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Essential Reading: Income and Volunteering Challenges in the UK Charity Sector 2023: Building Better Series

Income and Volunteering Challenges in the UK Charity Sector: A 2023 Guide

Challenges Facing Not For Profit Organisations | Challenges Facing Charities in 2023 | Third Sector Challenges

In a world increasingly characterised by economic uncertainty, the charity sector plays an integral role in providing support and relief to various segments of society. However, charities in the UK today face significant challenges, notably in terms of income generation and volunteer recruitment and retention.
This article aims to shed light on these challenges, their implications, and potential strategies for overcoming them.

Income Challenges in the Charity Sector

In the past few years, charities have grappled with various economic hurdles affecting income generation. Two main areas of concern have emerged: a decrease in public funding and increasing competition for donations.

  1. Reduction in Public Funding:
    Public funding has traditionally been a critical source of income for charities. However, recent years have witnessed a gradual reduction in this funding due to government austerity measures and budget cuts. This situation has led to a significant resource gap for many charities
  2. Increasing Competition for Donations:
    With over 168,850 charities in the UK, competition for donations has become fierce. Economic downturns and the COVID-19 pandemic’s financial aftermath have also made people more cautious about discretionary spending, affecting charities’ donation income.

The charity sector is facing a number of challenges, including declining income which by end of 2023/2024 is expected to fall in real-terms by £2.2bn according to think-tank, Pro Bono Economics. This is due to a number of factors, including:

  • The economic downturn:
    The economic downturn has led to a decline in donations and government funding. According to Charities Aid Foundation UK Giving Report 2023, the level of participation in charitable activities in 2022 was 84%. However, participation levels have not returned to pre-pandemic levels of 88% in 2019.

  • The rise of online giving:
    The rise of online giving has made it easier for people to donate to charities, but it has also led to a decline in donations to traditional charities. A study by the Charities Aid Foundation found that online giving accounted for 26% of all charitable donations in the UK in 2022.

  • The increasing cost of living:
    The increasing cost of living has made it harder for people to donate to charities. According to Charities Aid Foundation, across 2022, more than two thirds of people indicated they would need to cut spending to manage their bills. This includes 17% who said they would likely cut their charitable donations.

The Volunteer Dilemma: Recruitment and Retention

Alongside income challenges, charities also face issues concerning volunteer management. Volunteers are the backbone of many charities, and challenges in recruiting and retaining them can severely impact a charity’s operations.

Recruitment:
Charities often struggle to find volunteers with the required skills or time commitment. The recruitment process can be lengthy and expensive, adding to the operational strain on charities.

According to the Charity Aid Foundation UK Giving Report 2023. There has been a sustained reduction in volunteering levels. In 2022, an average of 7% reported volunteering for a charity. Whereas, pre-pandemic, this figure in 2019 was 9%.

The Community Life Survey 2021-2022 by the Department for Culture, Media and Support estimates that there are 4 million fewer people participating in regular formal volunteering than in 2019/20.

Retention:
Keeping volunteers engaged and motivated is equally challenging. Lack of career progression, inadequate support, or recognition can lead to volunteer fatigue, resulting in high turnover rates.

  1. The increasing demands on people’s time:
    People are increasingly busy with work, family, and other commitments, leaving less time to volunteer. According to a study by the National Council for Voluntary Organisations, the average person in the UK spends 16 hours per week on non-work activities.

  2. The lack of recognition for volunteering:
    Volunteering is often seen as unpaid work, which makes it less attractive to potential volunteers. One study showed that only 28% of people believe volunteering is valued by society.

Strategies for Overcoming These Challenges

Opportunities for charities

While these challenges are significant, they are not insurmountable. Here are some potential strategies for charities to consider:

Income Diversification:
Charities should seek to diversify their income sources to reduce vulnerability to fluctuations in any single income stream. This strategy might involve exploring corporate partnerships, earned income, grants, individual giving, and fundraising events. The advent of online crowdfunding campaigns can also help expand income sources.

Effective Communication and Transparency:
To stand out amidst the competition, charities must effectively communicate their mission, impact, and needs. A compelling narrative can capture potential donors’ attention and persuade them to contribute. Regular updates about fund usage can foster trust, encouraging repeat donations and volunteer commitment.

Strategic Volunteer Management:
It’s vital to have a comprehensive volunteer management strategy. This involves defining clear roles, ensuring adequate training is provided, and recognizing volunteers’ contributions regularly. By offering flexible volunteering opportunities, charities can also attract individuals who cannot make long-term commitments to their organisation.

You should also make it as easy as possible for people to volunteer and show them your appreciation. In order to do this, you might want to consider sending them thank-you notes, holding an event to thank them, or even offering a small reward, such as a gift card, as a way to show that they are valued by your organisation.

