Philanthropy Impact

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Securing a sustainable future for local charities and community groups

Securing a sustainable future for local charities and community groups

Expert opinion

On 16th December Localgiving released its latest Local Charity and Community Group Sustainability Report.

This annual report explores the state of the UK’s local voluntary sector - highlighting some of the key emerging trends and providing a set of recommendations to help local groups achieve sustainability and flourish.

The report finds local charities facing an increasing number of challenges. Recent years have seen a rapid escalation in demand for the services of local charities, with 78% forecasting a further increase over the coming year. Many charities cite cuts in funding and referrals from the public sector as a significant factor behind this increase. When coupled with diminishing funding opportunities (67% predict stagnation or a downturn in their financial position over the coming year) this leaves large parts of the sector in an unsustainable position.

Just 18% of those groups predicting an increase feel that they currently have the capacity to meet this demand. In fact, the dual burden of overstretched services and diminishing resources has resulted in 46% of survey respondents expressing concerns about their survival beyond 5 years.

The problems facing the sector are deep-rooted, the result of long-term neglect amid wider economic volatility. While there is no silver bullet, there are some clear lessons that can be taken from the Report’s findings.

In order for the local voluntary sector to subsist, let alone flourish, local charities require the means to move beyond the day to day scramble for funding. Central to this is the need for more unrestricted funding.

Over recent years funding has increasingly been ring-fenced for specific purposes or project, an issue repeatedly highlighted by our interviewees. Jill Caskey of NI Children’s Enterprise explains:

“We have, and will continue to face funding challenges, it’s become the nature of working in the voluntary sector and we have no core funding from any source so this is a huge problem for us. The main problem is in finding funding for salaries, raising funds for programme work is not as  big an issue but you can’t run an organisation without staff”

The consequence is a pervasive culture of short-termism, including quick staff turnover (76% of respondents had seen a reduction of staff over the last year) and an overreliance on under skilled volunteers and staff  (77% of charities do not believe that they have the skills to run a successful fundraising campaign).

Funding practices and culture will not change overnight.  However, it is positive that funders are moving towards structuring their giving in ways that help local charities move beyond this hand-to-mouth condition.

Some funders are choosing to take a long term approach, building close relationships with one or more charities over a sustained period of time. Such relationships, which may go beyond financial support and involve other activities such as mentoring or board membership, are allowing funders to gain a more in-depth understanding of their partner charity’s activities and spending. This insight leads to trust, enabling them to support a charity’s mission and objectives by providing funding to cover core costs, rather than new and/or time-limited projects. For the charity, meanwhile, the comfort of a financial buffer enables them to think long-term and invest in the training and infrastructural development needed to achieve sustainability.

Other funders choose to support multiple groups (i.e the local voluntary sector as a whole) through providing match funding and/or small, unrestricted grants. Accessible application processes and time-efficient reporting requirements reduce the administrative burden often associated with grant funding, enabling charities to focus on service delivery. Programmes such as these provide an excellent option for those preferring a lighter approach, where by the benefiting charities are trusted as experts in their own needs and the needs of their beneficiaries.

The local voluntary sector consists of thousands of charities with widely varying skills and resources at their disposal. Consequently there is no ideal type of investment or investor.  What is required however is an overall increase in unrestricted, flexible or needs-sensitive funding from a far more diverse range of sources to enable smaller charities to take control of their own financial future.