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Charities take drastic measures as austerity bites

15 March 2013

New figures released today by PwC, Charity Finance Group and the Institute of Fundraising show that the economic conditions continue to prove challenging to charities.

More than nine out of 10 charities (93%) have said that they were experiencing a squeeze on fundraising while more than two-thirds (67%) said that demand for their services had increased. Just days before Budget 2013, 58% of respondents also indicated that Government policies had had a negative impact on levels of funding during 2012.

 

In response, major changes are taking place within charities: for 63%, using reserves is on the table and a fifth of charities are considering merger, or had merged in the past year. While many charities report taking bold steps to cope with the economic conditions, Managing in the ‘new normal’: Adapting to uncertainty did find signs of improvement too, with many charities reporting a slight uplift in income levels and that staff morale is good.

 

Overall findings from this year’s survey appear to show that although the tough economic climate is putting charities under pressure, people are optimistic for the future of their charities as they adapt to meet the challenges it poses. However, it is unclear if this just means that people are becoming accustomed to uncertainty and learning to live in a challenging environment.

 

PwC Director Ian Oakley-Smith said: “The latest in the survey series has shown some pleasing signs that charities are adjusting to this environment and importantly that morale in the sector may be improving as people become more used to operating within it.

 

“In our last report in April 2012, we introduced the concept of ‘managing in the ‘new normal’’ and, nearly 12 months on, the characteristics of this “new normal” remain relevant and are likely to continue for some time,” he added.

 

Caron Bradshaw, CFG Chief Executive, said: “These timely figures – coming out just days before the budget – show that charities are taking bold steps and demonstrating remarkable resilience in the face of increased demand and ongoing austerity measures.

 

“The sector is clearly doing its bit:  the results show more charities are expanding trading activity and exploring merger; however we know unnecessary trading restrictions and pensions legislation still pose barriers in these areas.  We’re hoping Government will use Budget 2013 as opportunity to step up and meet us half-way on some of the long-standing issues that threaten sector sustainability.”

 

Peter Lewis, Institute of Fundraising Chief Executive, said: “Our research shows that the fundraising environment remains tough and many charities expect it to get even tougher in the coming year. The squeeze of falling statutory funding and increased demand for services that we highlighted from last year’s report looks set to hold.

 

“But, there is optimism for the future. Donors are continuing to give to their favourite charities, and taken together with the generally healthy levels of staff morale in charities there are clear signs of greater confidence for the year ahead.”


Key findings

 Of the 427 charities that responded to the survey:

  • 93% reported that fundraising had got tougher
  • 58% reported that government policy had resulted in a negative impact on funding levels
  • 67% said there had been an increase in demand for services and 73% expected an increase in 2013
  • 50% had taken steps to reduce salary costs during 2012, including restructure or redundancies
  • 21% were considering merger or had merged
  • 64% planned to increase fundraising during 2013, and 56% said they would explore new fundraising options
  • 63%  were planning or considering dipping into  reserves
  • 55% had increased trading or social enterprise activity since the start of the downturn.


A copy of the report is available to download - click here


The Managing in a Downturn series

This is the sixth in a series of a major survey of senior fundraising and finance professionals in the charity sector, tracking the recession’s impact during 2012. The survey, the latest instalment in the Managing in a Downturn series, produced by PwC, Charity Finance Group (CFG) and the Institute of Fundraising (IoF), has been charting how charities are coping in economic decline since 2008. Over 400 charities responded to this year’s survey, providing a real insight into how they are responding to funding cuts and increasing demand for services.