Are you feeling positive as we look forward to the rest of 2011? I thought this month I would share with you some of the key findings from one of our recent surveys and take a look at some of the possibly good news starts to 2011 coming from government.
CFDG, together with highly respected consultants PricewaterhouseCoopers (PwC) and the Institute of Fundraising undertook our fourth “Managing in a Downturn” survey. The series have tracked the recession’s impact on the sector, and sought to understand how charities’ experiences and expectations have evolved. What stood out overwhelmingly (although perhaps not surprisingly) in this latest survey were concerns around statutory funding – alarmingly, the sum of public funds anticipated to leave the sector in the next 12 months is estimated at a staggering £1.2bn. When added together with things such as the increase in fuel duty, VAT rising to 20 percent and the end of transitional relief, it’s not hard to see why levels of anxiety among charity FDs could be high.
From our survey, most respondents (78 percent) do expect to be impacted on some level from the cuts set out in last October’s Comprehensive Spending Review. And in the majority of cases, any funding cuts this year will not be anything new – almost all (93 percent) of respondents receiving statutory income have already experienced a real-terms reduction in funding from this source. Charities are starting to see how local authorities are implementing the spending cuts in the light of their local settlements, and for some these will be devastating. The number of charity respondents expecting their public funding to be reduced by 10-30 percent has more than doubled since the last survey at the start of 2010. It is therefore unsurprising that anxiety levels in respect of public funding are at their highest since the surveys began.
It is worth remembering, however, that the impact of the cuts will not be the same for all. Some charities will be affected far more than others. And it is not universally bad news; confidence is not at an all-time low across the board. Across all other categories of funding anxiety levels have fallen – perhaps reflecting the new opportunities available, such as corporate interest and renewed government concern to raise alternative sources of funding from the private sector and individuals.
So how do charities plan to respond to the income squeeze? Over a quarter (27 percent) of charities are considering redundancy as a way of managing their funding challenges. The sector’s ability to innovate and adapt is apparent – a large majority (83 percent) will be increasing their funding activities and more than 14 percent will be looking to partnership in the public and private sectors to respond to economic challenges. Many are also taking the opportunity to re-focus on what their core objectives are and what their priorities should be. While this is no bad thing, the result is that when compounded by funding reductions, services will inevitably be cut back, which 31 percent of respondents are already considering. This is despite coming at a time when 39 percent of respondents are experiencing an increase in demand for their services.
So some possible good news for the sector? This year should see the Big Society Bank coming on stream. The government has been relatively quiet on the detail, yet it is projected to release between £60m and £100m to the sector. The Cabinet Office published a Giving Green Paper on 29 December in which, among other suggestions such as cash point and checkout giving, it outlined a Community First Fund of £50m and a £10 Million Volunteer Match Fund to expand fundraising and volunteering opportunities. As with the transition fund, the detailed requirements of such proposals might limit the extent to which they can offer respite from the economic pressure, and they will not be able to support all charities in need. But they certainly cannot be seen as bad news.
Also promising is the government’s engagement with the sector and recognition of the vital role charities play in society. While at times the volume of formal and informal consultations has been a little overwhelming, the government appears genuinely receptive and open to hearing charities’ views. Individuals within the sector have also been recognised for their valuable contributions. The newly titled Sir Stephen Bubb and CFDG member (and former chief executive of the Charity Commission) Andrew Hind CB both deservedly made the New Years Honours List, and I would like to extend my congratulations to them.
There is no denying the coming year looks very tough indeed and there are no silver bullets to end the problems we face. But we cannot afford to let the pressures consume us. We must stay optimistic, seek out the opportunities and, as we as a sector do best, use our ingenuity to carve out ways to survive and thrive.
Caron Bradshaw is chief executive of the Charity Finance Directors Group. Her blog on the sector, “Give And Take”, can be found by visiting Extraordinary Items on the first week of every month
The Spring Budget 2017 saw Philip Hammond commit to lowering corporation tax - was it a missed opportunity to lower the rate sooner?
Vernon Dennis of Howard Kennedy LLP explores HMRC's approach to the tax gap, and the tax authority's relationship with financial directors
In the first article of a series exploring recent tax developments and the challenges they present to companies in the UK, Lydia Challen looks at the key tax issues affecting CFOs
Kevin Hindley of Alvarez & Marsal Taxand UK LLP examines how businesses should approach the publication of their tax strategy, and outlines the key challenges for company boards