Some 50,000 charities may be at risk of closure in 2021. This toolkit gives you everything you need to plan your response to that. Charity COVID19 Toolkit 1 of 7 (Strategy) was last updated Mar 21.
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.
How effective are charities at strategy? The Charity Sector Data Store strategy indicator is at amber, showing that the majority of charities report they are not doing this well. Weaknesses 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.
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.
The impact of the crisis was and will continue to be felt unequally across the sector. Use this sector assessment to identify the issues of most importance to you.
Prior to the Mar 21 budget, the Chancellor had made significant cuts to departmental budgets, of which the huge cut to overseas aid was the most widely reported, but not only cut. An example of what that might mean 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 said they were at risk of closure.
The March budget projections estimate that the economy will bounce back rapidly post lockdown and unemployment will be lower than expected, but the long-term damage from Covid will leave the economy 3% smaller in 5 years’ time. Moreover, the budget made no allowance for pandemic-related spending after next year and a further £4 bn in cuts were announced. The Institute of Fiscal Studies is sceptical that these cuts are deliverable.
There is a significant risk to the sector that the Autumn Spending Review may see a return to austerity.
What That Means - 50k charities are at risk of closure (see below).
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; but.
But, despite all the commitments, reports and initiatives, we have failed to tackle the very long standing abuse of people within the sector. They got us through the initial 2020 crisis and it will be they who get us through the coming challenges. The abuse has and will continue to badly damage the sector's ability to deliver and we risk losing the confidence of those that we need the most.
And externally, 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.
The sector doesn't have a crisis, it has 2.
New risks are emerging, but the existing risks have not gone away and, if anything, may even be more urgent.
Government Budgets. With the focus on the economy/jobs, more funding for the sector seems unlikely and departmental budget cuts may well both reduce income and drive increased demand.
2020 was the worst economic decline since the Great Depression of the 1930s. The IMF has predicted global growth in 2021 will be driven primarily by countries such as India and China. Recovery in big, services-reliant, economies, such as the UK, is expected to be slow.
Whatever numbers you choose to use, there is unquestionably a huge funding gap and, potentially, this may become even greater in 2021. However, there is some good news. The ACF Rising To The Challenge Report (Apr 21), found that 9 out of 10 foundations expect to maintain or increase grant funding for charities in 2021, despite many predicting financial turbulence.
How Many Charities Are There? Many people think there are about 160k UK charities, but there are 400k+.
Last Recession. The only 2008 charity closure figure I have is 12.3k, but that's probably substantively underestimated, due to the data used, the sector is now much weaker than in 2008, because of the years of austerity and this crisis is worse. We might perhaps expect 20k to 30k closures this time?
Looking Forward. '50k at risk' seems reasonably prudent.
But, closures haven't increased? Charity Commission de-registrations last year were lower than the year before and fewer than the number of new charities that registered. Given the above, it seems very difficult to believe that a substantive increase in closures won't be inevitable.
No matter how well we mitigate the funding gap risk, we can't close it, and that's not the only issue, but a crisis is a catalyst for new ideas and better ways of doing things. Finding and exploiting these gives us a way forward. And whether an issue is a threat, or an opportunity, may well depend on what you do about it.
Some opportunities 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.
We need to recognise, at both sector and individual charity level, that we would achieve far more by working in a genuinely collaborative way, 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.
Let's admit it, collaboration is often superficial. 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 new way forward and give our people hope. They need and deserve that.
COVID19 is already creating huge changes, some of which will change the way we work in the future.
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.
Other areas with long standing issues that have now come more to the fore include mental health and social care.
Others may be specific to certain charity sectors or even individual charities.
Unexpected opportunities - Ash 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.
The crisis has been hugely damaging but, we could use that as a catalyst for change, to enable the sector to emerge from the crisis stronger, more effective and trusted.
A British Academy Report (March 2021), predicts a “Covid decade” of social and cultural upheaval and that failure to deliver change will result in a rapid slide towards poorer societal health and more extreme patterns of inequality. It calls for renewed spending on community services, local government, social care and local charities, especially in deprived areas.
But we have a 2nd crisis. NCVO and CIOF are only the latest additions to a now long list of great organisations that have somehow got it wrong. Blaming people simply creates scape goats, and more commitments and frameworks might raise expectations, but won’t realise them.
I believe that both NCVO and CIOF will overcome their challenges, but also that this is a sector wide issue, which requires fundamental change. I don't pretend to have the answers, but outlined below are my own ideas on what that might look like. If there's anything of use to anyone, help yourself.
Sector bodies collaborate and act collectively, to create a new vision and strategy for the whole sector.
Not a commitment to change, but a robust action plan that is demonstrably delivered to:
Funders build on their excellent collaborative work during Covid to:
Sector bodies and expert charities work collaboratively to identify, share and celebrate good practice and innovation, not just their own.
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.
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.
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.
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.
We’re usually feel able to identify our strengths, but it’s always worth thinking through this.
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.
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.
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?
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.
Get started on making 2021 a success for your charity by spending 30 mins completing the strategy questionnaire.
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