How can charities and Not For Profit make their funds go further?

Going digital

Led by Nottingham Trent and Sheffield Hallam universities, and the National Council for Voluntary Organisations (the NCVO), an ongoing survey found that while 47% of voluntary organisations had seen their income decrease over the past year, 31% saw an income increase. Added to that, while 43% of organisations reduced their range of service, 37% widened their offering.

The charity sector is experiencing a period of unrelenting change, and whether your organisation is large-scale, high-profile or a small high-street shop, the likelihood is your risk-mitigation strategies will follow a similar theme.

Many organisations within the sector have had to drastically reduce their forecasted income for 2021 and cancel or re-invent flagship fundraising events – whether fun runs, auctions or galas - to account for social-distancing requirements. And, according to the latest edition of the COVID Charity Tracker by Pro Bono Economics in partnership with the Charity Finance Group and Chartered Institute of Funding, more than half of the UK’s charities do not expect fundraising investment to reach pre-pandemic levels by the end of 2021.

Interestingly, the difficulties facing medical charities in particular are unimaginable; with these organisations, according to the Institute for Public Policy Research IPPR, likely to lose more than £4billion between now and 2027, due to lack of critical fundraising events.

Despite this though, charities have benefitted from innovation and collaboration during the pandemic – as the NCVO survey suggests. 76% of charities had tried new delivery models, 59% increased their workforce’s digital skills and 42% collaborated with other charities.

Domestic abuse charity, Safer Places, which helps on average 2,800 clients a year, had to halt both fundraising activities and, crucially, it was forced to pause training programmes that bring in valuable funding.

Safer Places made the decision to move its training online and use emergency Government funding to meet the growing demand for its services. But, as Jack Larkham, Research and Policy Analyst at Pro Bono Economics says: “Charities have seen demand for their services rocket during the pandemic… but the elevated demand comes alongside a sharp squeeze on charity resources.”

No matter how well your organisation fared during the pandemic, good financial management processes, supported by the right technology, help you to make the most of every penny and, crucially, keep track of the organisation’s finances.

The Covid-19 pandemic has exacerbated digital transformation plans - we know this from our recent survey of the UK’s financial professionals – but charities still relying on disparate IT systems will find it difficult to create rosters electronically or track fundraising income, capture time and manage care plans for service-users, not forgetting to mention that this could be a huge financial drain on the company’s resources. Systems that lack visibility, will only hamper an organisations ability to easily pivot services and, ultimately, their potential for growth.

Upskilling a workforce

Throughout the pandemic, a large portion of the charity workforce went remote, taking the difficult decision to temporarily close down physical operations. While important face-to-face interaction was removed, this gave organisations the opportunity to upskill staff digitally – a once expensive, but essential operation that would cost charities thousands.

Martin Baker, chief executive and founder of training provider, Charity Learning Consortium, says that when the first lockdown was introduced in March 2020, his organisation recorded a 300% increase in the use of online learning resources.

The technology has helped his team respond to challenges in role responsibilities, organisational structure, remote working and communication – all of which not only save time, but improve overall efficiencies.

Sarah Jeeves, HR officer at homelessness charity, Thames Reach, said “e-learning can also be ‘packaged up’ to meet organisational needs in significantly less time than other methods”, adding “there are almost no further marginal expenses or overheads, unlike other approaches. It’s a particularly good solution for cash-strapped charitable organisations that are looking to save money and spend their donation funds wisely”.

E-learning has transformed the business’ finances, alleviating pressure on the charity’s bottom line by having a positive knock-on effect on its other operations - including its culture and diversity awareness, supervisory management and learning and development training, all of which can now all be delivered online. And, with good financial planning, the money saved can now be reinvested back into the charity’s life-changing work.

Operational efficiency

While online learning increased, saving organisations thousands, many were still running on outdated, legacy systems that were hampering both financial recovery, productivity and growth. One of our customers, the National Autistic Society (NAS), embarked on a digital transformation project to improve operational efficiency and make savings of £350,000 a year.

One of the fundamental, moral issues charities face is to ensure public money is being spent wisely and invested back into user-services – as Sarah Jeeves noted. If operations at that organisation are already inefficient and eating into that investment though, it can create a serious dent in the charity’s finances as well as potentially damaging its reputation.

This is the challenge facing the NAS, as Kelly Evans, director of finance, explains: “We’re spending public money, so it’s essential that the charity is as efficient as possible. This is why we undertook this digital transformation project, but it will also help us in our drive to improve quality and compliance by joining up our systems and making monitoring and reporting simpler.”

Before the digital transformation, the team were relying on time-consuming and manual processes and inaccurate data delivered by disparate IT systems – risking reduced workforce productivity and higher spending.

An integrated system will give charities the opportunity to reduce admin and duplication, as well as giving teams – particularly a remote workforce – a complete view of staffing and costs, which allows senior managers to get the most value from their budgets.

And also, taking into account the wider changes like remote working, without an integrated system where anyone – anywhere - can access essential data and applications for services users, or internal functions like finance, payroll and HR, an organisation can be open to poor decision-making.

With the economic landscape continuing to change at a rapid rate, it’s important charity teams are agile, led by accurate data and able to adapt quickly in order to future-proof their organisation and continue to service their communities.

Encouragingly, income from online giving rose 97% over the past 12-months helping to plug the shortfall and perhaps demonstrating the economy is beginning to stabilise - with many of UK’s charities relying heavily on these good-will donations, this will be a welcome sign of things to come.

Achieving sustainable growth isn’t easy, especially in a sector still recovering major losses, but like any business, charities and Not For Profit organisations benefit from good financial planning. Regardless of the organisation, the ability to deliver efficiently and profitably has never been greater. By improving your processes now, you’ll be able to maintain current service levels even if budgets are stretched but also be in a position to grow as demand increases.

Find out more about our finance and accounting solutions for the charity/not for profit sectors.