Last week an article in Civil Society made note of a somewhat disappointing report from the Directory for Social Change which revealed that whilst company profits have been rising, for some their giving has actually reduced.
According to the article:
“An annual study of 550 companies with CSR programmes by the Directory for Social Change uncovered a substantial increase in year-on-year pre-tax profits of 55 per cent to £245.8bn, however charitable giving fell over the same period from those same companies.
Total cash giving by these 550 companies amounted to £470m, down 9 per cent on the previous year, while the total value of community contributions plummeted by more than a quarter (27 per cent) to £600m. The study, released today, tracks the essentially the same 550 companies each year, and the current report relates to the most recent company accounts available – ranging from 2010/11 to 2011/12”.
Both cash and non-financial contributions have fallen which, according to the author of the report, challenges the often-made assertion that some companies have been putting a greater emphasis on non-cash contributions to charity, like skills volunteering.
Nevertheless, Denise Lillya does argue the case for cash donations ahead of more partnership programmes and the likes, offering some optimism:
“For many charities, cash will be the best tool for the job, and for many companies cash will be the most available and appropriate resource to meet what they see as their social obligations. Cash and in-kind giving from companies remain a crucial part of the funding environment for charities,” she said. “Far from being on the way out, it has huge potential for growth.”
Back Britain’s Charities urges companies to maintain or increase their charitable giving at this time of need for the sector. As when calling upon individuals and the Government for support, the campaign asks business to stand by the voluntary sector in whatever ways they are able.
We would like those in the commercial sector to remain committed to their giving programmes and CSR initiatives, and those who pledge their commitment will be free to place the Back Britain’s Charities logo on their website – to show that they take this commitment seriously.
Of course, we must continue to appreciate that many businesses have been rocked by the economic climate in the same way that charities have, and might be struggling to pay their own staff and keep their own heads above the water. But for those who continue to make profits, we would ask that they replicate, continue and/or increase the volume of the fantastic contribution they have been making to the charity sector over recent years.
Yesterday, NCVO released their updated ‘Counting the Cuts’ report, which examines government funding cuts to the voluntary sector, and predicts a potential drop in funding of 15% by 2017/8, which translates to £1.7bn.
This steep decline however, is one of the ’best case scenarios’ – i.e. if cuts are proportionate to over all budgetary cuts at local authorities. Should cuts be disproportionate – as they already are at 50% of councils responding to a Freedom of Information (FoI) request – the sector could lose as much as £2.1bn from government.
NCVO’s study uses OBR economic forecasts, charity accounts data and data obtained directly from local authorities as part of a Freedom of Information (FoI) campaign. The analysis and estimates focus on three possible scenarios – proportionate cuts to charity funding, disproportionate cuts, and a ‘contract winning scenario’.
The following diagram may make grim reading for many of our Back Britain’s Charities supporters:
The NCVO say that they compile this data because government fails to provide reliable figures on charity/voluntary sector expenditure…
In order to debate this very issue, the Back Britain’s Charities campaign are holding an event in Parliament on the 10th June.
The event, entitled “Cuts in the Community: Can councils justify disproportionate reductions in charity funding?”, will be asking the following questions amongst many others:
- Are the councils that are cutting charity funding merely playing politics or have austerity measures left them with little choice?
- Do charities need to innovate in order to truly earn the funding they get?
- Is Government doing enough to ensure small and medium-sized charities aren’t muscled out?
- Are charities always in a better position to meet the needs of their local communities?
The format will be of a panel event with representatives from local government, central government and charity, followed by a lively 45minute Q&A session.
Places are now extremely limited due to the overwhelming popularity of the topic, but if you would like to enquire regarding the last few places or be added to the cancellations list, please just email firstname.lastname@example.org.
It is destined to be a great event and we’ll be sure to document it in full on the blog next month!
This morning NAVCA released the results of their quarterly survey of their members, and the results echo many of the concerns voiced by charities as part of the Back Britain’s Charities campaign.
Amongst the headline figures, NAVCA found that almost half of their members were reducing staff and that the majority of survey respondents predicted that their local authority would have a negative impact on their success in the year ahead.
What is more, chiming in with the statistics from the latest in the Managing In a Downturn series of reports (PwC, the Charity Finance Group & the Institute of Fundraising) which revealed that 67% of charities have reported an increase in demand for services, for the fourth time the NAVCA survey found that an increased workload is the biggest issue for voluntary sector respondents.
