Managing your charity in turbulent times Children’s Hospices UK January 2009 Stuart E therington Chief Executive, National Council for Voluntary Organisations

The UK and global economy is clearly in trouble: UK unemployment expected to hit 3 million Housing market correction Equity markets in decline Banking and credit crisis But action to stop recession turning to depression: Monetary policy: inflation falling rapidly (lower costs) Fiscal policy: increased government spending (boost demand) Bank rescue: availability of credit Growth again in 2010? ITEM Club forecasts growth in 2010… … but consumer spending negative till 2011 Long term impact on public finances The end of the Nice Decade

The UK and global economy is clearly in trouble:

UK unemployment expected to hit 3 million

Housing market correction

Equity markets in decline

Banking and credit crisis

But action to stop recession turning to depression:

Monetary policy: inflation falling rapidly (lower costs)

Fiscal policy: increased government spending (boost demand)

Bank rescue: availability of credit

Growth again in 2010?

ITEM Club forecasts growth in 2010…

… but consumer spending negative till 2011

Long term impact on public finances

Income streams do not necessarily decrease in economic downturns Individual charitable giving may be resilient… … but lag and redistribution effects likely Statutory funding: fiscal stimulus in some areas (advice; worklessness), but cutbacks in others (spending that isn’t ‘frontline’?) But real concerns over other income streams: Legacies, investment income: follow asset prices downwards Corporate giving: related to business cycle Foundations: medium term fall, short term refocus Social enterprise: still a viable model? Charities: previous recessions

Income streams do not necessarily decrease in economic downturns

Individual charitable giving may be resilient…

… but lag and redistribution effects likely

Statutory funding: fiscal stimulus in some areas (advice; worklessness), but cutbacks in others (spending that isn’t ‘frontline’?)

But real concerns over other income streams:

Legacies, investment income: follow asset prices downwards

Corporate giving: related to business cycle

Foundations: medium term fall, short term refocus

Social enterprise: still a viable model?

A reduction in income streams and asset values Particular nervousness – real or otherwise – re local government Opportunities for asset purchase Cashflow and reserve levels Many organisations poorly capitalised Increasing levels of demand Many indicators of social malaise worsen in recessions Current/anticipated impacts

A reduction in income streams and asset values

Particular nervousness – real or otherwise – re local government

Opportunities for asset purchase

Cashflow and reserve levels

Many organisations poorly capitalised

Increasing levels of demand

Many indicators of social malaise worsen in recessions

Easing labour markets Less pressure on staff costs; skills shortages ease Greater demand for ‘skilling-up’ via volunteering Reconfiguration of the sector Weaker organisations will close, creating opportunities for others Mergers and collaboration become more necessary Current/anticipated impacts

Easing labour markets

Less pressure on staff costs; skills shortages ease

Greater demand for ‘skilling-up’ via volunteering

Reconfiguration of the sector

Weaker organisations will close, creating opportunities for others

Mergers and collaboration become more necessary

Purpose: focus on your mission Planning: think ahead Pennies: financial management People: human resources Partnerships: strategic relationships What next? Five Ps to address

Purpose: focus on your mission

Planning: think ahead

Pennies: financial management

People: human resources

Partnerships: strategic relationships

Focus and refocus Concentrate on your core activity Innovate: don’t do different things, but do things differently Reconsider your users & their needs Ensure your services are relevant and user-oriented Other player analysis Check who else is meeting their needs Refine your story about the gaps you fill Purpose: focus on your mission

Focus and refocus

Concentrate on your core activity

Innovate: don’t do different things, but do things differently

Reconsider your users & their needs

Ensure your services are relevant and user-oriented

Other player analysis

Check who else is meeting their needs

Refine your story about the gaps you fill

Purpose: focus on your mission

Scan the environment Maintain awareness of local and wider issues that will shape your organisation (eg PESTEL) Ensure your internal management information supplies what you need Prioritise opportunities and threats What’s most important? What’s most uncertain? Plan your response Consider alternative scenarios…and plans to get there Make changes Ensure your plans are a living document Ensure a clear link between plans and budgets 2. Planning: think ahead

Scan the environment

Maintain awareness of local and wider issues that will shape your organisation (eg PESTEL)

Ensure your internal management information supplies what you need

Prioritise opportunities and threats

What’s most important? What’s most uncertain?

