Report Highlights Threats Facing Charities

Charity money collection boxesLast month saw the publication of the ‘Managing in the New Normal – adapting to uncertainty’ report, which includes a large amount of data that helps to illustrate the challenges that charities across the sector are faced with.

Each year for the past six years accountants PWC have teamed with Charity Finance Group and the Institute of Fundraising to produce a report focusing on the consequences that the global economic downturn is having on charities across Britain, and after an eventful year in the sector this year’s report is particularly insightful.

2012 of course saw the Government plan – and to their credit, cancel following the Give it Back George campaign – to cap tax relief on charitable donations, which would have threatened donations from philanthropist that many charities of all sizes rely on. Later on in the year, the ‘UK Giving 2012’ report detailed a 20% drop in giving from members of the public, and cuts to Government spending mean that charities are seeing their income streams squeezed.

The ‘Managing in the New Normal’ report found that charities are seeing an increase in the demand for their services, with 67% of respondents reporting that they saw an increase in demand during 2012, and 72% expecting to see a further increase in 2013. Increased demand for the vital services that charities provide is no surprise in a downturn, but it is not sustainable for all charities to keep up with increases in demand of this scale. In fact, the report found that only a quarter of those facing increased demand were able to step up and provide additional services.

The report also found that the fundraising climate has taken a turn for the worse in the past year. Of those asked, 93% of fundraisers said they thought it had gotten harder to fundraise over the course of 2012, and 89% expect to see this trend continue through 2013.

The dynamic between Government and charities has also seen a difficult year, partly because of the impact the spending reductions are having on charities. The report uncovered a 7% drop in those naming public sector funding as a major income source. This decline may partially explain why 58% of charities reported that Government measures had a negative impact on fundraising, and 52% believe that the Government was have a negative impact on the whole sector, compared to just 7% reporting a positive impact.

It is extremely interesting to see this report finding charities suffering from a combination of falling government support and difficult times for fundraising, whilst trying to deal with an increase demand for services. This echoes the Back Britain’s Charities campaign, which has been stressing that many charities are being forced to do more with less and calling for action to address this problem.

The report demonstrates the impact that this situation is having on charities, and found that 63% of respondents said they were having to cut back or stretch existing resources further, that 50% had taken steps to reduce wages and salary costs, and that 63% are considering or planning to draw on their reserves. Worryingly 23% of those asked said that they expected to make redundancies in 2013.

In better news, a number of statistics demonstrate how innovative the charity sector is at looking for solutions to challenges. For example, the report found that 85% of respondents are exploring new fundraising options, and that 69% had undertaken collaborative activity with others. It’s pleasing to see that despite the gloomy environment there is still a great deal of spirit within the sector, with 46% of respondents reporting that they work for an energised or optimistic team, and 61% stating that they are optimistic for the future of their charity.

It’s great to see charities working so hard to keep pace with demand, but we know the outlook for the year ahead remains bleak. That’s why it is so important that you help us by getting as many people as possible to sign up to Back Britain’s Charities and show politicians and businesses that we need their help.


3 Comments on “Report Highlights Threats Facing Charities”

  1. […] charity funding. Many charities are already struggling as a result of a 20% drop in donations and 67% of charities are reporting an increase in demand for the support they provide – this is another blow to Britain’s voluntary […]

  2. […] These findings are consistent with research carried out by CAF over the past few months. In December, we reported that one in six charities fears being forced to close over the next year unless there is a significant improvement in the economic climate. We’ve also referenced figures from elsewhere which have shown that charities have seen a 67% increase in demand for their services. […]

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