Charities: what has changed in the last 14 years?

I was recently going through some old paperwork and came across a Charity Commission leaflet from 2009.  It was entitled “The Economic Downturn – 15 Questions Trustees need to ask”.

As I re-read it, I realised the questions asked then are still relevant in today’s environment. Clearly the world has changed a lot in the last 14 years and the way in which charities interact with, fundraise deliver services and communicate with their audiences has also changed. It’s hard to believe for example that the iPad wasn’t on sale until 2010, Instagram was also launched the same year and we had to wait until 2016 until TikTok was invented. And look at how the pandemic has accelerated the use of technology, changed working patterns and our lives in so many other ways. 

In a perfect world, the charity sector would not be needed but unfortunately, we exist in the real world, and many of the problems the sector support are still there and, in some cases, getting worse.  It is not through the lack of trying to help.  Society is pursuing a very volatile road and we continue to help deal with the carnage it creates on its trip.  

However, our work is not futile, as it helps so many people manage and survive this journey.  Returning to some of the questions raised by the Charity Commission, how can we apply the learning and experience over the last 14 years to the situation many charities face today? These remain the right questions to ask, what has changed is our knowledge and the tools now available to us to help us to answer them and achieve longer term objectives. 

What effect is the economic downturn having on our charity and its activities?  

The economic downturn has become the “cost of living crisis” and before it, the Covid Pandemic. The current environment is having an impact on many people and organisations.  It is a time to reflect on the consequences it has on us.  However, thinking positively, we should be looking for the opportunities, consider and focus on the right things, but also take onboard the risks.  

Are we financially strong enough to sustain our operations? 

Budgets and cashflows have played a crucial role for several years now, coming to its fore during the pandemic.  Charites should be reviewing their financial information; to decide if it is sufficient for their needs.  We have better access to real time data now so decision making, and financial forecasting can be much more accurate. 

Based on the information they have, they should ask themselves: 

• Can we continue to provide all our services 
• Can we make our money go further 
• Can we meet our financial obligations as they fall due 

Do we know what impact the economic climate is having on our donors and support for our charity? 

The sector is already seeing a drop in donors and pressure on funders to support more charities. Charities need to focus on their fundraising strategy and relationships with donors. But with the technology and tools more readily available there are many more opportunities to reach new audiences, share the fantastic work of your teams and reach out and form new relationships and partnerships with other organisations. Better quality and more timely data allows charities to be both more strategic and targeted. 

 Do we have any reserves? 

The Covid period emphasised the need for adequate reserves and clearly defined policies.   Some charities used their reserves up during the pandemic and many have seen increased pressures in the last 12 months reducing their reserves. 

Good governance is vital and while there is no specific formula for how much income should be kept as a reserve, we know the importance of assessing all the risk factors which determine reserve levels and planning accordingly.   

Have we reviewed our banking arrangements and, where relevant, our investments?

When was the last time you reviewed banking arrangements, do they still meet your needs?  Is your investment portfolio appropriate for your current and future needs? 

What has changed significantly in the last 14 years is the pressure for an ethical portfolio and the need for greater transparency around investment decisions. What has changed in the last 14 years is the growing realisation that climate change is happening at an alarming rate. We all need to ask more detailed questions about where our money is being invested, who is benefiting from it and if you can’t justify the investment decision, finding an alternative.  

Have you reviewed your contractual commitments, for example office leases, rental agreements, equipment hire?

When a charity is struggling it is normal to look at cost cutting, but certain costs need to be maintained to ensure proper service delivery.   Is there a different way of delivering the service?  Are the right contracts in place?  Don’t miss break clauses that could prove very useful. 

Also think about how technology and how that has changed and whether your practices and procedures can be updated to free up time for more worthwhile and productive tasks. 

The above are six questions raised in the 2009 leaflet.  It would appear that whilst the world has changed a lot, not much has changed when it comes to asking yourself key questions about your operations. The financial basics remain the same and as crucial.   

The problems charities tackle still exist, but the sector has changed exponentially.  I have seen stronger trustee boards taking more dynamic decisions to move their charity forward.  Whilst the issues may be similar, the approaches to deal with them have changed.   

The charity sector has been around for centuries, and it will continue to endure for many years to come.  Trustees need to ensure they continue to ask the right questions and take appropriate and considered actions with the knowledge, skills, and tools available to them at the time. Who knows what we will be able to use to help us achieve our goals in the next 14 years!