New, tougher normal here to stay for charities

15 Mar 2013 News

Charities are settling in to a new operating environment in which demand is high, growth is low and all options – from downsizing to merging – are on the table.

Charities are settling in to a new operating environment in which demand is high, growth is low and all options – from downsizing to merging – are on the table.

A feeling of de ja vu accompanied today’s release of the Managing in the ‘new normal’ report, which monitors charity attitudes and reported behaviours over the year, with many of the findings from the 2012 report repeating themselves.  

Part of what was originally-titled ‘Managing in a downturn’ series, last year’s report was titled ‘The new normal’. It would appear the naming was as prescient as it was apt; very little has changed since the report was conducted last year. On nearly every subject – from the fundraising climate to propensity to consider merger – charities are feeling very much the same in 2013 as they did in 2012.

In 2013 as in 2012, two-thirds of charities report demand for services has increased, seven in ten expect demand to increase in the coming year, three in five think government policies have had a negative effect and precisely 93 per cent say fundraising has got tougher.

But charities are responding to these difficulties. Some 85 per cent said that over the past year they had invested in new fundraising opportunities, setting themselves in as good stead as possible for the competitive and difficult fundraising market ahead. The vast majority still expect fundraising to get tougher yet.

The majority of charities (55 per cent) had also expanded their trading activity, a vital source of income for many organisations.

One fifth of charities have or are considering merging and just shy of two thirds are considering using their reserves to buffet themselves against pressure on income.

The report, co-authored by PwC, Charity Finance Group and the Institute of Fundraising, does not track individual charities but is the result of a survey of the members of the respective organisations. This year 400 charities took part.

PwC director Ian Oakley-Smith said that the inclination of charities to consider merging, dip into their reserves and cut staff costs (half of respondents this year said they had done so) was a positive sign of charities adapting to more straitened times.

The report, he said, shows signs that “charities are adjusting to this environment and importantly that morale in the sector may be improving as people become more used to operating within in".

“The characteristics of this ‘new normal’ remain relevant and are likely to continue for some time.”

Charity opinion about the impact of government policies on their overall activities is damning, likely a result of the government’s steadfast commitment to spending cuts – or ‘savings’ in the contemporary parlance. While 58 per cent said that government policy  had a negative impact on funding levels, just a third said it had negatively affected administration and less than half felt it had put pressure on funding terms. Overall, however, 53 said that government policies had had a negative impact on their charity – with only 7 per cent believing government policy to have been positive on the whole. 

Sector leaders hope for no tax-cap style Budget surprises


At the launch of the report in London this morning, a panel of three sector leaders outlined their hopes and fears for Wednesday’s Budget.

The overriding fear from Caron Bradshaw and Peter Lewis, chief executives of CFG and the Institute respectively, was of another surprise announcement to equal last year’s unpopular charity tax cap announcement.

Bradshaw said CFG hoped that Chancellor George Osborne would “get hold of” the pensions issue – not just around deficits, but how the sector is set up to manage pensions. Of the likelihood of this happening, she said: “The door has opened – [the government] is now listening a bit. They’ve started to accept that there is a problem and are listening for solutions. We just have to keep on [emphasising the issue].”

The Institute of Fundraising is pushing its familar refrain to government: Lewis said he wants government to make a strategic investment in enabling charities to bring in more income, including fundraising training, so organisations can "better stand on their own feet".

The issue of collaboration weighed on the Small Charities Coalition. CEO Alex Swallow said he hoped the Budget will  encourage more collaboration both within the sector and across other sectors; his fear was that it may not.

A fourth place on the panel was filled by John Hawksworth, chief economist at PwC, who hoped for growth - “any kind of growth”. He feared the effect if there was another crisis in the Eurozone.

Additional reporting by Jonathan Last 

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