Why This Matters

We can't change what's happening in the outside world, but we can respond to mitigate threats and exploit opportunities.  This toolkit does the spadework for you.    

• Part 1 – What 2021 might hold for the charity sector. 
• Part 2 – How to find the emerging opportunities.
• Part 3 – How to use that to create your recovery strategy.

How effective are charities at strategy?  The Charity Sector Data Store strategy indicator has been at amber since 2018, showing that the majority of charities report they are not doing this well.  Weaknesses within this include, not assessing funding needs effectively, a lack of realism in target and objective setting, not focussing on delivering impact and not engaging people in the strategy. To find out how to make your strategic planning more effective, complete the CEF Strategy questionnaire. It takes 2 mins to register here and 30 mins to do so; everything is free.   

What are the sector's key weaknesses?  Of the 21 top level indicators, 3 others are also at amber.  Sustainability will come as no surprise, but weak management of fundraising and ineffective planning might.  More positively, communications has moved from amber to green, over the course of the year.  Covid tracking, begun Mar 20, was initially all red/amber, but now only 2 of the 16 indicators are amber, showing how outstanding well the sector has responded, despite the huge challenges and desperate shortage of resources.  However, 2 of the 3 Brexit indicators have been at amber for a long time, and remain so.  There is now very little time left to do something about that.  

But we are desperately short of funding and our people hard pressed.  Survive And Thrive 2021 builds on the Charity Excellence response to the Covid crisis, by providing you with a whole range of new resources and functionality, to help you make this year a great one for your charity.   

PART 1 - What 2021 Might Hold In Store For Us?

2020 was a hugely difficult year, but the impact of the new Tier 5 and Brexit, are likely to drive further increased demand and widen the already huge funding gap. But, the impact will continue to be felt unequally across the sector. Use this sector assessment to identify the issues of most importance to you. 

Government

• Recession - in the Spending Review in Nov 20, the Chancellor said the UK's "economic emergency" had "only just begun".  The economy has suffered "the largest fall in output for more than 300 years".  "Even with growth returning, our economic output is not expected to return to pre-crisis levels until the 4th quarter of 2022. And the economic damage is likely to be lasting."  And that was before the new variant emerged.   
  • 2020 - the UK economy contracted by 11.3%, pushing us into the first recession since 2008.  
  • 2021 - the growth forecast for 2021 is 5.5%, but the 2nd lockdown and new tiers are a further serious setback.  A double dip recession now seems likely.  The 2008 recession lasted for about 15 months so, even if no worse, this one might well last until 2022.  More positively, if the vaccine(s) roll out is successful, the economy may bounce back mid-year.  
• Paying For Covid - the Chancellor announced that the government budget deficit is expected to be £394bn this year - the "highest" level "in our peacetime history and more than twice the peak recorded after the 2008 financial crisis.  The Government (OBR) estimated the tax increases/funding cuts needed to be £27bn, but the Institute of Fiscal Studies (IFS) has suggested a more realistic figure would be £40bn.
• There are 3 options; increase taxes, cut spending or not repay the debt. Raising taxes and cutting budgets would potentially have a substantial economic impact in 2021.  Borrowing would not, but would increase the cost, albeit over a very much longer period; potentially decades.   
• Government Priorities - spending has been announced for the NHS, defence and tackling unemployment, which is expected to surge to 2.6m by mid-2021.  
• Government Funding - elsewhere, a really tough focus on making cost savings seems inevitable.  
  • Charity Funding -  the Government is cutting the £15bn aid budget by £5bn. More than half goes directly to countries, but Oxfam alone receives £30m+ pa.        
  • Demand For Services - the Chancellor cut £10bn from the planned increase in Whitehall budgets next year.  A reduction in public services would further fuel the increasing demand for charity services.
  • An example of what the impact of that may look like is youth services (Jan 21).  These have been chronically underfunded for years and a further round of major cuts to local government youth services is expected.  Almost two-thirds of youth organisations with incomes under £250,000 say they are at risk of closure, with 31% saying they might have to shut in the next 6 months.  

