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Advice in the credit crunch?

Jonathan BakernfpSynergy

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• The effect of recession on the charity sector

• The effect of recession on advice giving charities

• What advice charities can do in difficult times

Overview

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History of charities in recession

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What we know

• Not as much as we should – need to record our experiences

• Great Depression – charities did well. One study looking at voluntary funded hospitals found short term hardship but surprisingly robust income

• Study looking at last 5 US recessions shows slowdown in charitable donations (giving falls on average by 1.3% corrected for inflation)

• Certain income streams/charity sectors are disproportionately hit

• 1990s recession – we have comprehensive records for charities

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Income of charities affected by economic performance

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-10%

-5%

0%

5%

10%

15%

20%

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Year

Gro

wth

Total Income Growth

GDP Growth

= Delayed effect – average delay 17 months

Base: 550 charities Source: Dimensions, Charity Trends, CAF

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Cumulative Growth of Total Income in real terms (1981=100)

100

200

300

400

500

600

700

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Year

Tota

l Inc

ome

Gro

wth

0

20

40

60

80

100

120

140

160

180

200

GD

P G

row

th

Total Income

GDP

Trend

Economic downturn followed by slower Total Income growth

Base: 550 charities Source: Dimensions, Charity Trends, CAF

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-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Year

Gro

wth

Economy effect on Voluntary Incomes have a 10 month delay

Voluntary Income Growth

GDP Growth

= Delayed effect – average delay 10 months

Base: 550 charities Source: Dimensions, Charity Trends, CAF

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Cumulative Growth of Voluntary Income in real terms (1981=100)

100

200

300

400

500

600

700

800

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Year

Volu

ntar

y In

com

e G

row

th

0

20

40

60

80

100

120

140

160

180

200

GD

P G

row

th

Voluntary Income

GDP

Trend

Economic downturn followed by slower Voluntary Income growth

Base: 550 charities Source: Dimensions, Charity Trends, CAF

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Hot or Cold? The Best and Worst performers

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Characteristics of best and worst performers in last downturn

Medium sized

Homelessness & Disability

Religious Charities (welfare)

Increased Fundraising

Small

Eclectic minor causes

Religious Charities (missionary)

Decreased Fundraising

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Does Size affect growth?

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Real terms Total Income of Big and Medium Charities has far outgrown that of Small CharitiesCumulative Total Income Growth – By charity size (1980=100)

0

100

200

300

400

500

600

700

800

900

1000

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

Big - £20m+

Medium - £2m-£20

Small - < £2m

Big and Medium Charities have strongly outgrown Small charities in Total Income

Base: 156 small, 250 medium and 142 Big charities Source: Dimensions, Charity Trends, CAF

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Does charity type affect growth?

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Not all charities/areas were equally affected

• Children’s and Animal charities were most resilient

• International Aid is not primarily affected by the economy but events

• Income streams were important – where the money came from

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Help giving charities in recession – real examples

0

5000

10000

15000

20000

25000

30000

35000

40000

4500019

7919

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150000

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250000

MIND

Samaritans

Shelter

Crisis

Barnado's

Inco

me

£,00

0sIncom

e £,000s

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Income challenges

• In 1990s recession income streams were pressured particularly legacies and investments

• Donations can peak during recession and then decline coming out of a recession

• Problems continue after headlines recede

• 1993/1994 was toughest time in last recession – 2010/2011 this time

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Perception

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Cut backs in general spending“Do you expect to cut back on your spending in any of the following areas in the next 12 months?”

19%

27%

27%

32%

35%

31%

15%

17%

20%

20%

25%

33%

-26%

-25%

-25%

-25%

-17%

-16%

-9%

-9%

-8%

-6%

-5%

-4%

-60% -40% -20% 0% 20% 40% 60% 80%

Giving to charity

Gas bill

Petrol

Weekly food shopping

Clothing

Eating out

Definitely not Probably not Not sure Yes, probably Yes, definitely

Base: 1,000 adults 16+, Britain.

Source: Charity Awareness Monitor, Nov 08, nfpSynergy

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Do you believe you may be made redundant or become unemployed due to the current economic climate?

