According to the latest Charity Commission web site, there are over 180,000 registered charities in England and Wales. They have combined income of £53.2 billion, and investments worth £77.7 billion. It is worth breaking this down to get a more accurate picture of size. 91% of charities have individual income of under £250,000 (combined income of around £4.5 billion), and the remaining 9% have a combined income of around £48.7 billion. Most of the small charities that I know have little or no investments, so most of it is held by the larger organisations. It doesn't take a genius to work out where the financial power lies - and it's not with the smaller organisations.
In October 2010, the Government produced its Comprehensive Spending Review. It outlined savings that would have to be made over the next three to four years in order to reduce the national deficit. Local authorities up and down the country are currently making decisions as to how to make savings in their areas. These will probably be around 30 - 40% over three years. These mean cuts in services and massive job losses as they struggle to cope with reduced Government funding. In my interest area of Adult Social Care, there will be savage targeted savings, with an inevitable adverse effect on the most vulnerable in society.
Where does this leave small charities? In talking to the Chief Executive of a large national charity last year, he believed that any charity with income of less than £5 million would be struggling in the future. Whether one agrees with this figure or not, it is patently true that small charities are going to find 2011 and beyond to be very difficult. Just like small independent retailers, they are going to struggle to survive.
In the latter part of 2010, the Charity Commission published a report entitled, "Strength in Numbers - small charities' experience of working together". For the Charity Commission, the way forward is to encourage collaborative working with other charities, and the report outlined how this was being done, what were the benefits and what were the difficulties. The research respondents indicated that the main challenges they faced were in relation to income flow (54%), the recruitment of staff (32%) and rising costs (28%). To counter some of this, charities had entered into informal arrangements such as the sharing of ideas and information, joint fundraising events or activities and sharing equipment. Only 26% of respondents had entered into formal arrangements with others, and these were mostly about joint funding applications, joint service provision and the sharing of workspace or staff.
Collaboration was not without its difficulties, and the most frequent of these involved;
- joint bidding for contracts (68%)
- funding applications (61%)
- negotiations to avoid service duplication (58%)
- formal sharing of information or ideas (56%)
In spite of the difficulties, over 80% of research respondents felt that collaboration had been of benefit to their organisation. However, there are many charities who have chosen not to collaborate, and others who are struggling with the concept, almost preferring to believe that there is light at the end of the tunnel, or some fairy godmother is just around the corner. Many small charities display the existence of a number of attitudinal barriers to collaboration, which reflect a range of fears and perceptions. The report highlights:
- Individuals running a smaller organisation might feel that collaboration could lead to the loss of a singular community position
- Some Trustees and CEO's might harbour concerns that their charity risks losing its identity and independence, and that collaboration may dilute its aims and purposes
- Some charities might fear that collaboration may lead competitors to steal their ideas
- There is a view among some charities that 'our way is the best way' and they have a strong attachment to their charity's history, often in spite of changing circumstances
- Charities may focus on their own narrow organisational interests rather than their mission and the needs of beneficiaries
The report concludes this section with, "Participants in the qualitative consultation were of the opinion that these fears and perceptions could sometimes be exacerbated by personality clashes, personal agendas and insular working cultures and practices. Indeed, there was a general consensus that problems associated with personal and cultural issues can be significant 'deal-breakers' when it comes to collaboration. The interviewees felt that this was particularly true amongst CEO's, Trustees or Founders, but could also be a problem amongst beneficiaries and operational staff".
Many smaller charities need to wake up and smell the coffee. The world is dramatically changing. There is unlikely to be a Philanthropist waiting for the call. 2011 will be about contracts cancelled or dramatically curtailed. New services will be about tendering, with unit costs as the focus for commissioners. Small organisations cannot compete on unit costs with larger ones. We see income reducing, but costs growing. What to do? Doing nothing is not an option. For some, collaboration with others to reduce costs is an option to explore. For others, the only solution is a merger with a larger organisation. For some charities, this will be the only way to ensure that a much valued service to vulnerable people is continued. It means that Trustees must rise above the narrow confines of their individualistic concerns, and enter the real world of 2011 and beyond.