Supply and demand: five changes happening in the charity / digital agency marketplace 

Published on
October 26, 2020
in
Perspectives
Joe Roberson
The marketplace is growing. As we welcome more agencies into the Catalyst fold we take a look at some trends.

Last month we contracted eleven new agencies to increase their support to charities. This month we’re looking for another eleven. Next month we’ll be looking for up to 54 more. But even before this surge in demand, and even before Covid, the marketplace was already changing. 

These changes are positive, but each one also brings a new challenge or increases the need to solve an existing one. We don’t have all the answers but we believe it’s good to share what our research found.

1. Supply of agencies is increasing

There is a growing community of digital agencies who are primarily driven by social causes.

Hurrah! These agencies inspire talented people motivated by social causes to work for them. These agencies are also good at building trust with charities. And, even though the sector is generally viewed as more complex and unpredictable than the commercial sector, these agencies are building expertise in delivering outcomes for charities. 

But…

There still aren’t enough digital agencies driven by social causes. That social drive is important. It massively increases the likelihood of a successful project. As does previous experience of the sector. As a result there aren’t enough agencies with proven results in their work with charities working in the sector. Yet.

“Charities want to work with agencies that are willing to take on challenges that are beyond website building. There are not many agencies who want that work. Most agencies are comfortable with doing commercial work as it’s easier” - Alice, digital lead at a charity

2. Demand from charities is increasing

The charity sector’s appetite for digital products and services is increasing. Charities are realising the value of digital to their beneficiaries. Agencies have expertise that can help deliver that value. As most charities can’t afford to recruit internal expertise, agencies make attractive partners.

But…

The costs that charities can afford to pay often leave agencies in a financially precarious position. This vulnerability occurs because they still have to pay their staff the same rates whether the work is social or commercial. Also when projects are small or incremental it becomes harder to break even. 

“Void periods (between client sign off and start) are very damaging and lose us money...The worst void period was six months and every three weeks they said it was going to start but the funding was just not appearing.” - Sam, agency director

3. Agencies are offering more choice to charities

Agencies are expanding their range of services to suit charity needs. They are adapting to what charities need and how they work. Sometimes they are even educating and creating digital capacity within charities in parallel to their design and build work.

But…

Charities can become reliant on digital agencies. In some cases this has led to agencies overselling their services or charging retainer rates to manage the technology they have built when they could instead teach the charity to manage it themselves. This damages trust and comes at a financial cost to the charity.

“It’s just about doing the best that we can. Spreading knowledge. Trying to be better as an agency. Better is more impact, is effectively more money in the bank, more volunteers, more benefit in their beneficiaries.” - Hamed, digital agency CEO
“You can see if you want a button to be in a different place but you can’t tell if the code behind it is any good or not. We don’t understand what agencies are doing for us.” - Jana, charity project manager

4. Agencies are adapting to charities’ needs

Agencies are adapting their business models to better suit charities’ needs. Some have adapted to account for charities’ variable funding patterns. Some are also willing to forgo profit either by doing pro-bono projects or subsidising via their commercial work.

But…

Pressure on agencies to flex their rates can lead to a lower quality of work. Offering charity discounts is common and appeals to both parties. But it can lead to less time spent on user research, more use of junior staff and lower quality code. Agency employees may feel unhappy delivering poorer quality work, and charities become unhappy if problems occur further down the line. 

“Agencies are often really nice and do charity discounts etc. but that puts pressure on the agency. If you shave costs you shave resources. Do they feel they are compromising on quality? They wanted to do right by the charity. And it’s not because charities are cynical and do it on purpose; it’s more because charities don’t know.” - Dan, charity CEO

5. Mixing together is stimulating growth

Charities are building their digital capacities as a result of working with agencies. When agencies and charities work in the open with each other good things happen. Staff gain knowledge and skills that increase their organisation’s digital capabilities. Communication and relationships improve further.

But…

The agency-client relationship can create tension. When cultures clash, relationships and work quality suffer. For example: when agencies don’t give constructive criticism charities don’t learn how to work with them better; and when agencies aren’t transparent charities become disempowered and unable to make decisions.  

“We achieved openness and honesty by the end, particularly when we initiated a lessons learnt workshop. However when we asked for critique they didn’t give it.” - Zara, charity digital manager

It’s all good

It really is. Supply and demand is growing and more agencies are joining the Catalyst network. If you’d like to join look at our current opportunities

Or if you are already involved read our other agency focused blogs:

If you liked this article and want to learn more about how digital can help your charity, then sign up for our free weekly newsletter. Thank you!