Taking the Pulse. Small Charity Sector. of the. the Small Charity Index results Quarterly Report (December 2014 to February 2015)

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1 Taking the Pulse of the Small Charity Sector the Small Charity Index results Quarterly Report (December 2014 to February 2015)

2 About the FSI Since its inception in 2007, the FSI has grown to become the UK s largest provider of free capacity building support and services to the small charity sector. The FSI delivers approximately 2.2 million of free support services to small charities registered in the UK. The FSI was established to deliver strategic skills to small charities. This is achieved through a year-round programme of training and conference learning. The content of this learning programme encompasses all disciplines of fundraising, marketing and communications, organisational and board leadership, and a wide range of key back office skills. The programme is designed to build sustainability in charities and enable them to adapt to the demands of the communities and causes they serve. The learning programme delivers 1280 delegate training opportunities in eight cities across the UK as well as 900 delegate training opportunities each year in London. Capacity building activities also include: A conference programme, Sharing the Best Forum (fundraising focused) and Sharing the Essentials Workshop (back office skills); Advice clinics where small charity leaders access direct advice/mentoring support on organisational and project strategy; An Affiliates programme providing small charities with intensive development support. Increasingly in today s environment the voice of the small charity sector is drowned out. This is because they are unable to allocate time and resource to activities that do not directly impact on the delivery of services. This is a direct result of an unprecedented increase in the demand for services. The FSI plays a significant role in facilitating their voices to be heard through its policy programme. The FSI works positively to influence the external environment on behalf of small charities. Key areas of activity are policy and research: by developing a strong evidence base on small charity issues, we are able to provide our members with a platform to influence government and other decision makers. Each year the FSI undertakes research into specific areas of concern to small charities. The results of the research are used to campaign, with small charities, to effect change based on the research findings. The FSI is responsible for the Small Charity Index, which delivers quarterly reports on the state of the small charity sector. The FSI has a small charity membership of over 3,500 small charities. Our regular communication with members, their valuable feedback through research and the Small Charity Index gives the FSI a unique platform to advocate and support the small charity sector.

3 the Small Charity Index results Quarter Four (December February 2015) Foreword Content 1 Foreword 2 Income 4 Service Delivery 5 Workforce 7 Governance 8 Quarter 4 Perceptions The Small charityy Index was first launched in Small Charity Week 2013 (June). The Index is a quarterly pulse of the small charity sector report looking at key challenges facing small chariteis. Areas of analysis include: Workforce Services Governance Income The SC Index provides up-to-date information on small charities. Current information on small charities is important to those who provide support and to those who legislate or are decision makers or influencers on issues concerning small charities. This report contains an analysis of data covering the period December 2014 to February The FSI also collects data to provide a breakdown on each of the questions asked in the survey according to charity cause type, geographical location and income level. These more indepth statistics are not published but are available, if appropriate, on request. 1

4 Income Over the quarter December 2014 to February 2015 income in all three areas remained static continuing the trend over the past 18 months. Whilst a number of other reports state that income to charities overall is increasing this is clearly not the case in respect of small charities who continue to see income flat-lining from voluntary, statutory and earned income sources. There could be a number of reasons for this: Voluntary income to smaller charities comes predominantly from Trusts and Foundations, local community fundraising activities and sporting events such as the London Marathon and other running and cycling events. Smaller charities do not tend to have Major Donor programmes and their relationships with local businesses encompass gifts in kind as well as lower level donations or donations through employee fundraising. Therefore smaller charities are not benefiting from higher level donations from both major donors and businesses. This is an area of activity that could be developed given a recent survey indicated that the general public would be more likely to donate to smaller organisations than larger ones, local rather than national or international and those with greater volunteer involvement. All of these indicators are good news for small charities but it requires small charities to make the impact of their services known locally as in the same survey respondents indicated 2

5 that the names of larger charities come to mind when asked which charities they might support. It would seem therefore that smaller charities need to raise their profile, demonstrate and shout out about their local impact and develop opportunities for major donors and business supporters to give. Statutory income to smaller charities has been impacted by the Government and Local Authority policy to move away from grant funding and instead work on payment by delivery or payment by result contracts. Many small charities are not able to support the up-front investment that both of these latter models necessitate. There is also a trend by Government and Local Authorities to move to larger providers who deliver an end to end service. Small Charities must continue to lobby for contracts to be delivered to those organisations who can demonstrate that they are adding social value into local communities beyond the value of the contract. However, as budgets continue to be cut and Local Authorities continue to struggle to balance their expenditure there is no bright light at the end of the statutory income tunnel. Earned income is an area of income where we are in control and all small charities must look at how they develop services and products that can be sold across a wider market and to those who can afford at full market value. Whilst this is easy to say it is often more difficult to do as smaller charities, due to increased workloads, have less and less time and resources to spend on development. Against this backdrop small charities are struggling overall with income and the most pressing outcome is that small charities have insufficient resources to cash flow their charities spending increasing amounts of time balancing the books in order to keep their doors open for those who need their services. We have said before that the importance of a strong cash flow is crucial in the fight for small charities to stay alive. 3

