buying new clothes, we inevitably hold onto our old ones for longer.
If charity shops can’t cope with the renewed demand for second-hand trousers and hand-knitted jumpers, then it seems as if we’re back to square one. Will shops ever be an efficient way of raising cash?
So charity shops will have to sell on less and put a higher percentage of their donations into the shop.
For the shops I know, still a lot of donations.
Martin
Well,
http://www.thirdsector.co.uk/Channels/Fundraising/Article/614433/FINANCE...
Sure conditions are getting tougher, but shops CAN do well...
Ginsters: I agree with you that charities can’t rely on one source of income, and that not all income streams can be hyper-efficient. But, from our experience, some charity shops seem to be SO inefficient that it makes us wonder if they’re really worth it.
Martin: surely the point is that while it was easy for charity shops to find stock in the past, it’s becoming much harder. If this is the case, then shops will have to spend time looking for stock which, as rspcacambride says, can be a lot more expensive.
Sarah, Intelligent Giving
Once you're down the route of paid managers you need a minimum of one full-time and one part time (to cover holidays, sickness etc.). It's a pretty skilled job (honest!), so you're going to have to pay more than the minimum wage.
You won't need to buy stock, but you'll have energy costs for running a steamer (basically this is an industrial ironing system).
If you don't get enough stock brought direct to the shop by donors, then you'll need to run a van and pay someone to put out collection bags and pick them up.
When you first open a shop you can expect legal costs of around £2,000 and rent in advance of at least £2,500 (for a smallish, old building).
You'll usually have rates as well as heat, light, water etc. (although some local councils will waive their entitlement to make a charge).
Don't get me wrong - I am a big fan of charity shops because they serve a useful social function, mostly don't annoy people and are a way of generating a predictable income stream for the charity. But they are not for the faint hearted and they can potentially get you into a LOT of trouble if you fall foul of any of the very complex regulations about operating small businesses.
The shop has to be paid for, the salary of a manager may have to be paid for.
Heating, lighting, insurance. Outfitting?
Thats about it offhand.
No or little stock cost. No or little money tied up in unsold stock. Sales targets can still be set.
I only know one expensive charity shop. My local hospice shop.
Every other shop I go in is pretty cheap.
And even purchases can be gift aided now I'm given to understand.
I'm afraid really is part of the "inefficiency" of modern charity shops. An all-volunteer team can generate a much better profit ratio, but the accumulation of regulations is making it less and less possible.
Volunteers (reasonably enough) often don't appreciate that things they survive in normal life are potentially laying the charity and themselves open to strict liability fines of terrifying proportions if they're done in a shop. As a result there's pressure to have at least one paid staff member present at all times, which creates a vicious circle because the need to pay their wages forces the shop to go up-market - hence pressure to be more selective about only selling the more expensive items. This in turn makes it more difficult to use ordinary volunteers, because sorting stock becomes a more complicated process and so it goes on.
People need to look beyond a crude measure of return on investment to decide which fundraising activities are worth doing and which aren't.
Given that legacies are renowned for giving the best ROI, should we simply stick to tapping up the wealthy portion of the ageing population and drop all other fundraising techniques? No, of course not.Why, well to start with it's best not to have all your eggs in one basket. Just ask any fund manager, particularly in the current climate. Secondly certain activities 'grow your brand' and have an impact on other funding streams such as one off donations and committed giving. It's my hunch that retail is one of these.
OK the word 'hunch' might make you feel uncomfortable becuase it's not 'intelligent' enough for you - but I doubt there's one succesful business person who can honestly say that instinct has no part to play in their decsion making process.
Just to clarify much of the above I believe that many charity shops actually damage brand values because they're so poorly run. Still, I'm talking about the potential rather than the reality!
Don't shoot the messenger
There are plenty of charity shops.
The problem isn't usually getting stock, its getting rid of stock.
One of my previous jobs involved transporting an import/export agent around. We visited several firms one day, all companies that receive unwanted stock from charity shops.
The largest could let us have only 5 containers (as in big things they load onto ships) a day of goods. Boots at 50p/kilo, coats at £1/kilo and so on. A hell of a lot of stuff can fit in a container.
The shops get usually far more than they can display. The amount sold on to these companies can be in excess of 90% of the stuff coming in in a week.
Now if you want cheap charity shops, don't think traditional high street.
The cheapest are online, followed by car boot sales, stalls at local fairs etc.
I shop at charity shops - get some great bargains. Usually looking for old books no longer in print, old tapes and so on.
Stuff that I can buy on the internet for £300 I've purchased in charity shops for a couple of quid.
Martin
The trouble is that this potentially causes a downward spiral of decreasing quality. When stock is donated, a typical shop will sort it, immediately "rag" any worn or damaged textiles (to sell for recycling); bin damaged non-textiles; and put out the good items on the shop floor.
A shop which is aiming for the higher-price end of the market will also rag (or transfer to jumble sales) any clothing which isn't actually damaged, but is very low value (basically because it's naff.)
An effective charity shop will go round every week or so, taking out any items which have been in the shop more than 14 days without selling and replacing with fresh stock. If they don't do this, customers stop visiting, because the shop's full of things they've already seen and chosen not to buy. (Most volunteers really hate throwing stuff out, even if it's going to be sold for recycling, and this tends to be one of the issues which make the volunteer/paid staff relationship rather fraught.)
If the inflow of donations tails off, there's a temptation to leave unsold stock for longer and to put out lower-quality items. Word will then go around that X shop only has tat and fewer customers will visit.
Paradoxically this also tends to lead to further decrease in donations - because people don't want to donate good stuff to a shop that looks as if it only stocks jumble-quality items.