Paper prepared by Jonathan Moore, CEO of SAVO November 2008

“Charities that are versatile, willing to adapt, and consider all the options available to them, should be able cope with the extra challenges posed by the credit crunch and survive it,”

Stuart Etherington, Chief Executive of NCVO, October 2008.

If you would like to attend the SAVO Member meeting on the 3rd December at Stowmarket to put forward your views on the Credit Crunch and its affects, please download the booking form here:
SAVO Assembley Meeting 3rd December

Dire times?
73% of charity leaders think conditions will worsen for the sector over the next 12 months.

90% of charity leaders are unconfident about the financial future of the UK economy

47% of charity leaders feel that government policies will worsen the operating environment for their organisation.
NCVO’s October 08 Charity Confidence Survey

Results of SAVO’s 2008 Survey:

Potential/possible Implications for Suffolk’s VCS of current financial/economic conditions:
(drawn from: NCVO, CCLA, CFDG, ACEVO, SAVO and other sources)

Income/Finances

• Drop in income for those raising money from the public, as they ‘pull their horns in’ to keep their personal budgets in order. Opportunity to emphasise importance and impact of VCS services in helping individuals prioritise their own spending and donations
• Grant making trusts will have reduced amounts to give out, as their stock and share holdings yield less income in a depressed market.

Services/facilities

• Pressure on services across all areas will increase – creating cost pressures and delivery difficulties for some organisations. ‘Our business has seen a 14% increase in clients, a 27% increase in client contacts and a 45% increase demand for our products in the last year’ Janet Johns, North East Suffolk CAB  Nov2008

• More ‘dumping’ of clients on voluntary services, as statutory services squeeze their own contributions.
• Poorly managed and financed organisations will probably face crunch decisions – national expectation is that a lot of ‘dead wood’ will be shaken out by the crisis.
• Trustees/officers are likely to become more risk adverse in their planning processes – meaning in some cases opportunities will be missed and innovation stifled. The conditions, however, could also encourage improvements in long-term planning and resource allocation
• Greater interest in sustainability of activities – willingness to make harder decisions rather than fudge decisions.
• Change management – opportunities will emerge to create change to introduce long term efficiency and effectiveness. Conditions will encourage groups to reassess purpose and functioning.
• Collaboration – crisis may well encourage greater capacity for co-operation as solutions gain precedence over problems in relationships. Merger talks will become more commonplace
• Operating Costs are likely to substantially reduce – more beneficial terms on premises, contracts (e.g. ICT) and commodities will emerge.
• Investment – lower interest rates will benefit charities seeking development

People

• National bodies are predicting that more volunteers likely to come forward, especially in context of employment seekers.
• Employees within VCS likely to see pressures on salaries for medium term. Redundancies will be one response to service rationalisation.
• Quality of applicants for jobs/volunteer posts likely to increase.
• Many smaller organisations will be ‘fire-fighting’ to maintain survival – placing pressures on staff, trustees and volunteers.
• Stress and debt issues will impact internally as well as to services of VCS groups
• Community tensions at pressure points could flare up

Potential Solutions/Actions:

• Funding Stability – To ensure a fully operating Voluntary and Community Sector, Public Sector agencies can work towards improving financial stability and planning. Making longer term commitments in determining grants and contracts with VCS.
• Promoting collaboration
• Increasing support for fundraising from funders and infrastructure organisations to front-line groups
• Ensuring VCS options are included in procurement decisions
• Promoting benefits of public giving
• Promoting volunteering and individual/community self-help – this would include providing training for potential community leaders.
• Improving communication regarding service expectations and delivery
• Both simplifying and improving performance management support
• Promoting good employment practices (and funding such)

“It is more important than ever during these tough times for charity leaders to plan ahead. It is vital that they look carefully at their objectives and funding streams, to ensure that they have the best strategies in place to deal with any likely changes."

Karl Wilding, NCVO October 2008