Most charities' business models 'will not last the long-term'

Finance | Tania Mason | 2 Nov 2011

Very few charities are doing enough to secure their long-term future, according to an author of the latest annual risk survey report by CFDG and accountancy firm PKF.

Richard Weighell, a partner at PKF, said that while charities are exploring various strategies to continue their activities, “very few are doing enough” to ensure they are still around in years to come.

The tenth annual risk report, this year titled Managing risk: Operating in the new world, analyses information from 288 charities about how they are responding to social, policy and financial changes.

Weighell said the results highlighted a “fundamental imbalance” between supply and demand in the sector, with charities seeing increased demand for their services but being unable to invest enough to meet that demand.

“There is little sign of the situation improving in the foreseeable future, which means that many charities are faced with a business model that no longer works in the longer-term,” he said.

Key findings from the survey include:

Only 7 per cent said they understood the aims of the Big Society and the approach to delivering them, though 50 per cent said they understood the aims but not how they are to be delivered
Less than half of charities say their trustees usually provide strong leadership
Three in five say their income has fallen as a result of changes in public policy
Three in five charities have already outsourced some activities or entered into other partnerships with other organsiations. Two-thirds of charities expect to collaborate more in the future but the success of partnerships to date is “moderate at best”, according to Weighell. One in five charities did not know whether working with others externally was delivering the intended benefits or not.
One-third of charities still do not have a risk policy, up from 32 per cent last year.

Directory: Charity Finance Directors' Group (CFDG) | PKF (UK) LLP
Who's Who: Richard Weighell

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