70% of charities in UK expect demand for charity services to grow

The charity sector has in recent years come under increased pressure from multiple fronts. The government continues to axe funding and public services; in addition, a number of public funding scandals have rocked the reputation of the sector. A new study reveals that while the sector is stronger than last year, it expects to face continued pressure for the coming year – on the back of growing demand for charity services and new rules around fundraising.

The charity sector has undergone a period of uncertainty as austerity measures at government and local government level cut into their funds, at a time when services to those with considerable disadvantages are also being reduced or cut due to austerity measures. In addition, the sector has come under considerable scrutiny regarding fundraising and the subsequent use of funds, with various new regulations and increased focus on the governance of charities and the role of trustees — all factors that will affect the changing fundraising rules.

A new report by PwC, the Institute of Fundraising and the Charity Finance Group, titled ‘Managing in the new normal 2016’, looks into the current funding landscape for charity organisations in the UK as well as their biggest concerns and barriers for the year ahead. The report is based on responses from 300 charities, of which 27% had incomes of more than £10 million.

Meeting demand
The research finds that the vast majority of the charities surveyed have seen an increase in the demand for their services (67%) over the past year, while for the coming 12 months 70% are expecting demand for their services to increase. Over the 12 months under 20% of charities saw no increase in demand and relatively few charities are expecting less demand for their services in the coming 12 months (under 10%).

Furthermore, the research asked respondents to indicate whether they are able to meet the demand on their respective services in the coming 12 months. The number of organisations that feel they cannot meet the demand has fallen slightly from last year, at 27% and 29% respectively. Although many respondents expect to have to deliver more services with fewer resources, the number has fallen somewhat from the previous year. The number of organisations that believe they are able to meet demand is up slightly to 30%.

Important factors
The most important factors affecting charity players in the UK in 2016, according to respondents, are 'public funding cuts to services', which comes out on top again at 35%, followed by reduced grant funding from public bodies. Coming in a close third, however, is ‘reputational issues for the charity sector’ relating to the negative media attention on the use and governance of charitable funding. Other factors that highly concern charitable organisations are ’maintaining public trust and confidence’ and ‘changes to the regulations of fundraising’ both scoring above thirty percent. The areas of least concern include ‘pension deficits’ at around 10%, ‘the future of the Charity Commission’ scoring under 10%, and ‘development of the social investment market’ at around 5%.

Caron Bradshaw, Chief Executive, Charity Finance Group says “Charities are facing a number of challenges both financial and reputational, but this survey is encouraging as it shows charities taking seriously the need to meet these challenges. We need to give charities the time and space to adapt and have confidence in charities ability to grapple with them.”

Increased challenges
The partners also asked respondents about the biggest challenges they faced for the future of their organisation, on a five point scale. Top of the list is ‘maintaining public trust and confidence’, at almost a four, followed by ‘reputational issues for the charity sector’ which also almost reached a four, up from a two the previous year. An ‘increased demand for services’ was up slightly on the previous year, also at nearly a four.

The decrease in grant funding has become a much more acute issue for respondents, up from around a three last year to close to a four this year. Public funding cuts have also become a more acute issue, up from almost a three to almost a four. The ‘increased expectation from donors and other stakeholders’ too has risen, from almost a 2 to around 3.8. Most of the categories have seen a significant increase on the previous year, suggesting that charities are taking issues that have been highlighted and uncovered seriously.

Steps taken
When asked what kinds of responses charities have made in relation to increased scrutiny of the sector, the top response was ‘reviewed consent statements on donation forms’ at 40% of respondents, followed by ‘improved internal compliance’ at 38%. The third most cited step was ‘improved ways in which your donors/supporters can manage their communication preferences, at around 35%. Around 33% of respondents cited ‘increased trustee involvement/oversight’, while 30% ‘reconsidered the effectiveness of governance and decision-making’. The least cited defined response was ‘enhanced disclosure of financial information’, at 17% of respondents.

Peter Lewis, Chief Executive of the Institute of Fundraising says “This report shows us that the majority of charities have taken action to respond to public concerns about fundraising practices, and that the fundraising community is committed to achieving the highest standards. The report also shows that the public are continuing to in their generosity to the causes they care about, contributing to make the world a better place both here and abroad.”