Charity Survival Strategies in a COVID era

On Wednesday 9th September, Susan Robinson, Partner, Kreston Reeves joined Thomson Snell & Passmore and Zoe Amar Digital, to present a webinar on Charity Survival Strategies in a COVID era. The session explored the challenges that are being faced by charities currently, how these can be overcome, and how engaging with all things digital is becoming increasingly important for charities.

The COVID-19 pandemic we face in 2020 has presented charities and not-for-profits with unprecedented and unexpected challenges. The Chartered Institute of Fundraisers predicts that charities across the UK will face a £12.4 billion shortfall in 2020, with charities on average expecting to lose 24% of their total income for the year. Such a huge and abrupt loss of income is already having a huge impact on the sector and leaves many charities questioning how they are going to look in the coming months.

Since the beginning of the year, most businesses and charities will already be operating in previously unrecognisable ways. A lot of organisations have quickly transitioned from a few employees working remotely, to the entire organisation working remotely. Only a minority of front line workers still attend offices and other places of work, and six months into the pandemic a mass return to the office still seems a long way off.

Whilst this period has certainly been challenging, there are a number of positives that can be taken away. The speed and efficiency with which charities have adapted to this ‘new normal’ is nothing short of remarkable. It has been so successful in fact that a number of organisations have realised that operations can be streamlined significantly, in terms of both personnel numbers and office space. This change has left many organisations pondering if this process of change should begin now. If these changes seem inevitable, it could be worthwhile exploring options available whilst there is still financial assistance available from the Government, for example in the form of the Coronavirus Job Retention Scheme which is due to end on the 31st October.

For many, the changes that are coming will involve restructuring in some shape or form. This could involve existing employees taking on more responsibilities in order to reduce employee numbers, or through adapting the business model in order to have fewer individuals in management roles. Whatever changes that do occur, it must be done with board oversight to ensure that any changes are justifiable. Care must also be taken to ensure redundancy protocols are followed – jobs cannot be removed and then reinstated at a lower pay grade, any jobs created must be substantially different to any jobs that have been previously existed.

Of course, any potential restructuring plans are currently in the shadow of more immediate concerns related to the loss of revenue charities are facing. In this climate cash flow is king, and a lot of charities are already drawing on their emergency reserves to meet immediate financial obligations. Many charities have promises of funding coming their way in the future but have a genuine concern on whether or not these funds will come soon enough.

Whilst for many the current outlook is bleak, there are a number of steps that can be taken to help mitigate the impact of loss of revenue, such as;

• Mergers – a merger between two or more charities can be beneficial in helping to expedite the provision of new services and provide greater depth at a lower cost. Whilst this can in itself create a number of issues, primarily relating to the integration of workforces that may have different values and approaches, the prevailing view is that mergers between charities are advantageous for beneficiaries.
• Working together – short of a full-scale merger of charities, there are innovative ways in which charities can work together to share the burden of certain expenditures. Things such as the provision of HR services and property management expenses are areas which could potentially be shared between charities.
• Making difficult decisions – whilst many will be reluctant to do so, it may be necessary to cut or reduce services. Providing three fully funded services in many cases would be better than providing six under-funded and overstretched services.
• Focus on fundraising – a key aim of charities should be to think of new and innovative ways of fundraising following the loss of key fundraising avenues such as mass sporting events and social gatherings. Ideally, charities should come up with ideas that will get money directly to the charity as opposed to through sponsorship. It is important to remind donors of the pivotal work that charities do, and ask them to consider what would happen if charities ceased to exist due to financial limitations.
• Changing ways of working – this is already being done by a large number of organisations, with more people working from home than ever before and now redundant office space let go or sub-leased.

This new way of working should aim to change the way that charities work digitally, both within the organisation and how they interact with donors and fundraisers. The annual Charity Digital Skills Report (‘the CDSR’) found that 66% of respondents ranked the digital skills of their Board as low/room for improvement, with 48% stating that they are not currently making widespread use of digital fundraising.

Developing digital skills should be a high priority, and it could also be recommended for boards lacking in this kind of expertise to appoint a new trustee who possesses strong digital knowledge in order to assist in the transition. This could be done through websites like Reach Volunteering, a fantastic organisation that ‘connects people, skills and good causes’, or even by approaching a local university to see if any IT students might be interested in becoming involved in your charity.

There is some indication from the CDSR that charities are beginning to embrace this change already, where 61% of respondents said that they are planning to offer more online services, and 66% saying they have already been able to adapt and work entirely remotely. 47% of respondents also said that they are collaborating and sharing with other organisations. This is vital for success, both for organisations themselves and for any beneficiaries. For example, if two mental health charities can combine resources and expertise to produce a new online service in partnership with one another, they are likely to save both time and costs for themselves, as well as providing a more effective service to beneficiaries in even less time.

2020 has proved an incredibly challenging year so far. However, the speed and efficacy with which charitable organisations have so far adapted is hugely encouraging. If this willingness to embrace change continues in the coming months and years, charities could come through this period more resilient and stronger than ever.

Discussion

Following the session, attendees were provided with the opportunity to ask questions and have a discussion with the panel.

A common question that arose during the discussion related to how to engage with donors in new ways, from enquiring on how best to engage with digital audiences to the most effective ways to use digital fundraising platforms. In response to these queries, the emphasis was always to ensure that charities engage with donors and fundraisers. Research has found that speaking with just five individuals in depth can provide as much useful information as undertaking much larger, yet less in-depth, surveys and questionnaires.

Queries were also raised regarding issues with employees, touching on topics such as redundancy and pay reductions. If personnel costs are proving too much of a burden following the sharp downturn in income, the first step would be to see if staff members are agreeable to a pay cut, whether it be temporary or permanent. If this proves to be insufficient, redundancies could be considered. However, this option must be considered with care. When reducing staff numbers, any new roles must be substantially different from those that have been removed.

It was also discussed how the pandemic is not necessarily all doom and gloom and has provided some positives for the third sector. In the coming months, charities may find they encounter opportunities to partner with corporations who are no longer making use of all of their premises which they may be willing to share with charities. The pandemic has also magnified the hugely important role charities play in all aspects of our society. This alone will hopefully increase awareness amongst the general public of the work charities do, and help increase public engagement with charities moving forward.

If you would like to discuss any of the topics explored above, please contact Susan Robinson.