Advice Charities and The Credit Crunch
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Advice Charities and The Credit Crunch

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An nfpSynergy presentation on how advice charities are affected by the recession, and how they can combat the effects of the credit crunch. Includes data on how the recession is affecting charity ...

An nfpSynergy presentation on how advice charities are affected by the recession, and how they can combat the effects of the credit crunch. Includes data on how the recession is affecting charity income.

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Advice Charities and The Credit Crunch Advice Charities and The Credit Crunch Presentation Transcript

  • Advice in the credit crunch? Jonathan Baker nfpSynergy © nfpSynergy
  • Overview • The effect of recession on the charity sector • The effect of recession on advice giving charities • What advice charities can do in difficult times © nfpSynergy 2
  • History of charities in recession © nfpSynergy 3
  • What we know • Not as much as we should – need to record our experiences • Great Depression – charities did well. One study looking at voluntary funded hospitals found short term hardship but surprisingly robust income • Study looking at last 5 US recessions shows slowdown in charitable donations (giving falls on average by 1.3% corrected for inflation) • Certain income streams/charity sectors are disproportionately hit • 1990s recession – we have comprehensive records for charities © nfpSynergy 4
  • Income of charities affected by economic performance 20% Total Income Growth GDP Growth 15% 10% Growth 5% 0% 80 82 84 86 88 90 92 94 96 98 00 02 04 06 19 19 19 19 19 19 19 19 19 19 20 20 20 20 -5% = Delayed effect – average -10% Year delay 17 months Base: 550 charities Source: Dimensions, Charity Trends, CAF © nfpSynergy 5
  • Cumulative Growth of Total Income in real terms (1981=100) 700 200 Total Income 180 GDP 600 Trend 160 140 500 Total Income Growth GDP Growth 120 400 Economic downturn 100 followed by slower Total Income growth 80 300 60 40 200 20 100 0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 19 19 19 19 19 19 19 19 19 19 20 20 20 20 Year Base: 550 charities Source: Dimensions, Charity Trends, CAF © nfpSynergy 6
  • Economy effect on Voluntary Incomes have a 10 month delay 16% 14% Voluntary Income Growth GDP Growth 12% 10% 8% Growth 6% 4% 2% 0% 80 82 84 86 88 90 92 94 96 98 00 02 04 06 -2% 19 19 19 19 19 19 19 19 19 19 20 20 20 20 -4% Year = Delayed effect – average delay 10 months Base: 550 charities Source: Dimensions, Charity Trends, CAF © nfpSynergy 7
  • Cumulative Growth of Voluntary Income in real terms (1981=100) 800 200 180 700 Voluntary Income 160 GDP 600 140 Voluntary Income Growth Trend GDP Growth 120 500 Economic downturn followed by slower 100 Voluntary Income 400 growth 80 300 60 40 200 20 100 0 80 82 84 86 88 90 92 94 96 98 00 02 04 06 19 19 19 19 19 19 19 19 19 19 20 20 20 20 Year Base: 550 charities Source: Dimensions, Charity Trends, CAF © nfpSynergy 8
  • Hot or Cold? The Best and Worst performers © nfpSynergy 9
  • Characteristics of best and worst performers in last downturn Medium sized Small Homelessness & Disability Eclectic minor causes Religious Charities (welfare) Religious Charities (missionary) Increased Fundraising Decreased Fundraising © nfpSynergy 10
  • Does Size affect growth? © nfpSynergy 11
  • Real terms Total Income of Big and Medium Charities has far outgrown that of Small Charities Cumulative Total Income Growth – By charity size (1980=100) 1000 Big - £20m+ Medium - £2m-£20 Big and Medium Charities have 900 strongly outgrown Small Small - < £2m charities in Total Income 800 700 600 500 400 300 200 100 0 81 83 85 87 89 91 93 95 97 99 01 03 05 07 19 19 19 19 19 19 19 19 19 19 20 20 20 20 Base: 156 small, 250 medium and 142 Big charities Source: Dimensions, Charity Trends, CAF © nfpSynergy 12
  • Does charity type affect growth? © nfpSynergy 13
  • Not all charities/areas were equally affected • Children’s and Animal charities were most resilient • International Aid is not primarily affected by the economy but events • Income streams were important – where the money came from © nfpSynergy 14
  • Help giving charities in recession – real examples 45000 250000 MIND 40000 Samaritans 200000 35000 Shelter 30000 Crisis Income £,000s Income £,000s Barnado's 150000 25000 20000 100000 15000 10000 50000 5000 0 0 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 © nfpSynergy 15
  • Income challenges • In 1990s recession income streams were pressured particularly legacies and investments • Donations can peak during recession and then decline coming out of a recession • Problems continue after headlines recede • 1993/1994 was toughest time in last recession – 2010/2011 this time © nfpSynergy 16
  • Perception © nfpSynergy 17
