UK charity sector seeks new funding to fill GOV gap

08 June 2015

Charities in the UK continue to fight for increasingly decreasing funding, as Government austerity programmes cut vital support to many charities, while at the same time finding the demand on their charitable services increase as the wider social care net in the UK is unravelled by austerity. A recent Baker Tilly survey finds that 40% of charities that were dependent on Government funding have had to cut services. Across the wider charity segment, the survey found that new funding sources remain the dominant issue for 71% of respondents over the coming 12 months.

In a recent survey, Baker Tilly asked UK charities about their current funding position* and their longer term income expectations. For its report ‘The current and future state of charities 2015’, the consulting firm surveyed more than 120 charities from across various sectors – with 15% in the health and medical sector, 13% in the social services and relief sector, and 11% in the grant making sector. The charities also varied in size and financial power, with 27% posting an annual income of less than £1 million, 38% falling within the £1 million-£5 million bracket, while the remaining 35% have an annual income exceeding £5 million.

Income of charity over last 12 months

Competitive funding
The current funding profile for many charities has not changed greatly in the past 12 months, with 70% of organisations seeing less than a 10% drop in their available funds. Over a fifth of respondents have seen no change in their income over the last year, and of the quarter who have suffered a fall, 70% saw a drop of less than a 10%. Just over half (51%) of charities saw a moderate increase in income. Yet while the overall funding landscape has remained relatively stable, certain kinds of charities – those that are dependent on Government funding – are finding their lifeline squeezed.

Sector based funding changes

With Government funding significantly decreased for 24% of charities, slightly decreased for 26% and the same for 30%, this funding route continues to be embattled. Individual donations are only up very slightly, while corporate donations are completely flat. The only funding section to see significant positive growth is the non-charitable trading. Of the respondents, 58% say this funding stream increased, propelled by a rise of social enterprises and the increasing trend towards more commercial partnerships within the sector.

Biggest funding challenges

Funding landscape
The survey further explores the funding landscape, finding that charities cite sourcing new funding streams as the most challenging funding aspect. The second biggest issue faced by charities is the full cost recovery of service provisions (45%), followed by maintaining voluntary income (41%). In terms of changes in the way funds are found, the survey results show that 59% of charities indicate that competition for funding is on the increase (up from 46% in 2013), while 29% cite that funding comes with a need to demonstrate its social impact and 27% found stricter application criteria for funding. 

Steps undertaken to replace lost government funding

For charities that lost some or all of their Government subsidies, the survey highlights that many (67%) have moved toward reducing their costs to allow available funding to go further. Other ways in which they are looking to keep their services available is to look for grants, as cited by 60% of those surveyed. 37% are also looking to add more donations based funding. The reduction of funding does however come at a social cost, with 40% of charities cutting some of their services.

Biggest challenges in coming 12 months

Coming challenges
The survey finds that finding new funding sources remains the biggest headache for many charities in the near term, with 71% citing this as a challenge for the coming 12 months. Staffing resources are challenging for 42%, while cost reduction programmes are a worry for 28% of charities. Strategic objectives are the least concerning aspect going forward, a concern for merely 4% of those surveyed.

* Consulting firm Connell Consulting also recently researched the funding landscape of the so-called third sector. The firm finds that as securing funding is an increased issue, non-profits need to find capital through investments, partnerships or mergers.


Manchester Mayor criticised for £250,000 consulting spend

19 March 2019

The Mayor of Greater Manchester has been criticised for splurging hundreds of thousands of pounds on consulting fees before determining that the region’s fire brigade must slash its budget by millions. Andy Burnham put more than £250,000 towards work from ten consulting firms as part of a review into the region’s emergency services.

Despite the continued argument that projects like the Northern Powerhouse initiative are helping to address the North-South divide in the UK, statistics still show that the North has borne the brunt of austerity in England. Northern English cities have been disproportionately affected, with their spending cut on average by a fifth since 2010, while cities in the south and east of England had average losses of 9%.

The impact of spending cuts has been keenly felt in Greater Manchester in particular, where local government spending has fallen by as much as £650 per person since 2009 in some parts of the region. As the area looks to find further savings, while the Central Government continues to fail to deliver on its pledge to end austerity, it has been announced that the fire brigade for Greater Manchester faces a reduction of up to £10 million from its budget.

The swingeing cuts to hit the emergency service would likely see its fleet of fire engines reduced from 56 to 47, while six fire stations face closure, and 113 support staff could suffer the axe. The news follows an investigation from Mayor Andy Burnham, which was triggered in part by the admission of Chief Fire Officer, Jim Wallace, that since 2015 the service has failed to deliver “its own efficiency plan”.

Greater Manchester Mayor Andy Burnham spent £268,300 to review the city’s fire service

The review itself has been far from inexpensive, however, and it has led some to accuse Burnham of hypocrisy. During the review of the fire service, which has delivered demands for the service to find major efficiency savings, the Greater Manchester Mayor reportedly splurged £268,300 in public funds on consulting work for his root-and-branch review.

According to local newspaper Manchester Evening News, Burnham tasked ten different consultancies with helping to compile the review, receiving payments ranging from £101,000 to £7,000. The largest amount was handed to Leicester headquartered P. Cooper & Associates for the expertise of a “senior change and transformation programme specialist,” while it was reported that another of the consultants gave “guidance on leadership and culture”.

A Greater Manchester Fire and Rescue Service (GMFRS) spokesman said of the spending: “The Programme for Change programme has required input from specialists who are expert in areas such as organisational transformation, operating models for fire safety and estates.”

Manchester’s fire brigade was criticised in 2017 when, in the wake of the Manchester Arena bombing, a report by Lord Kerslake noted crews had been held back from helping. Contrary to helping deliver a more efficient service, Unison has told the press that it believes the proposed cuts will make the residents of Greater Manchester “less safe”. With the expenditure of the review on private sector consultants now public, meanwhile, the union has slammed the report for throwing away public funds while jeopardising vital public sector work.

Unison represents the 113 staff who may lose their jobs, and a spokesperson for the union told Manchester Evening News, "It's disappointing that when finances are clearly tight, priority has been given to hiring external consultants rather than engaging with the workforce. This will be a shock to our members who were only told on Monday their jobs were at risk."

In recent years, a succession of local authorities have come under fire from officials and the general public for their consulting spending in the UK. Earlier in 2019, a freedom of information request by The Times revealed that local councils across the UK have spent around £400 million on consulting firms in the last year alone. According to the report, this represents a rise of more than a fifth since 2014, with critics using the figures to call into question the value added by engaging external expertise.

Commenting on the criticism many councils face, Tamzen Isacsson Chief Executive, Management Consultancies Association, said, “Consultants play a vital role in the public sector, [providing] transformational impacts, innovation and increased efficiency… Vital front line services continue to operate uninterrupted [while] consultants often help local authorities get better results with less money. As the MCA awards this year demonstrate consultants are delivering social benefits across the UK – from work on getting better outcomes for children in care to finding better processes for finding homes for vulnerable families in London these examples offer a true reflection of the consulting excellence that operates across the UK to the benefit of councils and the wider society.”