The budget will be on 2 March and is likely to include furher measures but, with the focus on employment and the economy, that may well not include anything for charities. 

Charity Sector

• Reserves - a survey by Ecclesiastical (Nov 20) found that 12% of charities expected to run out of reserves in the next 3 months and almost half in the next year.  This is supported by a report on the reserves of English & Welsh charities during Covid (Nov 20), which found that many charities have less than 1 month of reserves, with some ponly a few dyas. 
• Funding - based on the COVID19 funder database data, new emergency funding began tapering off in the 2nd half of 2020.  Looking forward, inevitably, the recession will impact all charity income streams, except perhaps retail, and charitable funders may not be able to respond by increasing funding, as they did in 2008.  
• Cost - Some 160,000 charity staff had been furloughed by the end of May.  That's a fifth of sector staff.  The extension to the furlough scheme is hugely welcome, but charities will have to find more funding for staff costs, by the time it ends on 30 Apr.  
• Demand For Services - the factors above suggest the potential for a substantial and sustained increase in demand in 2021, which would also inevitably increase costs, widening the already huge fundig gap. 
• An IFS report (Jan 21) found that Covid has exacerbated existing inequalties, with those on lower incomes, the young, the least-educated and the BAME Community hit the hardest. 
• And the recession is more likely to impact the young, than older people and to be greater in the north, than in the south. 
• And we may feel that impact very soon - eviction ban ends (11 Jan), self-employed grants deadline (29 Jan), mortgage holiday deadline (31 Jan), temporary boost to social security payments ends (6 Apr) and furlough scheme ends 30 Apr.   More positively, the Government has extended some of these deadlines already, so may do so again. 

What That Means - charity closures quadrupled after the last recession; 12,000 closed.  Potentially, 2021 could bring much worse. 

Why That Matters - it's not just a 'charity crisis', it matters to all of us.  Some 98% of people have used a charity's services and our work directly impacts on key Government priorities, and;  

Funding Us Makes Economic Sense As Well - with a passionate, but not well paid workforce of under 1m and nearly 20m (unpaid) volunteers, we represent extraordinarily good value for money.  Unlike the £10.5bn in Covid contracts awarded without competitive tender and the middle-man paid £21m in commission. 

But, the Pro Bono Economics Civil Action Report (Nov 20) found that civil society is under valued and overlooked, and 35% of the public think charities are wasteful and 31% that there are too many UK charities.  In my view, the sector needs to change from asking for more money, to making the case for why it's needed, based on a clear narrative about the value we add to society.  

Key Risks 2021

Covid 

• Covid Timeline 2021 - the current UK view seems to be that it will take us until mid-2021 to bring the virus under control.   
• Unanticipated Consequences - Covid rules preventing households mixing may have negatively impacted on the hidden homeless, who can no longer 'sofa 'surf'.  And might more home working make us more prejudiced towards each other?       

Brexit   

• Economic Risk - an LSE report (July 2020) found that Brexit will deliver a double shock to the economy, despite having secured a deal.  
• Funding Risk - the UK benefitted from a range of EU funds and it remains to be seen to what extent the funding gap will be met by new UK funds.  Erasmus (£130m) has been replaced with the less well funded Turing Fund (£100m) and the £1.5bn EU Structural Funds (ESF) are to be replaced by the UK Shared Prosperity Fund, but possibly not until 2022.  Charities received about £500m pa of ESF funding.  
• Lack Of Charity Preparation - that aside, the Charity Sector Data Store shows many are not ready for the changes; the 3 Brexit preparedness indicators remain at amber.  Areas where we need to be ready include staffing, data protection, import/export, tax and regulation. For some, there will be risks in areas, such as medicine and justice/security.  For example, loss of access to the 24 European Reference Networks will negatively impact charities supporting the 4m UK people, with rare diseases.  