  • Cut backs in general spending “Do you expect to cut back on your spending in any of the following areas in the next 12 months?” Definitely not Probably not Not sure Yes, probably Yes, definitely Eating out -4% -16% 31% 33% Clothing -5% -17% 35% 25% Weekly food shopping -6% -25% 32% 20% Petrol -8% -25% 27% 20% Gas bill -9% -25% 27% 17% Giving to charity -9% -26% 19% 15% -60% -40% -20% 0% 20% 40% 60% 80% Base: 1,000 adults 16+, Britain. Source: Charity Awareness Monitor, Nov 08, nfpSynergy © nfpSynergy 18
  • Do you believe you may be made redundant or become unemployed due to the current economic climate? 100% 80% 60% 50% Dec-08 40% 25% 20% 15% 10% 0% Yes No Don't know No answer Base: 938 respondents those who work © nfpSynergy 19
  • Respondents’ concerns about young runaways “Thinking about the issues related to child welfare, please state how concerned you are about them” 100% Extremely concerned Very concerned 80% Fairly concerned 20% 35% 14% 9% 60% 18% 32% 25% 40% 29% 20% 41% 38% 34% 25% 0% Jan 08 Jul 08 Sep 08 Jan 09 Base: 1,000 adults 16+, Britain. Source: Charity Awareness Monitor, Jan 09, nfpSynergy © nfpSynergy 20
  • Respondents’ concerns about the health of pets in the UK “Thinking about the issues related to animal welfare/protection, please state how concerned you are about them” 100% Extremely concerned Very concerned Fairly concerned 80% 18% 60% 7% 9% 25% 20% 40% 22% 20% 30% 31% 33% 0% Jan-07 Sep 08 Jan 09 Base: 1,000 adults 16+, Britain. Source: Charity Awareness Monitor, Jan 09, nfpSynergy © nfpSynergy 21
  • Respondents’ concerns about prompted issues related to experience of financial difficulties Please indicate how concerned you are about the following issues: Not at all concerned Not very concerned Fairly concerned Very concerned Extremely concerned Having to ask the state for help if you were experiencing 29% 25% 17% financial difficulties The risk of developing a serious health problem which 26% 20% 23% would affect your ability to work Having to turn to a charity for help if you were experiencing 28% 21% 18% financial difficulties The risk of a partner developing a serious health problem 24% 20% 22% which would affect their ability to work The risk of losing your home 17% 15% 24% Being able to make mortgage repayments 17% 14% 19% Base: 1,000 adults 16+, Britain. -60% -40% -20% 0% 20% 40% 60% 80% Source: Charity Awareness Monitor, May 08, nfpSynergy © nfpSynergy 22
  • Advice in a recession © nfpSynergy 23
  • Advice challenges • Higher caseload • Different types of case • Difficulty balancing short term and long term needs • Reduced funding – less ability to generate funds • Government funding cuts • Stress on key partners • http://www.thirdsector.co.uk/news/Article/896396/Soaring-demand-leads-smarter-ways-working/ © nfpSynergy 24
  • Advice solutions • More staff • More support for existing staff • National Debtline – received twice as many calls – up to 1,600 calls a day • Secured extra government funding till 2011 – recruited extra staff © nfpSynergy 25
  • Advice solutions • Better use of staff • Better systems to help staff • Samaritans – improved phone system – diverting unanswered calls to open lines elsewhere • More volunteers – helping paid staff / freeing up resources – effective volunteer management stretches resources © nfpSynergy 26
  • Advice solutions • Less bureaucracy • Make it easier to do the job • Retail Trust – went from paper to screen admin taken away from frontline staff • Increased links with its sector to secure funding © nfpSynergy 27
  • Advice solutions • Training improvements • Faster/more flexible training • Citizen’s advice direct in Scotland – Fast track volunteer training • Coping with high demand on short notice © nfpSynergy 28
  • Advice solutions • Rationalise the service – concentrate resources • Shelter – reduced funding meant restricting hours of advice • Concentrated resources (8am-6pm) – higher levels of assistance with reduced costs © nfpSynergy 29
  • Planning for the challenges • Talk to government – including opposition parties – forewarned is forearmed • Have a plan – what would you do if funding was cut by 1-10% • Have a more serious plan – what would you do if funding was cut 10-20% • Etc. etc. • Talk to your key partners about their plans • Talk to others in the same/more extreme circumstances © nfpSynergy 30
  • Fundraising in a recession • Tougher • Not a time to cut back on fundraising! • Time of greatest need is the worst time to stop asking for help • Expressed need can help • Cat’s protection – lost money in Icelandic banks • Donors made up the lost money © nfpSynergy 31
  • CAB fundraising • Grants are the main source of income • Government matters – elections matters • Everybody can help • Pressure your MP/prospective MP – get them on record before the election! • Emphasise cost savings of GP based advice – it is money saved not money spent © nfpSynergy 32
  • Summary • Recessions affect charities • Tough times ahead • Innovation and flexibility can combat uncertainty • Kick up a fuss © nfpSynergy 33
  • 2-6 Tenter Ground, London, E1 7NH Telephone: (020) 7426 8865 email: jonathan.baker@nfpsynergy.net © nfpSynergy