During the course of the Back Britain’s Charities campaign, we’ve been referring to the ‘triple whammy’ effect on charity finances – namely, the 20% drop in individual donations (as reported in UK Giving 2012), cuts to local government funding up and down the country, and the increasing demand for services. These circumstances – both individually and in combination – have been responsible for ramping up the pressure on organisations who were already struggling to cope in the wake of the economic downturn.
We’re regularly in receipt of testimonials submitted via our website and through correspondence, that corroborates the evidence that has been found in recent surveys like this latest one by NAVCA, and in our own research. Stories of charities having to turn the lights off, or the heating down, in order to make ends meet, of local community groups having to let loyal volunteers go, and of small organisations providing niche services – such as support for the victims of domestic violence – having to close down completely.
We also hear more motivational tales of the real value charities bring to our communities and lives. Respite care for the mums and dads of disabled children, the provision of meals-on-wheels for the elderly, organisations ensuring that there is food and shelter to those who have fallen upon hard times. These are things that we can’t afford to lose – both in terms of the services they provide, and in terms of the fundamental values they bring with them.
Considering all of the above, we can easily see that there is a clear need for a campaign like Back Britain’s Charities in order to galvanise the sector, and make sure that these issues are tackled properly so that we don’t face a future without the valuable contribution that charities make for the benefit of us all.
Know someone else who would like to Back Britain’s Charities? Why not sent them the link!www.backbritainscharities.org.uk
Payroll Giving in Action (PGA) backs Britain’s charities and wants to encourage the business community to promote payroll giving online as an easy way to show how much they also want to Back Britain’s Charities. Here PGA’s Director, Jeremy Colwill, describes how payroll giving could be a key tool in the survival of charities…
With charity funds being hit across the country due to the recession, we all need to get behind payroll giving and encourage people to give tax efficiently. Donating a few quid a month off the payroll is an easy way to automate giving and ensure that the charity gets the maximum tax gain too.
HM Government recently consulted the payroll giving sector to engage with all the major stakeholder groups involved with promoting and growing the payroll giving market in the UK.
The outcomes are still very unclear at the moment but it is unlikely the government will have any funds to significantly boost payroll giving, and therefore inflate charity incomes. A majority of people in the payroll giving sector want the HM Government backed Quality Mark and for the National Payroll Giving Excellence awards to continue, and to that end would urge the Government to not go back on their commitment to promote payroll giving as initially outlined in their recent Green and White papers on the subject.
However, regardless of Government action, it is still possible for the charity sector to help itself to generate payroll giving income by accessing the payroll giving scheme online or via mobile internet. As much as £118m was raised among the 735,000 workers who signed up to the scheme last year, and thought the total amount pledged over the last few years has only been increasing slowly, the amount of people donating online through the payroll has increased dramatically with a 100% increase in some cases.
Payroll giving is already the easiest way for employers to promote and employees to support their favourite charities on a regular and tax-free basis. For many employees, the time savings are great as it means no more paper forms to fill in and the freedom to give, amend or cancel donations at a convenient time.
The gathering momentum of payroll giving online means that we expect to achieve £10 million extra donations for Britain’s charities within the next 12 months, but the figure could be much higher if all employers with over 500 employees promoted the scheme and all charities had payroll giving as an option on their website. It’s a win-win situation for charities, employers and donors.
Payroll Giving in Action is now offering every UK charity a free Giving Online donation page to recruit payroll giving donations from their website. And if the donor’s employer doesn’t have a payroll giving scheme, we will ask the employer to set up a scheme to Back Britain’s Charities!
If more people can easily support a charity through payroll giving then it’s another large step forward for Britain’s charities.
See more information at www.payroll.givingonline.org.uk
David Carey of Creating Sustainable Organisations, a Community Interest Company (CIC), gives his impression of the current situation for charities and how he sees it ultimately impacting upon the rest of society…
At this crucial time when the welfare reform is likely to affect some of the most vulnerable in society, and the number of people turning to food banks may triple within a year, why have local authorities decided to cut essential core funding to the voluntary and community sector? Surely, the need to support the work of the third sector has never been so important, and the timing of council funding cuts could not have come at a worst time?
Recently, Sir Merrick Cockell, Chairman of the Local Government Association, said local authorities will have lost a third of their budget by 2015 and councils will be brought to their knees. However, any councils that disproportionately slashing core funding to the voluntary sector will seriously threaten the essential support these organisations deliver for many thousands of vulnerable people who rely upon their services.
The true value of the work done by third sector organisations across the country has always been valued very highly by local councils, and the importance of this work has surely increased under the present austerity measures and not decreased.
