A country is usually said to be in a recession after two successive quarters of negative economic growth. The UK has officially been in the current recession since the second quarter of 2008, the longest recession since World War II. The Confederation of British Industry predicts that unemployment is forecast to rise to three million (9.4 per cent) in 2010.
A recession can affect charities in various ways; voluntary income drops as people have less disposable income to spend, funding from trusts and foundations reduces as their endowments lose some of their value, and those reliant on statutory funding can fall victim to public spending cuts. At the same time, some charities experience rising demand for their services, especially those in the advice and employment training sectors.
However, it must be emphasised that not all charities experience reduced income or increased demand – the sector is so diverse that different types of organisation tend to be affected in many different ways.
Most charities expect the near future to hold further drops in income, but anxiety over cashflow has lessened as the recession came to a close.
Over the last 20 years charities and civil society organisations have been exhorted to become more businesslike, and they have responded well. After all more than 50 percent of charities’ revenues are now derived from earned income which is a testimony to their developing businesslike approaches.
Investors will not much mourn the passing of the last decade, says Guy Davies.
The charity sector is in a “phoney war” in terms of the true impact of the recession, according to a report from the Charity Commission on how trusts and foundations are responding to the economic downturn.
Charities which lost deposits following the 2008 collapse of Icelandic bank Kaupthing Singer and Friedlander could recover up to 70 per cent of funds over the next couple of years, according to Dominic Sullivan, Cats Protection’s director of legal services.
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.
This time last year the idea of reaching the end of 2009 in more or less one piece seemed far-fetched. The world’s financial infrastructure was collapsing around us, previously inconceivably large shocks became commonplace, even daily, experiences and a vortex of debt threatened spiralling doom to our entire system.
Jenny Willott, Liberal Democrat spokeswoman for charities, will be tabling an Early Day Motion (EDM) calling on the government to reinstate the £750,000 campaigning fund that has been redirected from the Campaign Research Programme to the Hardship Fund.
Christian book and bible charity IBS-STL UK is looking to sell all its operations and wind itself up after the implementation of a new IT system went badly wrong and capped off a succession of financial problems. It is the first time in recent history that a top-250 charity has chosen to wind up.
The NCVO has launched a petition to persuade charities minister Angela Smith to reinstate the £750,000 funding that she has redirected from the Campaign Research Programme to the Hardship Fund.
NAVCA has accused the Office of the Third Sector of breaching the Compact in withdrawing £750,000 in funding from the Campaigning Research Programme, and urged charities minister Angela Smith to reverse the decision.
Four in five British charities expect income from voluntary donations to rise or remain steady over the coming year, according to new research. And their continental counterparts are even more optimistic. Figures from the latest annual State of the Non-profit Industry (SONI) report suggest that two-fifths of British charities expect donations to rise and another two-fifths predict they will stay the same.
An extra £100m has been allocated to frontline charitable activity by major philanthropists, according to this year’s Coutts Million Pound Donors report. Million-pound-plus donations have been largely resilient to the recession, according to the report. Some 189 donations of £1m or more were made in 2007/2008, just 6 per cent fewer than in the previous financial year.
The recession has put risk management systems through a severe test, says Richard Weighell. The latest PKF/CFDG annual risk management survey, Managing Risk – keeping in control was carried out between May and June 2009. The number of participants in the survey was the highest yet at 466, and finance directors were very much at the forefront of those submitting the responses.
The recession is over in the US. Done. Dusted. Glad that’s over. Phew. Even beleaguered old Blighty could emerge from the confines of recession by the end of the year, according to some economic soothsayers. Hooray. Let the charity sector delight in the new world order!
One good thing about a near-death experience is that it is usually followed by a sense of euphoria arising from the knowledge that you have survived and that your worst fears did not come to pass. This slightly giddy joy is putting a youthful, carefree smile on the face of many in the City at the moment, hugely relieved as they are that the terrifying apparition of economic devastation staring us in the face in March has turned out to be just a particularly frightening Halloween mask after all.