Plan your response

Consider alternative scenarios…and plans to get there

Make changes

Ensure your plans are a living document

Ensure a clear link between plans and budgets

Income Look to diversify income streams Upsell and cross-sell to existing customers A bad time for donor prospecting Plan for a range of income scenarios Expenditure: do more with less Understand your costs and systematically identify opportunities for savings (which may require investment) New technologies might help: recruitment, publishing Identify joint purchasing opportunities Monitor cash flow: retain cash Reforecast frequently 3. Pennies: financial management

Income

Look to diversify income streams

Upsell and cross-sell to existing customers

A bad time for donor prospecting

Plan for a range of income scenarios

Expenditure: do more with less

Understand your costs and systematically identify opportunities for savings (which may require investment)

New technologies might help: recruitment, publishing

Identify joint purchasing opportunities

Monitor cash flow: retain cash

Reforecast frequently

Leadership is more important than ever Clear communication, with honesty Although staff are used to uncertainty they still want reassurance Ensure the staff and board are working together Look at your skills mix Many managers have not experienced a recession Take advantage of the labour market Many will look for volunteering opportunities Celebrate success Maintaining morale is crucial 4. People: human resources

Leadership is more important than ever

Clear communication, with honesty

Although staff are used to uncertainty they still want reassurance

Ensure the staff and board are working together

Look at your skills mix

Many managers have not experienced a recession

Take advantage of the labour market

Many will look for volunteering opportunities

Celebrate success

Maintaining morale is crucial

Ensure funders and partners know your position…and you know theirs Funders are ready to help, but not if its too late Counterparty risk: are suppliers and partners robust? Explore collaboration/merger Be clear who the candidates are Identify the nature and scale of efficiencies Merge/collaborate from a position of strength Demonstrate value for money If you havent done already, now is the time to invest in proving your efficiency and effectiveness 5. Partnerships: strategic relationships

Ensure funders and partners know your position…and you know theirs

Funders are ready to help, but not if its too late

Counterparty risk: are suppliers and partners robust?

Explore collaboration/merger

Be clear who the candidates are

Identify the nature and scale of efficiencies

Merge/collaborate from a position of strength

Demonstrate value for money

If you havent done already, now is the time to invest in proving your efficiency and effectiveness

Concluding thoughts Expect two years contraction: plan for now, but plan for the upturn There is a lag: and therefore enough time to plan Don’t just focus on risks: look for opportunities Negative impact isn’t uniform: it doesn’t have to be you

Expect two years contraction: plan for now, but plan for the upturn

There is a lag: and therefore enough time to plan

Don’t just focus on risks: look for opportunities

Negative impact isn’t uniform: it doesn’t have to be you

NCVO can help you manage the downturn Make better decisions by getting intelligence on your environment with NCVO Third Sector Foresight: www.3s4.org.uk Develop your strategy and highlight your impact with NCVO Strategy and impact: www.strategy-impact.org.uk/ Reduce your costs by accessing NCVO’s range of brokered goods and services with NCVO Discounted Services: www.ncvo-vol.org.uk/discounts/ For practical advice and guidance see: www.ncvo-vol.org.uk/downturn.asp

Make better decisions by getting intelligence on your environment with NCVO Third Sector Foresight: www.3s4.org.uk

Develop your strategy and highlight your impact with NCVO Strategy and impact: www.strategy-impact.org.uk/

Reduce your costs by accessing NCVO’s range of brokered goods and services with NCVO Discounted Services:

www.ncvo-vol.org.uk/discounts/

For practical advice and guidance see:

www.ncvo-vol.org.uk/downturn.asp