The road ahead


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The presentation was a workshop at Evolve 2014: the annual event for the voluntary sector in London on Monday 16 June 2014.

This presentation was given by Karl Wilding, Director of Public Policy (NCVO), Dave Kane, Senior Research Officer (NCVO) and Rob Macmillan, Research fellow (Third Sector Research Centre) and discusses the changing landscape in the third sector.

Find out more about the Evolve Conference from NCVO:

Find out more about the work NCVO does around funding:

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  • What is the Almanac?

    Launched in the mid 1990s after a collaboration with ONS.

    Aims to provide the statistics on the sector that other sectors take for granted.

    Methodology has remained consistent since 2004, so we can present trends over 10 years based on a consistent method.

    In 2008 we started to include data on civil society – wider than just the voluntary sector. But most of the data that I’ll speak about today relates to voluntary sector.

    Our voluntary sector is based on the “general charities” definition. This is a subset of registered charities – we exclude organisations such as faith groups, independent schools, charities controlled by government, to give a definition that is closer to what the man in the street might consider a charity.

  • Here are some of the key stats from this year’s Almanac, just to give you a flavour.

  • Here are some of the key stats from this year’s Almanac, just to give you a flavour.

  • Sector’s income steadily increased to £41 billion (in 2011/12 prices) by 2007/08.

    Recession hit the voluntary sector as well – large drop in income, followed by a slow recovery (mirrors the pattern of the whole economy?)

    Expenditure was kept up during the recession – dipping into reserves. But this couldn’t be maintained – spending seems to have lagged behind income.
    Now lets focus on 2011/12 – which saw income drop.
  • This graph shows the relatives sizes of different income sources – the top line is income from individuals, which has consistently been the highest, and the next one down is income from government – which we’ll come onto in a bit.

    The important part is to recognise how big the contribution of these two sources is – 4 pounds out of every 5 the sector receives comes from individuals or government.
  • The pattern of changing government income reflects the government’s spending priorities.

    International organisations (the bottom bar) have seen increased funding from government – and the government has increased spending on aid to meet their 0.7% of GDP target.
    Protected departments – Health, Education – have seen smaller falls.

    But areas where funding is unprotected – Social Services (by far the largest category), environment, culture and recreation – have seen large falls.
    Worth concentrating on employment and training organisations – we identified these as vulnerable organisations, with low reserves, a high reliance on income from government. Impact on this sector will be high. But this is also an area where the funding environment is rapidly changing, we don’t yet know the impact of payment by results and personal budgets.

    Looking at other ways of breaking this data up – central and local government both saw falls, with local government’s slightly bigger (£750 million) than central government (£540 million)

    Grants vs Contracts
  • In contrast to income from government, income from individuals held up between 2010/11 and 2011/12 in real terms, increasing by 3.1%.
    But this real terms increase was spread across a number of different income streams.

    Voluntary income rose by just 0.9%. This number is closest to a figure for “donations” or “giving”, although some of this income may be treated differently in accounts that it is for the people making a donation. This figure is different to the decrease found in UK Giving 2012 which covered the same period. It’s important to remember the differences in methodology and coverage of the two reports, which mean it is not unusual for the numbers to differ. UK Giving includes a wider range of activities, some of which such as religion and giving to hospitals, are outside the “General charities” definition used in the Almanac. UK Giving is a survey of over 3,000 individuals, and is based on their recollection, whereas Almanac figures are based on the reported income of charities in their accounts.

    Legacies and earned income saw above-inflation growth, with earned income in particular driving a large amount of the change. Earned fundraising income isn’t just traditional “fundraising” – it also includes any activity where a charity charges fees but doesn’t contribute to their primary purpose – so a raffle ticket.
  • General charities spent £38 billion in 2011/12 – a real terms fall in spending for the second year in a row.

    As I mentioned earlier, charities seemed to be able to sustain spending through the recession, but now not able to. Also, losing contracts from government will inevitably mean that the spending on those projects also reduced, which might not be the case for other income sources.

    11% of spending goes on generating funds – almost exactly the same as the previous year.

    Grant-making dropped dramatically after the recession – due to the large fall in the value of the investments that grant-makers hold, but has increased every year since.
  • Reserves are a way of measuring the capital that organisations have available to spend – so it excludes money that is tied up in long-term investments or property.

    Voluntary organisations’ reserves dropped significantly in the recession as the value of stocks and shares and other investments fell, but the rebounded afterwards.

    Since then the reserves of charities have slowly fallen – although total net assets have risen over this period, driven mainly by fixed assets (ie property). This reflects continuing troubles in the stock market over this time, but also fits with the trends we’ve observed in income and expenditure.