Embracing Digitalisation:
Digital platforms can be invaluable for income generation and volunteer recruitment. Charities can leverage online donation platforms, social media, and digital marketing techniques to broaden their reach, attract donations, and recruit volunteers.

Partnerships and Collaborations:
Collaborating with other charities can reduce competition, improve service delivery, and reduce costs. Shared fundraising events or joint marketing campaigns can mutually benefit participating charities.

Harnessing the Power of Data:
Charities can use data to drive decision-making, assess the effectiveness of their strategies, and tailor their fundraising appeals. Effective use of data can enhance donor engagement, improve volunteer management, and optimise resources.

Addressing the Challenges Head-On

Charities can counter the challenges of declining income and volunteer shortage by diversifying income streams, reducing costs, marketing their services effectively, and empowering volunteers through training and support. Furthermore, adopting a creative approach to fundraising and making it easy and rewarding for people to volunteer can significantly mitigate these challenges.

The UK charity sector faces considerable trials, but they also represent opportunities for adaptation, innovation, and growth. By understanding these challenges and implementing effective strategies, charities can ensure their resilience and continue to make a positive impact on society.

At AccountsPro, we understand the unique financial and operational challenges and complexities that charities face, which is why we partner with them to provide solutions that optimise efficiency and resources for our client base. Our dedicated team is committed to providing expert advice and guidance to charities, foundations and non-profit organisations.

One of the ways we help clients optimise their income is through providing outsourced finance solutions. We save our clients up to 80% of their overhead costs by outsourcing their finance department to us. If you would like to discuss this option, please contact us at: hello@accountspro.co.uk or visit this page to find out more about our financial outsourcing services.

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    Budgeting Funding

    Budget pledge of £100mn for charities & community organisations

    Budget pledge of £100mn for charities & community organisations

    The UK government has recently announced a pledge of £100 million in funding for charities and community organizations. The funding will be allocated through the Community Wealth Fund, a charitable organization dedicated to providing long-term support for local communities.

    This funding announcement comes at a crucial time for charities and community organizations, many of which have struggled to maintain their services and support for vulnerable individuals throughout the COVID-19 pandemic. The pandemic has placed significant financial strains on these organizations, as many have experienced a decline in donations and fundraising efforts.

    The Community Wealth Fund, established in 2018, aims to support long-term, sustainable projects that address the underlying causes of social and economic inequalities in communities across the UK. The organization’s focus on long-term solutions aligns with the government’s goal to create a more equitable and sustainable society.

    The £100 million pledge will provide much-needed financial support for charities and community organizations, allowing them to continue their vital work. Additionally, the funding will support innovative projects that address systemic issues, such as poverty, housing, and healthcare.

    The Community Wealth Fund has outlined its priorities for the allocation of the funding, including projects that address social isolation and loneliness, provide support for mental health and wellbeing, and tackle food poverty. The organization is also interested in projects that promote social cohesion and address the digital divide.

    This pledge highlights the government’s commitment to supporting charities and community organizations, recognizing their essential role in creating a fairer and more equitable society. With the Community Wealth Fund’s focus on long-term solutions, the £100 million funding pledge will have a lasting impact on communities across the UK.

    This announcement serves as a reminder of the importance of philanthropy and charitable giving, particularly during times of crisis. As we continue to navigate the challenges posed by the COVID-19 pandemic, it is crucial that we support those in need and work towards creating a more sustainable and equitable society.

    Sources:

    https://communitywealthfund.org/

    https://www.gov.uk/government/news/government-backs-100-million-community-wealth-fund-to-help-level-up-communities

    https://www.theguardian.com/society/2023/mar/15/government-to-back-100m-fund-for-community-projects

    https://www.bbc.com/news/uk-60702522

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      Advices Business Funding

      Cheat-sheet The Business Startup Checklist – Part 1.

      The Business Startup Checklist:- Things you need to start a business
      When launching a new venture it’s important to get the best advice and guidance to help you through the process from evaluating yourself and creating a business plan to funding and building your team.

      Wouldn’t it be great if you could have a cheat-sheet (or a startup checklist) to guide you through the process with key tasks and activities to ensure your start-up business is a success.

      There is not an ultimate guidebook, but AccountsPro have put together a business startup checklist which will guide you through the things you need to know from pre-launch to post-launch.

      Startup Checklist (This is Part 1. of the Startup Checklist. There will be a Part 2. to follow)

      Evaluate yourself
      This is a vital step in starting up a small business. Consider your knowledge, confidence and experience and identify areas where you night need support. Commit yourself to starting a business and ask yourself:

      • What skills do I have?
      • What am I passionate about?
      • What is my area of expertise?
      • Am I committed to starting a business?

      Once you have satisfied yourself that starting up a business is for you consider:

      • How much can you afford to invest?
      • Do you need to raise extra funding or capital?