Forthcoming government cuts in public spending will be as high as cuts made in the recession of the 1970s, Robert Chote, director of the Institute for Fiscal Studies warned charity finance leaders earlier this week. Speaking at the Charity Finance Live conference about the state of the UK economy over the next five years, Chote said the government had implied a cut in spending by 3 per cent a year in real terms from 2010. Over three years this would result in around £33bn in savings.
In an increasingly competitive marketplace, charities are well placed to negotiate better deals from agencies, says Alison Cowan It’s a tough market out there, and your first thoughts are probably not for the agencies that rely on corporate marketing budgets - usually the first spend to be cut in a recession.
Most people still want to keep giving, and not every charity is experiencing increased demand as a result of the recession. Beth Breeze writes as part of a series of four expert articles this month following the UK Giving report
The Scottish government has launched a £1.7m resilience fund to assist charities affected by the recession.
Triodos Bank has increased lending to charities and social enterprises by 33 per cent in the first half of 2009, taking its total lending and commitments to civil society to £150m. The largest growth area was social housing. Overall the ethical bank showed a 29 per cent increase in total UK lending and commitments in the first half of 2009 to £305m.
Newspaper coverage of philanthropy and the recession between September last year and April this year contained eight pessimistic portrayals of a ‘vulnerable’ sector for every one article that depicted the sector as robust and resilient, a study shows. The inherent danger in this is that such stories can affect confidence in giving and create self-fulfilling prophecies of a giving recession, the researchers suggest.
The Elton John Foundation and the Irish Cancer Society are to provide grants to the Irish government to ensure it continues to deliver certain health and social care services in the recession. Ireland has been badly hit by the global economic crisis and its deficit is expected to widen from 6 per cent in 2008 to nearly 11 per cent in 2009 - the highest budget deficit in the European Union as a percentage of its GDP.
Donations to UK charities have plummeted by 11 per cent in the last year to £9.9bn, according to UK Giving 2009, the annual survey of giving habits carried out by Charities Aid Foundation and the NCVO. The drop, measuring £700,000 in absolute terms and £1.3bn in real terms, was calculated after polling 3,316 UK adults between June and October 2008 and in February 2009.
Half of the non-profit organisations around the world have reported a drop in income, a new survey of 126 fundraising directors and sector experts suggests. But fundraisers do not blame the recession for the fall, according to the study.
Charity shops increased their profits by 4.1 per cent in the past year, according to the Charity Shops Survey 2009 While the gross income of the 69 shop chains in the sample fell by 3.1 per cent to £526.1m, their costs fell even further, by 4.9 per cent to £414.6m, leaving a collective profit of £111.5m. Charity shops have now increased their profits for four years running, and in eight of the last 11.
With government finances shot to pieces by the economic crisis, it is clear there will be a shortage of public cash available for charities in the near and medium term. This will have a negative impact on many charities but the likelihood is that it will affect small and medium-sized charities (SMCs) more than very large or very small charities.
The dividend paid by Oxford University Press to its parent charity, Oxford University, has almost doubled this year to £100m. In a clear sign that the recession has not affected the printing arm at all, it is to pass over £100.7m on the back of profits up 6 per cent this year to £88.7m.
Charity shops have defied the recession and increased their profits by 4.1 per cent, according to the Charity Shops Survey 2009, which is sponsored by accountants BDO Stoy Hayward. While the gross income of the 69 shop chains in the sample fell by 3.1 per cent to £526.1m, their costs fell even further, by 4.9 per cent to £414.6m, leaving a collective profit of £111.5m. Charity shops have now increased their profits for the past four years, and in eight of the last 11.
Two out of five of the top fundraising charities saw their income fall in 2008, according to the latest figures. The combined income of the top 300 fundraising charities grew just 0.9 per cent in 2008 according to the annual Charity Market Monitor. The previous year income grew 1.7 per cent.