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Managing in a Downturn Report Reflections....

Yesterday saw the launch of the seventh ‘Managing in Downturn’ report – a survey series that we have run in partnership with the Institute of Fundraising and PwC since the ...

Yesterday saw the launch of the seventh ‘Managing in Downturn’ report – a survey series that we have run in partnership with the Institute of Fundraising and PwC since the start of the economic downturn in 2008.

The launch event itself was a lively affair with reflections of the findings from: Andrew Sentance, PwC’s Chief Economist; Mark Astarita, the IoF Chair; and our own Jane Tully. Highlights included Andrew Sentance’s weather map of the global economic outlook for 2014 (sunny intervals for the UK!) and Mark Astarita’s optimism that the baby boomer generation’s large capital assets will have significant implications for charities’ legacy income in the future. From its inception, the survey has shed light on how the charity sector has fared in difficult economic times.   

Year after year the findings have demonstrated a charity sector that is both resilient and innovative in responding to a ‘new normal’ economy, characterised by sustained low growth and uncertainty. Cautious optimism This time round we were keen to see if the charity sector was feeling the benefits of the recent upturn in the economy.   And there is certainly optimism in the air, with 70% of respondents saying they were ‘optimistic about the next 12 months’.  But it is a cautious optimism, with over two-thirds reporting year-on-year increases in demand for their services.  

Moreover, while many are being innovative in finding ways to make the most of the recovering economy, many report that they do not all feel well equipped to cope with the demands being placed on them.  This is a development that looks set to continue as welfare budgets are cut and capped, and charities step in to fill the gap. Charities are taking other measures to adapt too; a significant proportion (44%) are continuing to draw on reserves and 31% have definite plans to utilise their reserves in the coming year, reflecting the fact that 77% feel that the fundraising climate has worsened.

Tackling reputational concerns

Added to this, charities reported a new raft of ‘reputational’ concerns. The sector found itself increasingly in the public eye in 2013 – and for all the wrong reasons:  first the Cup Trust scandal, then chief executive salaries, a damning report from the Public Accounts Committee into the sector’s regulation, and finally a high profile exposé on investment and ethical practices.  We asked about the impact of this and it was encouraging to see that, while 90% of respondents felt charities had fallen under a ‘negative spotlight’, only 20% felt there had been a negative impact on their fundraising.   Half of charities (49%) said that over the last year they had taken steps to enhance levels of transparency and disclosure of financial information and many of those who had not felt that they were already working to high standards of transparency.   

So, many charities are being proactive in response to the current environment and are keen to well places to cope with the challenges of future expectations and demands.  When asked whether respondents were planning to enhance levels of transparency over the next 12 months, the two most popular areas they had plans to look at were ‘costs of administration/ governance’ (45%), and ‘cost of fundraising’ (43%).

Working collaboratively

Charities continue to collaborate, with 77% having done so, ranging from programmes or operations to back office services.  We’re also pleased to note that 90% of finance respondents reported that one positive impact from the challenging economic environment has been the increased engagement of the finance teams in the charity’s strategic management. Do have a look at the report if you haven’t already picked up a copy. 

Edited August 2018

This post was last reviewed on 8 August 2018 at 15:28
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