A Road Map for Recovery - for Civil Society and the Charity Sector

The charity sector faces huge challenges and the new Government offers us both hope and opportunity and that we will be listened to - but they have inherited dire public finances.  They need us to bring them 4 things:

• We will deliver on their priorities and.
• In a way that delivers huge value for money and.
• We have bold but deliverable ideas and.
• As partners we will contribute fully.

We have inherited not just an economic black hole but a societal black hole. And that is why we have to take action and do things differently.  Sir Keir Starmer PM, Aug 24.

None of us alone can do that.  Sector bodies must now step up to the plate and genuinely co-create a sector plan for recovery that will deliver the above.  This article is our attempt to kick start that process by outlining how that might be done, with our own ideas and those of others.  Any critique or additions would be very welcome and credited - send your ideas to ian@charityexcellence.co.uk.

A majority of the public (59%) want government to work in partnership with charities more. NPC State of the Sector 2024, Aug 24.

Where We Are Now

Fundraising Hugely Challenging - No Near Term Recovery.  The Charity Excellence Charity Data Store shows that the cost of living crisis for charities was deeper and longer than Covid and, as predicted in our £1 billion Funding Cut report in Sep 23, Government funding cuts had huge impact with increasing numbers of charities closing.  Our data shows that fundraising is now more challenging than ever and will not fully recover until the economy does.  We think that fundraising won't fully recover until at least 2025 and that assumes the very real risks, which exist do not materialise.

Hope & Opportunity but Not a Solution.  The Government made promises to partner with the sector in its manifesto on various issues and made a commitment to return aid spending to 0.7% of gross national income when fiscal circumstances allow.  However, they also made clear we should not expect lots of funding.

We might reasonably expect a Labour Government to be more positive about the sector, with Chris Bryant MoS for DCMS, Lisa Nandy, the new culture secretary, worked for two charities before becoming an MP, and several charity sector staff have also become MPs.  We have good reason to be hopeful and an opportunity to respond to the huge challenges but we must not squander it, because......

The Public Finances are in Dire Straits.  The Government say they will not commit to significant spending until fiscal circumstances allow and, as the Resolution Foundation prediction of a £12 billion black hole in the public finances shows, the cupboard is bare.  There is no point in simply asking for money from a government that has none.  Moreover, if departments attempt to bring budgets under control by taking the same cut and slash approach to sector funding, as they did under the last Government, the situation for charities could become even worse.

The sector is in crisis and there is neither the fundraising opportunity nor public funding to address this.

What We Think Will Happen

Our best guess is there will be a (possibly very short) honeymoon period.  However, delivering economic growth will mean precious little funding for our underfunded public services, let alone the charity sector, and various pressure groups will be fighting for their share of a very small pie.  It may get worse before it gets better.

Longer term and assuming growth is achieved, we should see 3 main benefits.

• Fundraising.  Almost all  fundraising is tied to economic conditions, so this should recover.

We can also expect increased investment in public services, which will have 2 main benefits for charities.

• Demand for Services.  It will help reduce over demand for our services, particularly in areas such as poverty and mental health.
• Government Funding.  Those most likely to benefit from investment are charities working in social care, health, education and justice, particularly if what they are doing fits with whatever priorities Government has.
  • Whether or not that restores the £1 billion in funding cuts in 2023 remains to be seen.

Black Swans and Clouds on the Horizon.  However, we must be mindful that there are a whole range of global risks which could materialise and over which the Government has no control.  We've had Covid and a partly Ukraine war driven cost of living crisis but that doesn't make a hat trick any less likely.  From the Chinese economy's risks materialising to a Trump presidency creating American isolationism, or derailing any global response to climate change, or wider regional conflicts sucking in the major powers - from the Ukraine and Gaza to Taiwan.  None are likely, but then neither was Covid.

If we act boldly we will make the outcome better no matter what the future holds

A Roadmap for Civil Society & The Charity Sector

A Shared Agenda.  Nobody knows for certain but with o.5 million UK non profits, from huge super charities to tiny ones embedded in almost every UK community, our work impacts the lives of almost everyone in the UK.

Our beneficiaries are the Government's general public and we have a shared aim of working to improve their lives.    

We also directly deliver or support delivery of key public services, in areas such as education, including the key priorities for the Government, such as supporting those who are struggling and into or back into employment, as well as delivering for social care and the NHS, the environment and justice.

Our work directly supports the Government's priorities  

Huge Value for Money.  It's often thought there are about 170,000 charities but that's a huge underestimate.

• Nobody knows for sure but the real figure is about 400,000 UK charities, or nearly 500,000 if you include other types of non profit.
• We have about 1 million low paid but highly motivated staff.
  • There is a substantial pay gap between the charity and both the public and private sectors.
• Whilst figures vary, the Government's own surveys have suggested as many as 14 million unpaid volunteers. 
• Some 95% of charities have income under £500k pa and are almost entirely volunteer led - so have minimal staff costs and few if any overheads - almost all of their funding is spent on delivery.
• Often part of the local communities we support, we reach and engage the most vulnerable and excluded that Government often simply can't.

We have a huge, incredibly low cost but highly motivated workforce that is trusted by the most vulnerable

Bold but Deliverable Ideas

Some charity leaders have demanded a 'seat at the table' and criticised the lack of detail in Labour's election manifesto.  However, the Government will face a huge range of competing and often well articulated demands from across the spectrum, some from groups which wield real power.  I believe we have a critical role to play but would also argue that puts the onus on us to make the case as to how we would make that work to deliver on their priorities and at low cost.  They have a massive agenda and inherited a 'maxxed out' Government credit card, so will have no time for anything that doesn't.