15%

50%

25%

10%

0%

20%

40%

60%

80%

100%

Yes No Don't know No answer

Dec-08

Base: 938 respondents those who work

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Respondents’ concerns about young runaways“Thinking about the issues related to child welfare, please state how concerned you are about them”

41%34%

25%

38%

18% 32%

29%

25%

9%

20%35% 14%

0%

20%

40%

60%

80%

100%

Jan 08 Jul 08 Sep 08 Jan 09

Extremely concerned

Very concerned

Fairly concerned

Base: 1,000 adults 16+, Britain.

Source: Charity Awareness Monitor, Jan 09, nfpSynergy 20

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Respondents’ concerns about the health of pets in the UK“Thinking about the issues related to animal welfare/protection, please state how concerned you are about them”

30% 31% 33%

22% 25% 20%

7%

18%

9%

0%

20%

40%

60%

80%

100%

Jan-07 Sep 08 Jan 09

Extremely concerned

Very concerned

Fairly concerned

Base: 1,000 adults 16+, Britain.

Source: Charity Awareness Monitor, Jan 09, nfpSynergy 21

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Respondents’ concerns about prompted issues related to experience of financial difficultiesPlease indicate how concerned you are about the following issues:

Base: 1,000 adults 16+, Britain.

Source: Charity Awareness Monitor, May 08, nfpSynergy

17%

17%

24%

28%

26%

29%

15%

20%

21%

20%

25% 17%

14% 19%

24%

22%

18%

23%

-60% -40% -20% 0% 20% 40% 60% 80%

Being able to make mortgage repayments

The risk of losing your home

The risk of a partner developing a serious health problemwhich would affect their ability to work

Having to turn to a charity for help if you were experiencingfinancial difficulties

The risk of developing a serious health problem whichwould affect your ability to work

Having to ask the state for help if you were experiencingfinancial difficulties

Not at all concerned Not very concerned Fairly concerned Very concerned Extremely concerned

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Advice in a recession

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Advice challenges

• Higher caseload

• Different types of case

• Difficulty balancing short term and long term needs

• Reduced funding – less ability to generate funds

• Government funding cuts

• Stress on key partners

• http://www.thirdsector.co.uk/news/Article/896396/Soaring-demand-leads-smarter-ways-working/

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Advice solutions

• More staff

• More support for existing staff

• National Debtline – received twice as many calls – up to 1,600 calls a day

• Secured extra government funding till 2011 – recruited extra staff

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Advice solutions

• Better use of staff

• Better systems to help staff

• Samaritans – improved phone system – diverting unanswered calls to open lines elsewhere

• More volunteers – helping paid staff / freeing up resources – effective volunteer management stretches resources

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Advice solutions

• Less bureaucracy

• Make it easier to do the job

• Retail Trust – went from paper to screen admin taken away from frontline staff

• Increased links with its sector to secure funding

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Advice solutions

• Training improvements

• Faster/more flexible training

• Citizen’s advice direct in Scotland – Fast track volunteer training

• Coping with high demand on short notice

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Advice solutions

• Rationalise the service – concentrate resources

• Shelter – reduced funding meant restricting hours of advice

• Concentrated resources (8am-6pm) – higher levels of assistance with reduced costs

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Planning for the challenges

• Talk to government – including opposition parties – forewarned is forearmed

• Have a plan – what would you do if funding was cut by 1-10%

• Have a more serious plan – what would you do if funding was cut 10-20%

• Etc. etc.

• Talk to your key partners about their plans

• Talk to others in the same/more extreme circumstances

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Fundraising in a recession

• Tougher

• Not a time to cut back on fundraising!

• Time of greatest need is the worst time to stop asking for help

• Expressed need can help

• Cat’s protection – lost money in Icelandic banks

• Donors made up the lost money

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CAB fundraising

• Grants are the main source of income

• Government matters – elections matters

• Everybody can help

• Pressure your MP/prospective MP – get them on record before the election!

• Emphasise cost savings of GP based advice – it is money saved not money spent

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Summary

• Recessions affect charities

• Tough times ahead

• Innovation and flexibility can combat uncertainty

• Kick up a fuss

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2-6 Tenter Ground, London, E1 7NHTelephone: (020) 7426 8865email: jonathan.baker@nfpsynergy.net