    Total reserves cover about 15 months of expenditure – a healthy level. But this aggregate figure hides some real inequalities in how these are held – excluding the large foundations the figure halves to 8 months, and around 20% of organisations have no reserves at all.
  • For the first time we have more details on the sector’s £18.6 billion liabilities. These are becoming increasingly important as social investment rises in prominence.
    We can see that the sector currently has around £4 billion in loan finance
  • I’ll finish on a couple of positive notes.

    The trend that we’ve seen in spending has been reflected in our data on how many people the sector employs.

    But this data (from the Labour Force Survey) extends slightly further than the Almanac dataset, so we can get an idea of what has happened since the Almanac figures.

    Definition in labour force survey
    This shows an upturn in 2012, which could be positive news for the sector. But this data only covers the headcount – the total number of people employed in the sector. Other data from the survey shows that a large proportion of the voluntary sector workforce are part time, and a significant proportion of those part time workers would like to have full time work.
  • And in volunteering, we have seen an upturn in the latest Community Life Survey, which asks people to look at how many people have formally volunteered at least once a month, and once a year, compared to the final edition of the Citizenship Survey two years before.

    The caveat on this data is that it is only for three quarters of the year, and that it isn’t an exact continuation of the previous survey.
  • The road ahead

    1. 1. Workshops PM2: The road ahead Karl Wilding, Director of Public Policy, NCVO Dave Kane, Senior Research Officer, NCVO Rob Macmillan, Research Fellow, Third Sector Research Centre
    2. 2. UK Civil Society Almanac 2014 David Kane, Senior Research Officer
    3. 3. Fast facts 900,00 0 161,266 Voluntary organisations Total income £39.2 billion Total spending £38.0 billion Net assets £104.8 billion 29% volunteer at least once a month 800,000 Paid staff
    4. 4. Number of organisations
    5. 5. Trends since 2000 (voluntary sector) Source: NCVO/TSRC, Charity Commissio
    6. 6. Sources of income Income sources 2000 – 2012 (£ billions, real terms)
    7. 7. Change in income from government Change in voluntary sector income from government between 2010/11 and 2011/12 (£ millions) Source: NCVO/TSRC, Charity Commissio
    8. 8. Income from individuals Voluntary sector income from individuals between 2000/01 and 2011/12 (£ billions)
    9. 9. Spending Expenditure of general charities, 2011/12 (£ billions)
    10. 10. Reserves Voluntary sector reserve levels, 2000/01 - 2011/12 (£ billions, 2011/12 prices)
    11. 11. Liabilities & loans Type of liabilities, 2011/12 (% of liabilities, excluding micro organisations)
    12. 12. Paid Workforce Voluntary Sector employees, 2001 – 2013 (headcount)
    13. 13. Volunteering Proportion of people formally volunteering, 2001 – 2012/13 (% of respondents)
    14. 14. Changing Landscapes for the Third Sector Rob Macmillan University of Birmingham ‘The Road Ahead’ workshop Evolve 2014 London, 16th June 2014
    15. 15. The ‘Changing Landscapes’ project • Aim: to bring together insights from a network of recent qualitative longitudinal research projects in the third sector • Involves: – Data sharing and archiving, secondary analysis, research synthesis – Knowledge exchange (across the network of studies, and with policy- makers and practitioners) • Core themes: sustainability, independence, hybridisation, participation, inter-organisational relationships and impact
    16. 16. Network projects 1. Real Times: an in-depth study of third sector organisations over time (TSRC, University of Birmingham) 2. Pathways Through Participation: What creates and sustains active citizenship? (NCVO, with IVR and Involve) 3. The Opportunities and Challenges of the Changing Public Services Landscape for the Third Sector in Scotland: A Longitudinal Study (Edinburgh and Edinburgh Napier Universities) 4. Third Sector Trends Study (Durham University) 5. Employment Relations in the Voluntary Sector / Personalisation and the Voluntary Sector Workforce (University of Strathclyde) 6. Recession Watch (Institute for Voluntary Action Research).
    17. 17. ‘Unsettlement’ A third sector in transition? • economic context – (dual) impact for the sector of recession, austerity and cuts • political context and priorities – the Coalition’s framing of a fiscal crisis; the ‘Big Society’ as a (partial) decoupling of sector and state? • ‘Shaking-out’ - contraction and closure? enough ‘room’ for everyone? • ‘Shaking-up’ - organisations being more ‘enterprising’, demonstrating value and greater consolidation An ‘unsettlement’? • Where resources, relationships, approaches and understandings are called into question (from Fligstein and McAdam “A Theory of Fields” 2012) • Continuity and change – compared to what? leading to what?
