Charities remain anxious as recession hits Third Sector

23rd February 2010

New research by the Charity Finance Directors' Group (‘CFDG’), the Institute of Fundraising (‘IoF’) and PricewaterhouseCoopers (‘PwC’) has shown that charities remain cautious about the future despite the economic upturn. However, although the majority still expect a fall in overall income in the next 12 months, charities are more positive about the future than they were in May 2009. The research is the latest in the Managing in a Downturn survey series, undertaken amongst CFDG and IoF members in November 2009.

In the May 2009 survey finance directors were more concerned than fundraising directors in most areas of income. That picture has now reversed itself completely, with fundraising directors more anxious in all areas except corporate donations.

Going forward, there has been a significant increase in anxiety from the May 2009 survey around Government funding levels, due to widely predicted public funding cuts. However, charities are not clear when these will occur, although some respondents do not envisage any impact until 2011. Anxiety around major donors is also high (although lower than the May 2009 survey) with small charities more concerned than their large counterparts. Small charities are also more concerned about corporate donations than in May 2009. Charities are also anxious over un-committed public donations, which reflects the competition for public donations in the sector.

The November 2009 survey showed that charities consider investment in fundraising as key to thriving in an upturn. Some 40% of all respondents are focusing their investment in corporates and 44% on major donors, a clear increase from previous surveys. In order to maximise the cost-benefit, charities should set milestones of expectation for every fundraising initiative as to the level of “return on investment”, which can then be monitored.

Top tips for fundraising investment include:

• Better donor care: be flexible and supportive of existing donors

• Looking after staff: fundraisers are a valuable asset facing tough times

• Monitoring fundraising income: monitor results and challenge under-performance

• Exploring different fundraising methods: diversity in income stream is key

• Maximising tax-effective giving: make donations work as hard as possible

• Clarifying the ask: identify and pursue the most pressing fundraising needs

• Making the most of digital media: reach new audiences and communicate more widely

• Keep asking: don’t ask, don’t get!

Looking at wages and salaries, some 68% of respondents expect an increase in their wage bill, in comparison with 60% of private companies who have already implemented or will soon implement pay freezes. This suggests that charities are not being as realistic as the private sector, and are seeing themselves more in line with the public sector. However, overall, estimates for public sector workforce reduction over the next three years are in the range of 15 to 30%, suggesting that pressure on salaries will follow.

Finally, it is positive to find that charities in the November 2009 survey are continuing to use reserves in order to maintain service delivery. Charities must, however, use detailed scenario planning in order to avoid reserves becoming a short-term answer that leads to sustainability issues. Plans for a decreased level of reserves may include collaboration, merger, or scaling back services, but will all take time to implement and decisions need to be taken now to mitigate the challenges of these possible future scenarios.

David Membrey, Acting Chief Executive of the Charity Finance Directors' Group, says:

“Decreased anxiety amongst Finance Directors suggests that they have acted swiftly and prudently since November 2008. However, it will be necessary to maintain close scrutiny of finances going forward, and to use scenario planning to identify and mitigate the dangers of possible future courses of action. Finance Directors should work closely with their Fundraising colleagues to address the variation in different income streams.”

Lindsay Boswell, Chief Executive of the Institute of Fundraising, comments:

"Even though we are hearing reports of the end of the recession, for fundraising organisations the effects of the economic downturn are likely to be felt for some time. Fundraisers should be heartened that their organisations are doing better than earlier anticipations suggested. However, charities need to keep up their focus on fundraising to ensure that such patterns can continue through 2010".

Ian Oakley-Smith, Director, PricewaterhouseCoopers LLP, adds:

“This latest survey supports what we are seeing in practice. Many charities are relieved that the impact of the recession has not yet been as significant as might have been feared, but remain concerned about what the future holds. Many income streams were committed, often for two or three years ahead, and there is concern that these commitments may not be renewed, either at all or to the same extent. Many funders will be keen that charities demonstrate clearly how they are going to provide a cost-effective delivery.”

###-ENDS-###

A full copy of the research report is available on request from the Charity Finance Directors’ Group, the Institute of Fundraising and PricewaterhouseCoopers LLP press offices.

For further information please contact:

Kate Hand Tel. 020 7785 6419
Charity Finance Directors' Group email: kate.hand@cfdg.org.uk

Diana Mackie Tel. 020 7840 1027 / 07793 802 852
Institute of Fundraising email: press@institute-of-fundraising.org.uk

Stephanie Howel Tel. 020 7212 2421
PricewaterhouseCoopers LLP email: stephanie.howel@pwc.co.uk


NOTES TO EDITORS

Charity Finance Directors’ Group

The Charity Finance Directors' Group (www.cfdg.org.uk) was set up in 1987 and is an umbrella group that specialises in helping charities to manage their finance-related functions. CFDG has over 1,620 members who are responsible for the finances of charities with a wide variety of income levels. Between them our members manage some £17.4 billion in charity income per year.

Institute of Fundraising

The Institute of Fundraising’s (www.institute-of-fundraising.org.uk) mission is to support fundraisers, through leadership, representation, standards setting and education, to deliver excellent fundraising. Members are supported through training, networking, the dissemination of best practice and representation on issues that affect the fundraising environment. The Institute of Fundraising is the largest individual representative body in the voluntary sector with 4600 Individual members and 280 Organisational members

PricewaterhouseCoopers LLP

PricewaterhouseCoopers provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 155,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, the PricewaterhouseCoopers global network or other member firms in the network, each of which is a separate and independent legal entity.

References taken from IDS Pay report October 2009 , and ‘Tough times, tough decisions The dilemma of workforce planning in local authorities’ A publication from the PwC Public Sector Research Publication 2010

  • Email
  • Twitter
  • Facebook
  • Linkedin

© Charity Finance Group / © Charities Resource Network / Registered Office: 15-18 White Lion Street, London, N1 9PG.
A Company Limited by Guarantee. Registered in England No. 3182826, Registered Charity No. 1054914, Registered VAT No. 945 6038 09.