Global - more widely, the pre-COVID global risks remain, such as the more belligerent stance by China and the growing impact of climate change. 

• Climate Change - is already having an economic impact and will also lead to increased conflict and humanitarian disasters, creating greater challenges for our UK IDOs.   
• US/UK Trade Deal - we are likely to come under pressure to accept reduced animal welfare/food safety standards.  The US is also likely to target drug price setting and, accepting that, could drive a substantial increase in the cost of NHS drugs.  There will be a significant power imbalance, in favour of the US, in these negotiations.      

The Biggest Risk - The Funding Gap

All organisations have lost income, but for commercial ones this is at least partially offset by falling sales creating a reduction in their production costs.  However, charities are hit doubly hard, because recession also drives a substantial increase in demand for their free services; their costs go up. 

Where Are We Now?

• How Much Covid Funding - it's not possible to make an accurate estimate, but something of the order of £5bn has been made available to the sector.
• Who Got It - funding has mainly been focused on the front line, in areas such as the vulnerable and food banks. Funding for other charities, such as animals and the environment, has been limited, as has funding for UK international charities. 
• How It Was Distributed - more positively, funders have been very flexible and quite a lot of the funding provided has been core, including funding to adapt services and meet funding shortfalls.  Funders have been more open to funding non-profits that are not registered charities. Whether that translates into a welcome permanent feature of future grant making remains to be seen.  

This Charity Excellence Insight Report used the system's data to provide a full breakdown of the above - how much, who it's going to, what the future might look like and lessons learned. 

How Big Might The Gap Be?

• Sector Estimates - in June, Pro Bono Economics estimated that the gap to Dec 20 would be £10bn, the IoF/CFG that there would be a £12.4bn shortfall in income and, in a DSC survey, over half of charities expected to be insolvent by year end.  
• How Accurate? That doesn't appear to have happened, so was it the charity sector crying wolf?  It may be that the scale of response from funders and the public wasn't fully appreciated at the time and these couldn't have taken into account the extension of furlough.  Understandable, but it wasn't that bad after all?   I'm not sure. 
  • Not As Deep, But More?  Some of the reporting quoted the number of UK charities as 165k.  That's only the number of charities on the Charity Commission register.  The actual number of UK charities is about 400k.  Might the number impacted have been underestimated? 
  • Not 2020, But 2021?  Even if not, these estimates were before the Nov lockdown and there's now also the risk of a double dip recession.  It may be that the full impact won't be fully felt until this year.  
• Future Funding - will there be more funding available to mitigate that?  During the 2008 recession, charitable funders increased grant making in response.  They’ve already provided substantial COVID funding and some of that has been repurposed, so will not now be available for its originally intended use.  Finding more seems unlikely.
• Almost all charity income streams fall in a recession, including theirs.
• Government funding would seem to be the only realistic option and there are very good reasons why that is justified.          

Whatever numbers you choose to use, there is unquestionably a huge funding gap and, potentially, this may become even greater in 2021.  However, that's not a counsel of despair, but a call to action.

How Might We Manage That Risk?

Here are some ideas to think about.

Boring, But Very Important - finance is often treated as unimportant and getting that wrong in a crisis can be fatal. The COVID Toolbox toolkits will help you make sure you don't.

Here's just one example. We're lobbying for a relaxation on Gift Aid, yet we fail to claim about £600m each year.  That's just one of many charitable tax reliefs, you can claim up to 4 years retrospectively, it's core funding and you get it every year in the future.  That's £ billions we're already entitled to.  Want your share?  Run 'Tax Reliefs' in the CEF query system and it'll find yours and link you to what you need to claim it.      

• Toolkit 3 enables you to create a financial sustainability plan, or use Toolkit 4, if you're a small charity.  
• Toolkit 5 enables you to reduce cost, without damaging your impact and front line services.  
• Toolkit 6 helps you manage cash in a crisis.
• Toolkit 7 supports you in forecasting effectively.  