As councils move away or stop funding voluntary sector groups in favour of procurement and tendering for contracts, perhaps the question we should be asking is whether councils have provided enough knowledge and support to ensure a smooth and non-problematic transition. Also in light of these changes, we should ask if councils should have maintained core funding procedures and kept the same monetary levels in place anyway volatile time, especially as some parts of essential third sector work do not always fit easily within the structures of the tendering and procurement processes.
The Big Society is based upon empowering communities, redistributing power and fostering a culture of volunteerism. The community and voluntary sector has always empowered communities by the outstanding work they do, day-in and day-out. However, if the same organisations are struggling with core funding due to cuts, they have less grant funding monies available to apply for, and they are also being told to use new funding application procedures, it is indeed a triple whammy.
Not surprisingly organisations will strive tirelessly to deliver essential services to the neediest people in society, so perhaps everyone should be working together to support Britain’s charities as they work to support their service users who need our maximum support at this most important time.
Would you like to write for the Back Britain’s Charities blog? You can do – just email email@example.com for more details!
Last month saw the publication of the ‘Managing in the New Normal – adapting to uncertainty’ report, which includes a large amount of data that helps to illustrate the challenges that charities across the sector are faced with.
Each year for the past six years accountants PWC have teamed with Charity Finance Group and the Institute of Fundraising to produce a report focusing on the consequences that the global economic downturn is having on charities across Britain, and after an eventful year in the sector this year’s report is particularly insightful.
2012 of course saw the Government plan – and to their credit, cancel following the Give it Back George campaign – to cap tax relief on charitable donations, which would have threatened donations from philanthropist that many charities of all sizes rely on. Later on in the year, the ‘UK Giving 2012’ report detailed a 20% drop in giving from members of the public, and cuts to Government spending mean that charities are seeing their income streams squeezed.
The ‘Managing in the New Normal’ report found that charities are seeing an increase in the demand for their services, with 67% of respondents reporting that they saw an increase in demand during 2012, and 72% expecting to see a further increase in 2013. Increased demand for the vital services that charities provide is no surprise in a downturn, but it is not sustainable for all charities to keep up with increases in demand of this scale. In fact, the report found that only a quarter of those facing increased demand were able to step up and provide additional services.
The report also found that the fundraising climate has taken a turn for the worse in the past year. Of those asked, 93% of fundraisers said they thought it had gotten harder to fundraise over the course of 2012, and 89% expect to see this trend continue through 2013.
The dynamic between Government and charities has also seen a difficult year, partly because of the impact the spending reductions are having on charities. The report uncovered a 7% drop in those naming public sector funding as a major income source. This decline may partially explain why 58% of charities reported that Government measures had a negative impact on fundraising, and 52% believe that the Government was have a negative impact on the whole sector, compared to just 7% reporting a positive impact.
It is extremely interesting to see this report finding charities suffering from a combination of falling government support and difficult times for fundraising, whilst trying to deal with an increase demand for services. This echoes the Back Britain’s Charities campaign, which has been stressing that many charities are being forced to do more with less and calling for action to address this problem.
The report demonstrates the impact that this situation is having on charities, and found that 63% of respondents said they were having to cut back or stretch existing resources further, that 50% had taken steps to reduce wages and salary costs, and that 63% are considering or planning to draw on their reserves. Worryingly 23% of those asked said that they expected to make redundancies in 2013.
In better news, a number of statistics demonstrate how innovative the charity sector is at looking for solutions to challenges. For example, the report found that 85% of respondents are exploring new fundraising options, and that 69% had undertaken collaborative activity with others. It’s pleasing to see that despite the gloomy environment there is still a great deal of spirit within the sector, with 46% of respondents reporting that they work for an energised or optimistic team, and 61% stating that they are optimistic for the future of their charity.
It’s great to see charities working so hard to keep pace with demand, but we know the outlook for the year ahead remains bleak. That’s why it is so important that you help us by getting as many people as possible to sign up to Back Britain’s Charities and show politicians and businesses that we need their help.
Lord Ashcroft joins the likes of Richard and Joan Branson, Lord David Sainsbury and John Caudwell in pledging to give half of his wealth to good causes, and comes as the Giving List shows that the top 100 philanthropists in Britain have increased their giving to charitable courses by 20% in the past year.
It’s fantastic to see Lord Ashcroft join those signed up to the Giving Pledge, and by giving away at least half of his £1.2 billion fortune to good causes he will be making a lasting impact.
We’re delighted to see the Giving List include so many famous names from the likes of One Direction to Sir Elton John, and we hope that their philanthropic activities will encourage their legions of fans to do their bit and support charities during this tough economic time.