Charities struggling to recover costs when delivering public services

CFG is today launching the results of our benchmarking tool for charities, Finance Count 2016.

3rd March 2016

Finance Count allows charities to improve their own practice by comparing their performance to similar peers, and also provides a wealth of data on trends and challenges facing the sector more widely.

Finance Count reports on a range of indicators including procurement, expenses, budgeting, cash management and external reporting.

Over 120 organisations have taken part in this year’s programme which includes a survey, database, reports and training. 

The benchmarking tool, which was used by over 120 charities, has covered a range of issues including procurement, expenses, budgeting, cash management and external reporting. Charities at the launch heard the results from the first survey combined with training on how to use the data. 

One of a number of notable findings is that charities are struggling to generate income from public service agreements and contracts, with many large charities making significant losses on contracts. 

According to the survey results, the average income per contract or agreement was £169,707. 

However, the survey also found that the median surplus (income less total costs) on service agreements or contracts was 0%. For the bottom quartile, the median loss was 16.9%.

For the upper quartile, the median surplus was 3.4%. This shows that even those charities which were able to generate surpluses are not making large gains. 

For the largest organisations the position was worse. For large organisations that took part in the survey, defined as those with an income of over £50m, the median was a loss of 11%. This indicates that even for the most sophisticated charities, delivering a surplus on public service delivery is challenging.

CFG has also released a discussion paper from Head of Policy & Engagement, Andrew O’Brien, on public service reform, 'Whither value? Voluntary organisations and the delivery of public services' which calls for reform of public service commissioning.

Commenting on the results Anjelica Finnegan, Senior Policy Officer, Charity Finance Group said:

“These results are a welcome reminder that at a time when some are talking about charities ‘depending’ on state support, in many cases the opposite is true: we are subsidising public service contracts.

This data reinforces the need for government to continue to look further to reform public services, to make sure that it is fair on delivery organisations.” 

Finance Count runs every two years, and the next study will be launched in May 2017. Take part in the next Finance Count.

Additional information:

  • For further information on this press release please contact Anjelica Finnegan 07713 355 587
  • The tool is based on software developed by Agenda Consulting.
  • Finance Count was produced with the support of Crowe Clark Whitehill. Crowe Clark Whitehall is a national audit, tax and advisory firm with a dedicated not for profit team. 
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