Not Boring - but, everybody always wants to talk about fundraising, so here are some things to think about:

• How will the recession impact on the willingness/ability of donors to give?
• How will the impact of COVID change (or not) the causes people give to and the ways in which they give?
• Digital fundraising has grown in recent years and surged during the crisis, but to what extent will that change the nature of fundraising long-term?    
• Fundraising effectiveness is the lowest rated of the 21 Charity Sector Data Store dashboard indicators.  It's never just been about getting more bids in and it's not now just about moving to digital.  For many, improving fundraising management is a real opportunity.  If you're not sure how to, you can assess your fundraising in 30 mins, using the CEF income questionnaire.
• And charities have been making fundraisers redundant. I know people are fighting incredibly hard to protect their frontline services, but part of that is about securing the funding needed.  Cutting your fundraising capacity may well be the starting gun for a race to the bottom.  
• And don't forget that your supporters believe in what you do. Here's an article with ideas on this theme, by Giles Pegram, who shares my view that we need to give people hope and that there are reasons to be hopeful, amongst all the bad news.     

Toolkit 2 will enable you to turn that into a fundraising recovery plan. 

Access text versions of the toolkits using the links above, or download these in toolkit format, with the additional tools I've created to help you, from within the CEF itself.    

PART 2 - Finding Opportunities

No matter how well we mitigate the funding gap risk, we can't close it, but a crisis is a catalyst for new ideas and better ways of doing things.  Finding and exploiting these gives us another way forward. 

How To Do That

The Past - in recent years, social media went from online chat for young people to fundamentally changing  society in ways that no-one ever envisaged.  The charity sector was very slow to respond, but those that did were far more able to take advantage of this and much better prepared for the virus.  If your Board's now on Zoom, that's good, but that's not innovation, it's catching up.  

In 2021 - we need to get ahead of the curve, at both sector and individual charity level, by recognising that we would achieve far more by working in a genuinely collaborative way, by putting aside the (too often) competition with each other.  We need to identify and share the emerging opportunities and new ideas, work to develop and roll out scalable models, and funders need to be willing to invest in making this happen.  And we need to find a way to engage Government in supporting us to make that happen.  

Changing Mindset - let's admit it, collaboration is often superficial.  The Sector Data Store collaboration metrics show this to be an area of weakness.  That's not my assessment, but what the charities using it are saying.  The all too frequent competition hinders the exploitation of new ideas, wastes scant resources and splinters our voice to Government.  We need to collaborate to repair the ship, not fight over who gets a seat in the lifeboats.  That's about leadership and new thinking, to find a way forward and give our people hope.  They need and deserve that. 

What Might These Look Like?

Some are becoming apparent, but there will be others that we don't yet know about, and some of these could have huge impact in the longer term.  Which will matter will vary from charity to individual charity.  But they can't do it all themselves - there is a key role for sector bodies and funders in leading our response. 

