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.

1. Advice in the credit crunch?
Jonathan Baker
nfpSynergy
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2. 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
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3. History of charities in recession
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4. 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
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5. 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
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6. 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
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7. 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
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8. 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
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9. Hot or Cold? The Best and Worst performers
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10. 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
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11. Does Size affect growth?
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12. 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
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13. Does charity type affect growth?
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14. 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
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15. 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
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16. 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
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17. Perception
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18. 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
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19. 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
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20. 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
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21. 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
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22. 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
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23. Advice in a recession
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24. 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/
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25. 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
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26. 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
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27. 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
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28. 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
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29. 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
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30. 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
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31. 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
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32. 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
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33. Summary
• Recessions affect charities
• Tough times ahead
• Innovation and flexibility can combat uncertainty
• Kick up a fuss
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34. 2-6 Tenter Ground, London, E1 7NH
Telephone: (020) 7426 8865
email: jonathan.baker@nfpsynergy.net
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