The voluntary sector is currently facing a perfect storm, or indeed blizzard, as the government pushes forward with a further round of public sector funding cuts. The damage done to the sector by previous cuts has been severe, with many organisations closing or facing substantial reductions in income.
Voluntary Organisations are now closing on very regular basis. Two CVS’s in Darlington and in County Durham have closed in the last 18 months as has Havering CVS, Community Action Fareham, adoption charity BAAF, Women’s charity Eaves, CrossRoads Care East Anglia and 5 Citizen Advice Bureau’s in Glasgow …
The income of many voluntary organisations has dropped and brought with it redundancies at both small and large organisations e.g. NACRO, Action for Children, Hartlepool Volunteer Development Agency, NAVCA … the list could go on.
The Coming Storm
Income from national and local government to the sector has dropped by 50 % over the past 5 years alongside increasing competition from the private sector.
Big Voluntary organisations are doing OK, alongside large private organisations such as G4S and SERCO, but medium and small charities are not and increasingly lack the money, capacity and and expertise to bid for large contracts or fundraiser to scale.
Payment by Results contracts are increasing, but most voluntary organisations don’t have sufficient free reserves to fund a service upfront until performance payments kick in and don’t want to be poorly paid sub-contractors to somebody else who has been awarded a large regional contract.
Local authorities and government agencies face further massive funding reductions- up to 50%, which will in turn greatly reduce funding to the voluntary and community sectors.
There are still large numbers of new charities and social enterprises being registered each year competing for what limited funding is available.
There is therefore massively increasing competition for trust funding, including from larger organisations who previously would have focused on tenders rather than raising money from trust.
Many powers are being devolved to a city/ sub-regional level. In the North East, where I live, there will be two new structures and Mayors covering the Tees Valley and the rest of the North East respectively. However devolved budgets will also reduce by up to 50%.
There is a push towards social investment, though this approach is as yet unproven with substantial risks being perceived by many voluntary organisations. Furthermore, very little funding is as yet being put forward by commissioning bodies in ways which could be competed for using a Social Investment Bond or loan.
How should the voluntary sector respond to this perfect storm? It isn’t easy and the next five years will likely see the closure of many hundreds of voluntary organisations.
Those that wish to survive and thrive, need to take a close look at themselves and how they will go forward. There are a range of options they can explore and actions they can undertake:-
Weathering the Storm
- Consider whether there is a real need for what the organisation does or what it wants to do and take action accordingly.
- Examine whether the needs of beneficiaries have changed which require changes to the organisation’s services.
- What makes your organisation different from other voluntary organisations and/or social enterprises and how can this be promoted.
- Look outside and see what other organisations are doing that might be incorporated into your own services.
- Can you describe how you are successfully meeting the needs of beneficiaries? What outcomes do you deliver and can you measure their impact, to use the jargon.
- Are you flexible enough to to keep your tools sharp and respond quickly to arising opportunities whether that be a gap in the market for a service or a new funding opportunity.
- How will you actually go forward over the next 2-3 years. Develop a strategic plan with an an annual business plan setting out milestones, outcomes and performance indicators.
- How will you fund the plans? Develop a funding strategy, even if parts of it are still unclear and improve your ability to make funding bids.
- Make sure that you have good management systems in place to manage finances and measure the progress of service users.
- Are there more cost efficient (cheaper) ways of delivering existing or new services?
- Have you got the links in place with all statutory and commissioning bodies relevant to furthering your cause ?
Implementing some or all of the above won’t guarantee success but will give you both a reason for going forward and a plan of action to to take you forward in a very choppy and unclear landscape.