      Create your idea
      Validate your idea and ensure it solves a real-life problem. Consider what is different about your idea.

      • How will it stand out from the crowd?
      • Why will people want to use it?
      • Do you know about this business?
      • If not, what do you need to learn?

      Market Research
      This is critical for any small start-up business. Spending time on market research is the best way of knowing and understanding your customers. Comprehensive market research is the best way to evaluate the strength of you new business and vitally important if you want to raise capital.

      Write a business plan
      Formalise your ideas on paper. Planning helps clean up ideas, achieve full potential, find the right team to support the business and secure funding.

      Your business plan will give a clear picture of your small business startup and is more likely to attract investors and funding.

      Choose a business structure
      Choosing the right business structure is important, with each structure having different tax issues to consider as well as different liability considerations.

      The differences between the main structures are:

      • Sole trader – exclusive ownership of a business, entitlement to all profits, but also liable for losses.
      • Partnership – similar to the option above, but profit and liability split between all founders.
      • Limited company – a private company where your liability is only tied to the amount you have invested.
      • Limited liability partnership – as above, but with multiple partners tied to the amount they have invested.

      Assess your finances
      Once you have evaluated your plan you will have a clear idea of what sort of capital you will need to start. The finance you will need will depend entirely on the business you are launching. Break it down into categories:

      • Essential investment
      • Helpful investment
      • Nice to have investment

      You will also need to consider:

      • Finance options including bank or startup loans and investment or funding. You may consider applying for funding through the UK government Seed Investment Scheme (SEIS). For further information see AccountsPro article A Guide to SEIS for Startups: How to Make Your Startup Investible. Crowfunding and venture capital funding are other options open to small business startups.
      • Finance tools to ensure you are able to effectively track and manage your money and meet your financial obligations as a small startup business in respect of accounting and bookkeeping and tax advice and obligations. There are a number of accounting tools that are available for startups. AccountsPro can assist with our Cloud Automation Services which can automate a number of financial processes within the business.

      Choose a business name and brand for your business
      This will need to be thought about carefully for legal and marketing purposes. Check that your business name is available by doing a search with Companies House.

      Register a website
      Once you have decided on a business name, you should consider registering your website address (domain name). It is important in today’s world that you have a digital presence, and we can help you to source the talent to design and build your website for you.

      Making your first hire
      Many startup founders have the mindset that they can do everything themselves, but this is rarely the case. Startups need talent at different stages of growth, and it is often more cost effective to hire interim talent and leaders that can specialise in building teams around their particular function.

      AccountsPro specialise in helping your hire permanent or interim talent but, hiring is not always the option, and we can advise and provide guidance on more cost-effective alternatives.

      Sourcing an Accountant and financial services
      Ensuring you have a good accountant will help to overcome initial hurdles. Keeping financial records, complying with tax obligations, VAT and PAYE rules are all musts.

      Our Accounting Services include monthly and all-inclusive packages from bookkeeping to year-end accounts and PAYE.

      AccountsPro are listed as a Tech SME UK Accountant Recommendation for 2021 and our team can give you guidance and advice on financial modelling for your small business startup including company incorporation, preparing startups for investment through to flexible FD support.

      Our Startup Advisory Service provides guidance which is based on our teams’ experiences of both working ‘with’ startups and ‘inside’ startups. Our team have the experience as employees and founders, and we are always on hand to give you the best possible guidance.

      For a trusted finance partner that will support and guide your business, contact us for a free consultation using our contact form. Alternatively, you can call us on 0207 193 8798 or email us at: hello@accountspro.co.uk

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        Funding

        SME Brexit Support Fund – How Do I Apply?

        Apply For SME Brexit Support Fund

        Many businesses will be affected by post – Brexit and the changes in the trading environment whereby the UK will not automatically be part of any of any trade deal the EU enters into with another country.

        The government has announced that they will make available an additional £20m through the Brexit Support Fund to help businesses adjust and adapt to the changes in trade rules with the EU.  Businesses can apply for up to £2,000 to get advice and support for import and export through two different types of grants:

        • Grant for Training – this must be training related to how to complete custom declarations, how to manage customs processes and use customs software & specific import & export related topics such as VAT, excise. The training must be delivered externally either in person or virtually and can be provided by any suitably trained qualified trainer.
        • Grant for Professional Advice – this must be directly related to consultancy advice to ensure your business can meet its HMRC obligations in respect of customs, excise, VAT relating to import/export etc.

        Your business must also complete import or export declarations internally for its own goods or use someone else to complete the declarations as long as the business has the capability to effectively import and export.

        The grants are being administered for HMRC by PricewaterhouseCoopers (PwC). To register for a grant click here. Applications for the grants must be received by 30th June 2021 and may close earlier if the allocated funding expires before this date.

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