Financial sustainability is always a key driver for charities, but particularly in a time of crisis. The charity sector has experienced many of the same pressures as everyone else during the Covid-19 pandemic but it also faces some challenges, which are unique to the sector. These include the impact on sources of funding including fundraising events, increasing demand for services and the need to think creatively to continue to deliver to beneficiaries.
Although there may be green shoots of hope, these challenges are set to continue and there will be tough times ahead. Here are some key day-to-day considerations to help your charity remain financially sustainable.
1. Produce a cashflow forecast
It is absolutely critical that charities have a cashflow forecast for a period of at least 12 months, as well as a detailed forecast for the next 13 weeks. There will be things that you won’t know or be certain about. However, think of the forecast as a jigsaw puzzle and put down as many pieces of the puzzle as you have, rather than not starting because you know you don’t have all the pieces.
2. Account for loan repayments in your forecasting
If you have taken advantage of some of the Government support schemes provided during the pandemic, including Bounce Back Loans or the Coronavirus Business Interruption Loan Scheme, make sure that you factor your debt repayment timings into your cashflow forecast.
3. Review how you can reduce your expenses
Although it is likely you will have already considered what expenses can be reduced, it is worth reviewing this in light of continued changes. This could include the latest Government guidance outlined in the Winter Economy Plan, such as the extension to payments of deferred VAT.
Potential savings could also include other expenses which had initially been delayed, but which are still not required due to continued home working, for example. Although delaying payments to suppliers could benefit your cashflow, we recommend you discuss these individual circumstances with suppliers and agree terms unique to you.
4. Consider new ways of fundraising
A number of charities are beginning to re-start their fundraising activities as well as considering other sources of income. Some are moving from physical to virtual fundraising events.
Many charities are also thinking more broadly about social enterprise opportunities and trading activities which will provide a new source of income. The crisis has created some new potential fundraising opportunities, including the growth of e-commerce and increased support for local business and suppliers. Another benefit of trading activities is that it can also sometimes offer a source of employment or volunteering for the charity’s beneficiaries.
5. Look for new grant opportunities
There are various sources of emergency grant funding and other financial support still available to charities, from the Government or other grant issuing bodies.
Although there are large funds coordinated nationally, including the Government’s £750million package of support for voluntary, community and social enterprise organisations, there are also a number of small regional grants for the South West. These are much stricter in terms of eligibility, but with some research you may find opportunities for your charity.
6. Embrace the boom in volunteering
One of the positives to come from Covid-19 has been a boom in volunteering and a shift in social attitudes towards us all ‘playing our part’. According to research from Legal & General and Cebr, more than 10 million UK adults took part in volunteering activity during the lockdown period. This presents an opportunity for charities to grow their number of volunteers. The key is to present these opportunities in a compelling way so individuals feel their contribution will really have an impact.
7. Ensure you report your impact
Alongside the increase in volunteering is yet more expectation on charities to develop their impact reporting. There has been growing attention over recent years to how charities report the impact of their activities. This has only been increased through the Covid-19 pandemic, with individual donors wanting, more than ever, to ensure that the most will be made of their contributions.
8. Collaborate with like-minded organisations
There is still much debate about what the future of the sector might look like but, sadly, there will inevitably be some charities which don’t make it. Those that do, and those who thrive, will likely need to work much more closely with other organisations and agencies to drive impactful regional system change.
Through the current challenges, we are already seeing some good practice of charities working much more closely with one another and with local authorities than previously. The sector has perhaps not always focused on data sharing and collaborating with other partners but working together may be the key to continuing to make positive change.
By Adam Croney, Director