6 Services Working in collaboration, could arguable, be the saviour of the small charity sector. Whether it involves one-off projects, long-term arrangements, or collaboration with public and private sector organisations, small charities have all of the values needed to work collaboratively with others. However we are simply not doing enough of it. Whilst small charities are open to working in partnership, 70% of charities reported working in partnership with other organisations in this quarters survey, 89% report that the level of their partnership working is less than 20% of their overall service delivery. We need to do better, we need to do more as all small charities have a lot to gain and learn by working in partnership with other organisations. Services (1) We asked in the three months December 2014, January and February 2015 has your charity seen the demand for services increase, decrease or remain unchanged? 0% 39% 22% 6% (2) We asked does your charity work in partnership with other charities? Yes 70% No 30% (3) We asked the charities that answered YES, what percentage of your services during the three months December 2014, January and February 2015 were delivered in partnership? Base: All Individual Respondents (n=110) 2+ Decrease 16-2 Decrease 11-1 Decrease 6-10% Decrease 0- Decrease Unchanged 0- Increase 6-10% Increase 11-1 Increase 16-2 Increase 2+ Increase (4) We asked taking everything into account, how confident do you feel about your charity s ability to deliver its planned level of services over the next 12 months? Base: All Individual Respondets (n= 157) 10 Fully confident 12% % 26% % Not at all confident % 9% % 31-40% 21-30% 11-20% 0-10%

7 Workforce Workforce (1) We asked in the three months December 2014, January and February 2015 which of these issues has presented the greatest, second greatest and third greatest challenge? % There are no surprises that workload, funding and demand for services are the top three areas of greatest challenge to small charities. Given the crucial nature of all three of these concerns it is surprising that the motivation and morale of small charity employees remains high with 50% of charities reporting 10 that motivation and morale 5 0 Workload Training Investment Retention Cashflow Demand Funding Motivation Recruitment was good and 2 reporting that motivation and morale was (2) We asked how would you rate the current motivation/morale of your staff? excellent. In the previous quarter 29% September to November 2014 we saw a rise moderate rise in staff numbers, 9% of small charities 10% 0% reported a 16-2 increase 1 2 9% and 16% reported a 5-1 7% increase. These percentages have decreased slightly in the 10% quarter under review with (3) We asked In the three months of small charities reporting a 16- December 2014, January and 2 increase and 1 reporting February 2015 have your paid staff a 5-1 increase. numbers risen, fallen or remained Volunteers unchanged? play a huge role, especially in the smallest of charities, with many small charities relying solely on volunteers to run their services. Whilst not huge, the drop in the number of volunteers volunteering in small charities during the quarter under review will have a negative impact when coupled with less paid for staff and increased demand. 19% Greatest Second Greatest Third Greatest 1 16% 9% % 10 Excellent 9 20% % % 2 1 7% 1 Very Poor 5

8 7% 67% (3) We asked In the three months December 2014, January and February 2015 have your paid staff numbers risen, fallen or remained unchanged? 10 Excellent Very Poor Decrease 16-2 Decrease 11-1 Decrease 6-10% Decrease 2% (4) We asked In the three months December 2014, January and February 2015 have your volunteer numbers risen, fallen or remained unchanged? 0- Decrease Unchanged 0- Increase 6-10% Increase 11-1 Increase 16-2 Increase 2+ Increase 17% 1 0%

9 Governance Good governance in small charities is crucial for public trust. As small charities we must support our Trustees in their endeavour to maintain strong, sustainable and trustworthy small charities delivering impactful services to those who need them. There has been an increase in the percentage of charities holding reserves up from 60% in May 2014 to 8 in February However this does mean that 16% of charities are using their reserves to keep their charities afloat during these difficult times, this is not sustainable and does not reflect a totally healthy small charity sector. In the quarter under review of charities were less than confident that their charities were strong enough to be still operating in 12 months time due to their uncertainty about the future. (1) Does your charity hold reserves? (2) If Charities answered YES to question (1) we asked, how much of your reserves have you used during the months of December 2014, January and February 2015? Base: All Individual Respondents (n=133) Maintained level of reserve Yes 8 No 16% Used 16-20% Used Used 2+ (3) Some charities may face exceptional challenges and may have to contemplate closure, we asked how likely is it that your charity will face closure in the following 12 months? Base: All Individual Respondents (n=155) 10 Very likely % Not at all likely 47% Used 6-10% Used less than 1 (4) We asked How confident are your Trustees to take opportunities for development, outside of your current business plan which carry a financial risk? 10 Fully confident % 12% Not at all confident 2% 17% 7

10 Small Charity Index Perceptions Survey December February 2015 CRM Database Use by Small Chairties More now than ever before it is crucial that charities seek to know who their volunteers, supporters and donors are and are able to communicate with them effectively. The use of CRM database software is an important tool for any charity. We can use our database to collect information on what our donors are interested in, how they want to be communicated with and through which medium, which of our programmes they are inspired by and what sort and level of support they give to our organisations. Not only can we track their relationship with us as the chairty but also track their relationships with each other. Whilst only 12% of small charities were using Charity Sector Specific CRM Systems the majority of respondents sited CRM systems from Blackbaud (e-tapestry/raisers Edge). Apricot 3 Blackbaud 17% Donor Strategy Salesforce 3 Other 12% 6% 19% 5 Generic CRM (not charity specific) Bespoke software for our Charity Access Database Spreadsheets Charity Sector specific CRM System 8

11 9

12 Centre Point 45 Beech Street London EC2Y 8AD Charity Registration Number

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