The Big Unknowns

• Societal Economics is all a bit theoretical, but may potentially be very important.  In the last recession, Lidls got it right and Tesco got it wrong and look at the impact that had.  Will this change on our market driven economics, by placing emphasis on what real value is?  Society has seen the men that make deals and money, as those we value, but.....  
  • Key Workers. Before the crisis, people like immigrant care workers were underpaid and seen as of little value by many.  When COVID arrived, the public began clapping in the streets, not only for them, but also nurses, truck drivers and other key workers.  Will this change become permanent and might that change the public's view of a sector, whose primary aim is to deliver social value, from too often being seen as 'nice do gooders' to being really valued and to be properly invested in? 
  • But. Our boards are actually less diverse than the commercial sector and the never ending scandals have gone on for over a decade and continue. We talk endlessly about our commitment to our values, but it's not what we say that matters, but what we do.  
  • Public Trust in charities has been falling for some years. There’s some debate about whether that really matters, but I think it does.  Not necessarily for fundraising, but because key stakeholders, such as Government, respond to this. 
• Society. COVID has seen a surge in domestic violence.  That's another tragedy, but might there also be upsides? 
  • Quality Of Life - Will lockdown and greater flexible working in future be better for families and the job market be a bit less harsh on carers (often women). 
  • Valuing Each Other - will the often rigid cultures and hierarchy in organisations (including some charities) loosen up a bit in light of Zoom meetings in T shirts, that are interrupted by children/pets, and lead to us valuing each other, maybe just a little bit more? 
  • The Gender Gap - women bore the brunt of extra childcare during the initial lockdown and are being disproportionately impacted by the economic fallout.  However, social movements can be accelerated during crisis (WW2 moving women into work).  ONS data (May 20) shows a 58% increase in childcare undertaken by men.      
• Government Policy. The Government’s economic recovery plan, changes to the Civil Service, debate over a possible break-up of the UK, and suggested devolution to regions will cause disruption and may (or may not) work.  As an example of why that matters, here are some ideas on the potential fundraising implications for devolution.

Emerging Opportunities

COVID19 is already creating huge changes, some of which will change the way we work in the future.

Creating Something Good From Tragedy

Some good may come from awful events and factors may coincide, creating greater opportunity.

Both the impact of the virus on the BAME community and the Black Lives Matter campaign became matters of national debate. 

• What could be done to build on this at national level, to tackle the long standing inequalities in the UK?
• For the charity sector, how might we use this to finally deliver on diversity?  
• For individual BAME groups, how might you use this at a local level?  Might those who have previously ignored you now listen?

Other areas with long standing issues that have now come more to the fore include mental health and social care.

Charity Sector

• Government – in Sep 20, the Government published the Danny Kruger review into how the government can make the most of the voluntary sector in the UK’s recovery from the coronavirus pandemic. 
• Given current pressures and lack of funding, I'm sceptical about change, but how might we positively influence Government to begin to change that? 
• The Charity Commission - the sector needs a strong effective regulator, but one with some commonality of purpose with us and a relationship based on mutual respect and listening.  How might we reach out to begin creating that relationship?  Perhaps by replacing our warm words by collectively creating a robust action plan to address issues, such as diversity and the ongoing scandals?  The current chair steps down in Feb 21.    
• Structural Changes.  Large charities are few in number, but already take the lion's share of the funding and dominate the sector.  With their often strong balance sheets, executive expertise (or at least ability to buy it in) and very capable, large fundraising/digital teams, they may be more able to weather the crisis than smaller charities.  Will we see Warren Buffet's 'deepening moats', if they emerge with even greater competitive advantage?  These are commercial concepts, but we're all competing for a too small amount of available funding.
• Looking more widely and long term, what will the deepening moats of mega companies like Amazon, and the rise of AI and block chain mean for the world of work?    
• Sector Leadership - we've been long lead by our, largely Metropolitan, sector bodies.  They have been hit as hard as everyone else, they compete with each other and total membership is probably only about 30k, in a sector of 0.4m. 
  • How might they put that aside and work collaboratively, to adapt and meet the previous and even greater new challenges we face? 
  • Will financial pressure compel them to adopt a less insular metropolitan focus, in order to reach the wider sector and grow their membership funding?
• Or will there be new sector leaders, whose voices are listened to?  BAME groups have mobilised and are reaching key influencers in funding bodies and Government.

Sector Specific

Others may be specific to certain charity sectors or even individual charities.

• Environmental Charities – impetus for a Green Deal to restart economies, the election of Joe Biden, the Government's 10 point climate change plan to be announced this week (mid Nov 20) and it's hosting of COP26 in Nov 21.
• Health Charities – investment in vaccines, transferable advances in medical treatment and the COVID19 ‘Washing your hands’ campaigns that will impact much more widely than just the virus.

Unexpected opportunities - Ash have found that a million people have given up smoking since the crisis began. 

