In this blog we summarise some of the more positive trends from our Charity Health Check. If you have any questions about the data, please contact our policy officer Maisie on Maisie.hulbert@acevo.org.uk.
Since May, ACEVO and the Centre for Mental Health have been running the Charity Health Check. The health check is a composite score that measures the financial health of the sector, month on month. A score below 50 indicates a deterioration – for example, in May the score was 30.8. A score of 50 indicates no change, while a score of above 50 indicates an improvement. Respondents complete a short questionnaire asking whether their organisation is performing better, worse or the same across a number of financial measures.
The survey found a marked decline in financial health during April and May, followed by conditions stabilising at this new lower level of activity. As the furlough scheme ends, 33% of respondents are expecting to need to make redundancies within the next 12 months. You can see the summaries of the health check so far here.
However, although many respondents were having serious difficulties, a handful of organisations have consistently reported healthy financial conditions, and a few have seen several months of financial growth. We have followed up with organisations who reported increases over at least two consecutive months in one or more of three measures: new business/public donations, cashflow, and reserves. We hoped to understand if there were any patterns between organisations that have been under less financial stress over the last few months.
Before we go further, we want to emphasise that we have only spoken to a few leaders, so this is not a representative sample and does not reflect the experiences of the sector as a whole. Highlighting the positives also does not mean that the organisations who are struggling have done anything wrong; this has been a uniquely difficult time, and even the best prepared charities with the strongest reserves have faced unprecedented difficulty. The themes we have drawn out here are not the experience of everyone; we know many leaders are experiencing difficulties liaising with trustees, huge issues with funding and uncertainty about the future. However, we hope that the key themes summarised below might provide a chance to reflect on how your organisation does certain things, and a couple of ideas that could make your journey to recovery a little easier.
Boards and delegating authority
This was the enabling factor that came through most strongly: clear delegation of authority really helped. The leaders we spoke to said boards granted them the freedom they needed to act quickly and decisively, with regular scheduled meetings to give trustees updates and assurance. Command and control structures such as flowcharts provided clarity around independent decision-making, and also made sure senior management roles and responsibilities were clearly delineated.
One respondent specifically mentioned that their board was prepared to take risks to support beneficiaries. While being risk-averse in times of crisis is understandable, this was another helpful point. Knowing that trustees were open to considering completely new approaches helped organisations to find solutions quickly, especially when during a crisis an element of risk seems inevitable.
We know that many of our members are experiencing the exact opposite: that delegation of authority has been the biggest challenge, and that this can mean senior leaders are unable to make crucial decisions quickly and independently. The fact that this theme came through so strongly in the organisations who were improving every month highlights the importance of the relationship between CEO and board in times of crisis, and that clarifying responsibilities can make all the difference.
Strategy and mission focus
Another key area was refocusing on mission, vision and strategic priorities. This helped organisations to streamline outputs and focus on pressing issues, rather than continuing other workstreams indefinitely and straining staff time. One respondent explained that a recent strategy refresh had given them the permission they needed to move ahead with new ideas, making innovation easier. Organisations also spoke about delaying longer-term strategy development but creating shorter, 12-month long plans to enable them to keep focused and allow time to respond to the changing situation. Scaling back on activities which were normally standard but not essential frontline services afforded staff the time to write focused emergency funding bids, for example, that eventually helped secure the organisation.
Funding
This has been the most challenging element of the crisis for many charities, some of whom were unable to access the various schemes on offer. We know that many charities were left out. You can find out more about ACEVO’s ongoing advocacy work here.
Although several of the organisations we spoke to had been able to access emergency support such as the emergency funding for charities provided by the government, furlough scheme and the CBILS, they had also seen other areas of increased funding, including corporate social responsibility donations and increased income from commissioners. Other organisations had excellent contact and support from their grant funders. One leader said that they felt their work was funded because they offered clear and tangible support to marginalised people in great need. Another respondent said that they saw funders increasingly prioritising work that supported marginalised groups, in particular anti-racist and intersectional approaches. Although we know this hasn’t been the experience of all organisations, it is a positive sign that the strains of the pandemic on charities could highlight the need for targeted support from grant-makers, providing resource for work that changes cultures as well as delivering services.
Despite the fact that these organisations had been able to access new or increased funding streams, most did not think this was sustainable long-term. All were planning for reduced income across contracts, corporate and public donations, and retail or events income. Leaders noted that although they had enough funding to continue for a while, they now needed longer-term funders to return to assessing multi-year applications, as this was their only way of planning further ahead.
What next?
These conversations certainly don’t give us a one size fits all approach. However, they do indicate that some areas might present key challenges for organisations – for example, excessive bureaucracy around decision-making – and that planning to minimise these barriers can really help. Funding around intersectional or anti-racist work is an interesting issue to monitor as the sector begins to look further ahead.
We recently asked members to consider #LifeBeyondCovid as part of the House of Lords Covid-19 inquiry, and submitted a video of evidence from members which you can watch at the bottom of this webpage. If you have your own insights to share about what has worked for you, why not join our online Community and share your thoughts with other members?
Image: Hush Naidoo at Unsplash
