Charity Finance Directors’ Group NCVO Third Sector Foresight Seminar The Impact of an Economic Slowdown on the VCS Keith Hickey Chief Executive 22 July 2008

NCVO Third Sector Foresight Seminar

The Impact of an Economic Slowdown on the VCS

Keith Hickey

Chief Executive

22 July 2008

Introduction Economic background Implications Actions Opportunities Questions Conclusions

Economic background

Implications

Actions

Opportunities

Questions

Conclusions

Economic Implications Credit Crunch – bank lending and house building Inflation – oil, utilities, transport, food Falling Demand – M&S, John Lewis Increased Unemployment Current Account Deficit

Credit Crunch – bank lending and house building

Inflation – oil, utilities, transport, food

Falling Demand – M&S, John Lewis

Increased Unemployment

Current Account Deficit

Warning signs? A large and increasing current account deficit similar to the early 1990s Financial balances: although the corporate sector is in surplus, public sector and households are running large deficits Has the UK been living beyond its means?

A large and increasing current account deficit similar to the early 1990s

Financial balances: although the corporate sector is in surplus, public sector and households are running large deficits

Has the UK been living beyond its means?

Solutions Reduced government & consumer spending -> Reduced Imports -> Falling Pound & Reduced Growth How Long (mid 70’s 3 years, early 90’s 7 years)

Reduced government & consumer spending

-> Reduced Imports

-> Falling Pound & Reduced Growth

How Long (mid 70’s 3 years, early 90’s 7 years)

Implications Increased need Higher costs Reduced trading income Difficulties with public sector contracts Stagnation in individual giving Legacies Other

Increased need

Higher costs

Reduced trading income

Difficulties with public sector contracts

Stagnation in individual giving

Legacies

Other

Actions Dynamics Risk Scenario planning Investment & reserves policies Cash flow management Proactive Stakeholder participation Skill levels

Dynamics

Risk

Scenario planning

Investment & reserves policies

Cash flow management

Proactive

Stakeholder participation

Skill levels

Opportunities Brand Accountability Visibility Invest

Brand

Accountability

Visibility

Invest

Questions Implications on your stakeholders? Implications on employees & volunteers? Will individual giving go up or down? Will there be more charity failures and mergers? What will happen to grant makers using total return? What will happen to pensions? What effect will a change in government have? Will your suppliers still be there? Will there be an increase in ‘intelligent’ donors? What stories will the media be looking for? Etc

Implications on your stakeholders?

Implications on employees & volunteers?

Will individual giving go up or down?

Will there be more charity failures and mergers?

What will happen to grant makers using total return?

What will happen to pensions?

What effect will a change in government have?

Will your suppliers still be there?

Will there be an increase in ‘intelligent’ donors?

What stories will the media be looking for?

Etc

Conclusions 2 – 3 years of hard times Squeeze on charities Proactive decision making Transparency, accountability & culture important Invest in opportunities

2 – 3 years of hard times

Squeeze on charities

Proactive decision making

Transparency, accountability & culture important

Invest in opportunities