Charity finance policy

Autumnal colour or a wintery chill?

This year’s Autumn Statement – the Government’s opportunity to set out its stall for the months ahead and to respond to the latest growth forecasts – does little to reinforce ...

This year’s Autumn Statement – the Government’s opportunity to set out its stall for the months ahead and to respond to the latest growth forecasts – does little to reinforce our confidence in the economy and outlook for charities and those they support who are vulnerable. In an otherwise stormy sea, the only beacons of light for charities themselves were the headline grabbing cancellation in planned fuel duty rises, the reference to a forthcoming consultation on extending Gift Aid to cover digital platforms, and the additional spend on the Gift Aid Small Donations Scheme over the next 5 years (as a result of secured improvements to the scheme). Extended austerity and welfare cuts We all know life is tougher than ever for charities and community groups, and judging by today’s forecasts, the shoreline is even further from sight, as no doubt those organisations seeing growing numbers of people in need of their services had suspected.  Growth remains elusive with the economy expected to shrink this year by 0.1%. The deficit won’t start falling now until 2015/16, a year later than expected.  Forecasts into the future, always easier to make than to stick to, are slightly more optimistic with growth on an upward trajectory, estimated to be 1.2% next year and up to 2.7% in 2016. But the golden ticket on which this Government has rested its reputation, of eliminating the deficit, has been pushed back yet again, and isn’t expected to happen now until 2017/18. So basically we’re in for extended austerity. On-going cuts to departmental budgets, by an additional 1% this year and 2% next following today’s announcement, will continue to hit hard and frustrate policy and decision making. We can expect another Spending Review to be announced in early 2013 too; whether it will report before the next election remains to be seen, but it will no doubt harbour in further departmental cuts and determine policy priorities.  At a local level, as councils feel the squeeze and further benefit cuts kick in, charities and community groups that are the heartbeat of local areas will feel the brunt, both on the services and funding sides. With this gloomy outlook, we don’t expect much solace in the form of a more generous public either.  We’ve seen from recent NCVO/CAF research that giving appears to be not just stagnating, but falling. Deeper analysis of their figures showed that in February this year, when the news of doom and gloom in the Eurozone was at its peak, the numbers of people reporting that they had recently donated to charity slumped. With grim headlines abound  at the moment, we can only hope this is a blip, rather than a norm.   Now more than ever we have to demonstrate to the public why giving to charities and local communities is critical. But there were some slivers of light 1)      Hidden in the detail is reference to a Treasury-led fact finding exercise to examine digital giving platforms and Gift Aid. Currently Gift Aid can be accessed via wordy paper declarations or complex online websites. However, as people increasingly give online and use digital platforms, in particular mobile, Gift Aid administration must keep up pace. A recent report by DSC, reviewing ‘21 years of Gift Aid’ and its massively positive contribution to the sector, demonstrated that growth in Gift Aid donations have declined to 3% over the past few years. Increasing use of technology will exacerbate this trend and potentially stop Gift Aid uptake in its tracks.  Reviewing its accessibility is urgent and  can only be welcomed by the sector. 2)     The ‘policy costing’ figures for the Small Donation Scheme justified months of arguing, debating, collaborating and deliberating over what sometimes seemed like a paltry amount – an additional £1,250 per year, at most, for a charity. Ploughing through the technical detail, amendments and complex processes, dealing with MPs and chasing case studies were all well justified as the revised costings revealed that our efforts could achieve an additional £85m for the sector over the next 5 years. 3)      There are measures that will help some charities more than others, like the additional funding for education and academies, more loans available through the business bank or £600m for scientific research. Opportunities for a few charities no doubt, but by no means for all. 4)      Finally, a good news measure for most charities, as well as individuals and business, in helping them to control spiralling costs, is that the expected 3p rise in fuel duty in January has been cancelled.  Its purpose is no doubt more political than anything else, however, when little else is on offer, we won't complain. Charity Finance Group's full briefing for members can be found here. « Back to all blog posts