Costs of public service delivery creep up

Finance | Ian Allsop | 23 Apr 2008

Charities are falling increasingly behind in achieving full cost recovery on public service delivery, according to new research from the Charity Finance Directors’ Group (CFDG).

The worst-performing quarter of respondents to CFDG and Agenda Consulting’s annual benchmarking study, Finance Count 2008, are making a loss of 8.8 per cent or more in their income on public service delivery activities, compared with a 3.3 per cent loss last year.

More encouragingly, a quarter made a surplus of at least 1.6 per cent of income. And the percentage of contracts that were fully-funded crept up, with an average of 71 per cent fully-funded this year compared to 67 per cent last year.

But only 44 per cent of respondents believed their budget-holders were fully aware of central costs, and the study recommended raising awareness of full cost issues across organisations.

Room for improvement on gift aid

Gift aid recovery levels appeared fairly low, with charities claiming an average of less than 60 per cent of the gift aid available to them.

The study suggested there was significant scope for increasing the amount of available income claimed, as some respondents reported recovery levels of almost 100 per cent.

“Increasing the percentage recovered will become ever more important for charities in the coming years if they wish to maintain current levels of gift aid income,” said CFDG.

Overall, the study concluded that “finance directors are clearly not complacent”. It identified internal reporting as by far the most common priority for future development, followed by financial planning and budgeting.

“Finance directors’ most frequently mentioned issues included efficiency and competitiveness, full cost recovery, staffing issues, and future income sources.”

Finance Count 2008 involved benchmarking the performance of 237 medium and large voluntary and community organisations from across the UK, representing almost 18 per cent of the voluntary sector workforce, and combined total net assets of over £5.2bn.

Directory: Charity Finance Directors' Group (CFDG)
Who's Who: Ian Allsop

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