Charity Commission chair Dame Suzi Leather has warned that the optimism that has been displayed by charities that responded to the regulator’s latest survey may be “misplaced”, given the scale of the public spending cuts to come.
The Commission’s fourth Economic Survey of Charities suggests that although 59 per cent of charities said they had been affected by the downturn, up from 38 per cent in September 2008 and 56 per cent in September 2009, most charities still think the outlook is rosy.
Some 84 per cent said they were optimistic about the next year, up from 69 per cent six months ago.
But Dame Suzi (pictured) warned that this optimism “may be misplaced”, and that charity trustees should be “channelling their formidable energies into protecting the valuable work of their charity”.
“Of course optimism is very important but it must be matched by a recognition of the reality of the financial situation,” she said. “There is a real concern that charities which receive money from the public purse could find themselves at a financial cliff edge in March 2011.
“Despite what we may be seeing in other areas of the economy, our research shows that the financial recovery for charities may lag behind that of other sectors.”
Of those that said their organisation had been affected by the downturn, 62 per cent saw their income fall. Larger charities were hardest hit.
Contradictory findings in NCVO survey
However, the Commission’s findings seemed to directly contradict a survey from NCVO, for the second consecutive period.
NCVO’s latest NCVO Charity Forecast Survey shows civil society leaders are more pessimistic about the future for their charity than at any time since the survey started two years ago.
Some 42 per cent of the NCVO’s respondents thought the “general situation” of their organisation would get worse in the next 12 months, and 49 per cent expected their “financial situation” to worsen. Only 4 per cent felt that the economic conditions within the sector would improve over the next 12 months, yet confidence in the UK economy is higher than it was a year ago.
“Charity leaders continue to have more confidence in their financial situation of their own organisation than they do in the either the UK or the voluntary sector as a whole,” said the report.
However, just over a quarter predicted they would be increasing staff numbers over the next three months – outweighing the one-fifth who said they expected to reduce their employee headcount. The net increase, though, is at its lowest level since the survey began.
NCVO sample smaller than Charity Commission
The Charity Commission survey, conducted by MVA Communications, polled a representative sample of 1,010 charities between 25 January and 12 February.
The NCVO sample was much smaller, with 144 responses garnered between 1 February and 1 March 2010.
Asked to explain the discrepancy between the two surveys, Karl Wilding, head of research at NCVO, said: “Our survey reflects how NCVO members feel. The recession and impending public spending cuts offer the voluntary sector opportunities as well as threats and these differing survey results show the extent of charities’ mixed experiences in this period of uncertainty.”
