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Greater Competition

Reduced budgets and rising demand for services drives a shift in funding priorities. Demonstrating efficiency increases competition between charities.

There are just under 170,000 general charities in the UK. They share a total annual income of about £51bn, according to the National Council for Voluntary Organisations (NCVO). The vast majority are small – meaning they have income of under £100,000. Larger charities (£1m upwards) account for about a fifth of the sector, but 80% of its income. This concentration of funds amongst a relatively small number of organisations is also reflected in the make-up of Armed Forces charities. Across all sectors, many are struggling to cope with significant shortfalls caused by years of austerity, soaring demand for their services, and more recently, lost income due to the coronavirus pandemic. This downturn is not distributed equally; those with more diversified income streams are often more resilient. However, looking ahead, many charities face finding themselves competing with each other for a shrinking amount of financial support. “The sector is going to undergo a painful few years – there is a large number of charities – this is unsustainable: there are too many people chasing the money.”

In our discussions we heard that, as a society, the absolute amount of giving stays remarkably stable both through economic cycles and over time. However, “if people give to disasters or emergencies, they tend to give less elsewhere.” Also, “it is hard to raise the overall amount of giving, but there will be a shift of who is giving what. Over time, there has been a swing towards better-off people shouldering more of the giving and lower participation by the less well-off.” Given this, some charities may do well to review their fundraising efforts, as traditional donors, those who, for example, make small contributions on a regular basis, may no longer be able to offer the same level of support. On top of this, different generations prioritise different areas of need. Frequently in conversations with informed leaders, we heard comments such as, “my 20-year-old children think fundamentally differently to me on racism, collaboration, the environment.” This has an impact on their philanthropic interests and where they choose to give support.

It is clear that people donate funds for myriad reasons and that these can change depending on circumstance. We heard, “whether people care more about themselves and their family or the community generally goes in big pendulum swings. The pandemic has caused a shift in national consciousness; it feels like we’re in a community moment.” Although it is important to ensure that charitable funds are put to good use, for many the efficiency of these funds may not be the primary reason for making a donation, and “evidence of outcomes and effective altruism has been important for some, but not all. It isn’t what motivates a lot of people to give. Quite basic items like religious affiliation and values to do with responsibility and compassion are still important.” Looking ahead, changes in what people find important may present a challenge for the Armed Forces Community. “We are possibly in a generational shift, in the interregnum and not dealing with it very well”. As the generation with deep-rooted family connections to the military grows old, alternative sources of revenue may need to be found. “The Armed Forces Community is shrinking, and therefore the veterans’ community is also shrinking.”

In the years ahead, all charities will face challenges in raising funds. In particular, those organisations which have not had a high profile during the pandemic will face the difficult task of attracting support when the public’s attention is elsewhere. Moreover, certainly for the foreseeable future, they will be limited in what they can do to raise money. Pretty much all fundraising events in 2020 have been cancelled. Many charity shops had to shut because of the lockdown, and confidence in the safety of public gatherings is at an all-time low. The prevailing view during many of our discussions was that over the next decade: “The Service charities will have difficulty, simply because the profile of the military will have significantly declined, as the WW2 cohort will have left us; and it is unlikely that a major conflict is on the cards to raise the profile. The Service charities will be in a tough financial place at the same time as the government runs out of cash.”

It is not all bad news, however. We often heard the view that the Armed Forces charities provide a vital role, and that central and local government are attracted to operating with their support, because of the sense of mission, independence, and trust they bring. Although many face “a perfect storm of increased requirement and reduced means,” the need for their services remains hugely important. The challenge is to preserve these qualities, even as some are called upon to deliver what were traditionally considered to be public services. Over the next ten years, we may well see “a new phase of (more) professional but smaller number of charities – with potential for a closer engagement with government, and recognition that the charities are doing what the government should really be doing in accordance with the Covenant.” Moreover, as more data enables greater transparency, the ability to better interrogate individual charity and grant performance will increase substantially. This drives both greater internal efficiency, as well as easier comparison between organisations.

An Implication: As public priorities change, support for the Armed Services community may be marginalised in favour of different causes which are given priority.

 

Discussion

1 Comment

Anonymous

There’s an economic crisis looming, and we don’t know where it is going to land. Government funding will be cut, so will funding for the third sector. It will be brutal in the next 3 years which will have impact over the next 10.