A third of charities are finding it difficult to get core funding for their property, with increasing numbers saying it is a barrier to delivering their charitable objectives, according to a new report published today.
Some 30 per cent of the 474 charities surveyed for Charity Property Matters said that property issues are a barrier to delivering their charitable objectives, with the largest percentage of charities experiencing this in the south east.
This is almost double the proportion in 2016, when only 17 per cent of respondents said so.
Meanwhile, some 36 per cent of respondents said property is high risk to their future financial sustainability.
Over 23 per cent of respondents said they spend more than a fifth of their annual expenditure on property costs and over 15 per cent spend a quarter of their income on property.
However, charities reported widespread problems in obtaining core funding for property costs, with 32 per cent experiencing difficulty in sourcing funding and 26 per cent anticipating difficulty in the future.
Charities become private renters
A higher proportion of charities rent from private landlords than own their properties, the survey found.
Some 33 per cent of the charities surveyed privately rent their key property assets, up from 26 per cent in the 2016 survey and only 21 per cent in 2014.
The report, published by the Ethical Property Foundation, says this shift is evidence of the impact of austerity as local authorities either sell off property or start charging higher rents.
More charities leased property from private landlords in 2018 than from either local authorities (23 per cent) or other charities and voluntary organisations (19 per cent).
Antonia Swinson, chief executive of the Ethical Property Foundation, said: “As local authorities move towards more commercial rents, so we are seeing a shift towards renting from the private sector and problems finding funding to cover core costs.
“More than ever, our sector needs to be wised up about to manage their property most effectively.
“These results are a wake-up call. Property is not an extra but is a vital part of delivering social mission.”
'Better property knowledge needed in sector'
The report calls for charities to improve their own knowledge of the properties they manage.
It says: “There is widespread weakness in charities’ own capacity to manage property effectively. This starts at the top with a lack of knowledge among trustees and a misunderstanding of their responsibilities.
“The message for trustees is to institute regular property reports and risk assessments, assigning a key person with property responsibilities, whether paid or voluntary.”
David Holdsworth, deputy chief executive at the Charity Commission, said: “I encourage trustees whose charities that use property to read this report and learn from it in improving their governance and management systems around property.
"This report is also an important read for funders and others with an interest in the flourishing of charity in our society”.
Charity Property Matters was commissioned by the Ethical Property Foundation in partnership with the Charity Commission and Charity Finance Group.