We must take responsibility for our own future by presenting and engaging Government with an ambitious but robust and deliverable sector strategy.  There is no shortage of ideas we might include in that.  We have already proposed our own ideas.  These would require collaborative action but some would require little if any funding, and others are low hanging fruit that could be implemented quickly and easily. We don't even really need Government for some of them.  So why aren't we?

• Impact & Efficiency - Holistic Impact.  It is hugely challenging for beneficiaries and charities seeking advice and support to find the right support - to often, many don't even know it exists.  Our work in building out our one-stop-shop into a single AI gateway to the sector that will be accessible to everyone will not only address this but also increase efficiency by reducing wasted time and effort in looking for help.
• Better Decision Making - Big Data.  The very poor use of data and its impact on decision making at sector level is now widely accepted.

concerns that decision-makers in government and at the top of charities are often operating in the dark when it comes to a sector employing almost a million people. Commission on Civil Society.

Final build out and widespread use of our Charity Sector Data Store would enable sector charity and public bodies to make far better use of the very limited resources by improving decision making for policy and provision of training and other resources.

• Impact and Funding - Investing in Charities. In our Sep 2023 £1bn Funding Cuts report we explained why the savings were just on paper and would likely do more harm than good.  We suggested that, instead, high cost public services should be outsourced to much lower unit cost charity services and that also investing in these to deliver economies of scale would have even greater impact.
• Funding - Buying from Each Other.  Our latest promotion is to encourage non profits to buy from each other, because we help to close the funding gap a tiny bit every time we do. Our Help Finder directory enables anyone to join in and we showcase sister non profits on our website, and every week in our newsletter and social media.
• Impact, Workload and Funding - AI. Rapid, effective and safe adoption of AI would enable the sector to avoid the risks and exploit the opportunities to increase impact, reduce workload and improve fundraising. It doesn't require funding and we've done the spadework but it would require genuine collaboration across the sector.
• Impact.  There is no debate about the need to properly safeguard public money but the Charity Commission's role is to support charities to thrive and it is a barrier to supporting growth.  Registration of charities takes far longer, involved far greater work and, because of the need for specialist support, costs far more than it should.  The Commission's target for registration is 30 days but, in the case of our own charity, it took 23 months and was only registered when we took the Commission to tribunal.  The Commission's approach to charity registration should be substantially streamlined.
• Funding - Grant Making. There's no more money but far better focussing of grant making on delivering impact would deliver far more.  This isn't a new idea and we're far from the only people saying this - grant makers just need to do it.
• Funding - Public Sector Grants and Contracts.  Our Sep 23 £1bn Public Funding Cuts report explained why the slash and burn approach by public budget holders to cutting sector funding is false economy and also how to make savings needed in a way that would work.
• Funding - Common Good Funds.  Revitalising Scottish Common Good funds held by LAs - some £300m held by what were Royal Boroughs, not always well managed and often used for expenditure that could be deployed far more effectively. Here's our guide to this little known and under utilised funding source.
• Funding - GAYE Payroll Giving.  Rolling out a payroll giving policy requiring, or at least encouraging, all public bodies and agencies to offer this to staff.  Civil Service headcount is in excess of 500,000 and average take-up is between 5% and 10%, but can be as high as 20%.  It wouldn't raise game changing sums but it would raise millions and it wouldn't cost anything.  Currently, just 7 MPs out of 650 donate to charity through GAYE.

And we're not the only ones who have proposed ideas to begin delivering the change needed.

• Tax & Philanthropy. In March 2024, ex-Prime Minister Gordon Brown wrote in the Guardian outlining some big ideas on how we might address the challenges we face, including Gift Aid and corporate giving, and.
• Private Investment. In April Big Society Capital and 30+ other organisations wrote to the Financial Times calling for next government to take 4 steps to unlock private investment to drive growth & reduce poverty.
• New Government Unit.  In July, former Chief Secretary to the Treasury Stephen Timms proposed a new government unit on the impact economy, to harness the ability of philanthropists, social and impact investors, and businesses to contribute to Labour’s ambitions.
• Community Wealth Fund.  Local Trust neighbourhoods manifesto calls on the Government to allocate money from the expanded dormant assets scheme to create a community wealth fund.  This would be used to improve the prospects of doubly disadvantaged neighbourhoods that have the highest levels of deprivation and weakest social infrastructure.

There is no shortage of good ideas and no doubt many others out there we haven't found but, whilst both Government and sector leaders have talked about their ambitions, it's now time for both to step up to the plate and deliver.

There is no shortage of good ideas already but we must now act!

Partnership with Government

We have very little funding but we do have a very large, highly motivated and able workforce, we support civil society and directly support Government and its priorities, and we have bold, high impact, low cost  deliverable ideas.  We must now work with each other and Government to support the front line and deploy the very limited resources at our disposal to maximum effect by creating a bold, deliverable plan for sector recovery.

There is nothing to stop us, if we are bold enough to act collectively and quickly

What Others Have Said

NPC: What does Labour’s election victory mean for charities and funders?

NPC: Partners for Change.

Penningtons Manches Cooper - What Does a Labour Government Mean for the Charity Sector? 10 July.

Civil Society: Sector response to the King's speech. 18 Jul.