    18. 18. Sustainability • Voluntary action – how tough or fragile? how enduring? exaggerated anxiety? The organisations in our study are all experiencing a bewildering set of challenges, characterised by complexity (for example, changes to the organisation and funding of public services) and distress (in particular, increasing levels of poverty and hardship amongst their users and beneficiaries) (IVAR 2012: 4). • Sustainability strategies (1): – Income - retaining resources/income generation – Expenditure - containing costs; ‘paring back for survival’ – Activities - managing demand; rationing and signposting • Sustainability strategies (2): – Restructuring/redundancy – Reconfiguration/merger – Repositioning/rebranding
    19. 19. a) Restructuring/redundancy • Cutting costs – shedding hours, projects and staff • Multiple agendas and managerial restlessness – necessary evils and organisational agendas • Substitution between paid and unpaid work “it’s some of the most painful stuff I’ve ever had to do, it’s absolutely horrible, absolutely horrible. People come in and really look you in the eye and tell you how desperately they want their job and they enjoy their job and you just feel dreadful because, you know, it’s not about whether you want your job or not…It’s about how much money we’ve got and as much as you like your job, we’re not going to have a job for everybody at the end of this and it’s shit, what can I tell you?” (Advice services)
    20. 20. b) Reconfiguration/merger • Lots of talk but relatively little action • Preference for ‘sharing without merging’ • ‘On the sniff’ for merger/takeover opportunities “the strategy around that has to be tacit and not overt so I don’t think you go out there and openly pursue a kind of merger and acquisition strategy” (Social housing) “so there’s quite a lot of potential basket cases out there if I’m honest, and it wouldn’t be sensible for either charity to… the coming together of two baskets is not a good idea” (Family support)
    21. 21. c) Repositioning/rebranding “you’ve got to be aware of what other people are doing. We certainly try and stay close to key competitors and their tactics to understand what the world is going to look like and we try and adjust our plans accordingly. We do quite a lot of I suppose what the private sector would call market analysis, you know... what is the world going to look like, what are the political directions, how do we position ourselves to work in that way….” Niche (in relation to other organisations): “where I want to be by the end of the year, which will be a completely different organisation, a fresh new start and that kind of professionalism will be seen by our stakeholders, which I think then by the end of the following year we really would be in a good position to have the data, have a proven track record of delivering quality services, to go and get more funding”. Branding as a strategy of affiliation and distinction:
    22. 22. Transition The defining characteristic of this environment is that of continuous transition, in which survival means being able to adapt to new and shifting sets of circumstances… …transition has become an essential and permanent feature of what it is for an organisation to survive, thrive and make a difference. IVAR (2013) ‘Turning a Corner’, p.9
    23. 23. Supporting the sector…to change Civil society organisations will need to embrace new skills, partnerships and organisational models if they are to seize the opportunities that lie ahead. It will be vital for civil society organisations to improve their business skills, become more entrepreneurial and strengthen their governance . Government wants to invest in a new programme of strategic interventions which will help organisations modernise and become more efficient and more entrepreneurial in order to take advantage of the opportunities ahead (Cabinet Office 2010: 6, 8)
    24. 24. Transition as policy • Transition Fund (£100m, 2010-12) • Transforming Local Infrastructure (£30m, 2012-13) • Advice Services Transition Fund (£33.6m, 2012-14) In order to thrive and secure its future sustainability, the independent advice sector will also need to be more enterprising and business-minded. Simply funding direct services will not secure this future for local providers. The traditional sources of funding that the advice sector has relied on in the past are changing, and the amounts available are reducing. The Advice Services Transition Fund is to support changes that will help the sector to become more enterprising and resilient.
    25. 25. Uncertain futures – ‘Birch’ • Timescales of transition – fast and slow • Weathering the storm, cuts and reprieve through ‘transition’ • Buying time – ‘laying down funds’ “It’s been difficult to plan for….and that’s the big thing even at the moment, that actually it is still difficult to see what’s in front of you.. The plans have to be ‘we’re as flexible as we need to be to do what we need to do’, you know… But it doesn’t necessarily feel comfortable really, that you’re having to be so quick on your feet that actually you don’t want to lay things down because that might slow you down, so let’s keep it open and fluid” “we are a different animal now than we were 12 months ago. We would not have focused on half the things that we’ve focused on. We’re not as good as we need to be, and that’s what I mean about it takes a long time to change”
    26. 26. Evolve 2014