The 1st Brexit opportunity - Environmental Land Management (ELM), replacing EU farm subsidies, will pay farmers to prevent floods, plant trees and protect wildlife.  

Your threats and opportunities will be specific to your charity and could be global, UK, regional, or even very local. 

Think about what these might be and what do you need to do now to make 2021 a good year for you. Part 3, gives you a process and tools to do that.  Don't do nothing. 

PART 3 - How To Create Your Recovery Strategy

There isn’t enough funding and there isn’t going to be.  Boards that act strategically to the emerging threats and opportunities, will be far more able to mitigate risk, and find new ways of working to increase their impact and use resources more effectively.   

The Strategy Process

Strategy is about making the best decision you are able to, based on the best evidence you have.  It doesn’t have to be complicated, but you do need to have a logical, structured process, challenge positively, be prepared to think about new ways of doing things, take people with you and make decisions based on the available evidence. 

We cannot control the events in the outside world, so effective strategy isn’t about deciding what we want to do, but rather understanding how that may impact your work, and focussing our resources to exploit the opportunities and mitigate the threats facing us.  

External Threats & Opportunities 

These are the O and T in your SWOT. What the threats and opportunities may be for your organisation, depend on a range of factors specific to you and may appear at global, national, regional or even local level. 

You need to be looking outwards to identify, and then assess and respond to these. Think through what the issues above may mean for your charity.  

Internal Strengths And Weaknesses

These are the S and W in your SWOT.  If you’re a trustee, download the CEF Board Bingo game for your next meeting to find out what yours are.  

Strengths

We’re usually feel able to identify our strengths, but it’s always worth thinking through this.  

• Known Strengths - We are really great at x, but might that be partly based on what we do that we personally value, rather than an actual strength? A case in point is that I know Scotland has the greatest football team on earth, despite the fact that (sadly) there isn’t a huge amount of evidence to support this.
• Unknown Strengths – Sometimes other capabilities that aren’t really thought of as strengths, might now be very useful, in light of the changes COVID19 has created, or sometimes have just been overlooked.

Write down every strength you can think of, then test each in turn by asking yourself what measurable evidence do we have that demonstrates that to be the case?  Identify the key ones.    

Weaknesses

Even the very best amongst us have weaknesses, but many find identifying these the most difficult aspect of strategy.  But, these are usually the best opportunities we have to achieve more.   

Sector Weaknesses - The CEF Data Store aggregates all user data anonymously to create Big Data for the sector.  The metrics at amber are strategy, fundraising, communications, sustainability and how realistic we are in our planning and target setting.  That is the majority of charities do not do these well.  Are you one of them?

Challenges - We have fantastic people, but people are often resistant to change and talking about ‘weaknesses’ almost always makes people react defensively.  I find that approaching this as looking for opportunities to achieve even more helps.  

How Use Your SWOT Analysis

Bring your Strengths and Weaknesses together with you Opportunities and Threats to create your SWOT analysis. If you wish to, you could identify those that are particularly important or urgent. Then use this to create your strategy.   Watch this Charity Excellence ‘How To’ video (3 mins) for how to do your SWOT really well.

This image at the top is an example, which highlights those that are particularly important, or urgent.  The arrows show linkages that can be used to create a strategy; using strengths to exploit opportunities, and/or to address weakness, and/or to mitigate/avoid threats. Or better still, could you turn a threat into an opportunity? 

Implementation

However, strategy isn’t a plan, it’s what an organisation does and that involves everybody, ideally from the outset.  It’s important to engage people and turn your plan into the timetable, budgets and  actions needed for them to deliver it and your progress to be monitored.  

Whatever you do, don’t do nothing.

Here's another article you may find useful:

How To Make Strategy Effective.  Or Register Now to join the 11k members of our community and assess your strategy in 30 mins, with access to a huge range of resources and people who will help you; everything is free.  The system works for any UK based non-profit and requires no skills or expertise to use.