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'Resilient' charities have maintained income levels, says survey

Finance | Gareth Jones | 8 Dec 2009

Half of UK charities say their income has not changed in the past year, while a further 30 per cent have experienced a drop of less than 10 per cent , according a new survey by accountants Baker Tilly.

The firm said the results "seem to suggest the third sector is remarkably recession-proof, at least in the short-term", but added: “Although the majority of charities have proved their resilience and maintained a stable income over the past 12 months, they still need to review their business basics and take proactive action if they are to survive long-term.”

Indeed, 61 per cent of the survey's respondents said they were anticipating funding changes in the next 12 months, mostly as a result of falls in government funding, with a lesser effect from individuals and corporate giving.

Titled Managing charity finances through uncertain times, the report reveals that more than a third of the 175 respondents had already sustained a drop in government funding and nearly two-thirds of these were anticipating a further drop in the next 12 months.

When it comes to tackling these funding constraints, more than half said they have or have attempted to reduce costs in the organisation, with nearly a third deferring projects and 10 per cent cutting staff.

More than a fifth said they were looking to reduce projects offered and 11 per cent said they were closing down operations.

Quarter not making full cost recovery

Meanwhile, the findings indicate that charities’ relationship with government remains a problem.

Nearly a quarter said they were not achieving full recovery of costs on services, while 58 per cent said they had never heard of the Compact and only 7 per cent said they had found it useful.

The report argues: “Charities need to be realistic about their relationship with government.

“They should avoid the danger of providing services on the cheap and should build full cost allocation into budgets. We have seen the devastating impact on charities that continually fail to do so.”

Boards not talking

The survey also reveals a lack of awareness of the Charity Commission’s Big Board Talk initiative, which the Commission described as “the conversation all charities need to have”.

Some 62 per cent said they had never heard of the publication, and only 12 per cent said they had found it useful.