Charities are currently going through one of the severe funding cuts and uncertain environment. The most important aspect is the uncertainty and not having full picture about what is going on the charity funding in the UK, particularly from the statutory sources. The Third Sector magazines’ recent report suggested that Croydon council has slashed around two thirds of it funding to the charities and voluntary organisations. It is very amusing when govt’s “big society” idea is somehow expecting charities to do more and local council are slashing the funding to charities.
In this funding cut environment, charities are already starting to take steps to cope with the reduced finding in coming days. Perhaps in a way, the current situation has also been forcing charities to do the job differently and indeed more efficiently.
In any financial management process, reducing cost and efficiency savings are equally critical like getting more funds. It is time to focus on a number of areas, those can generate savings and reduce charities cost without compromising the services they buy? We are involved with a number of charities and using the range of ways to maximise cost reduction for them. Charity trustees and all relevant stakeholder are aware that every penny saving has a direct impact on the availability of funds for its core mission.
If your charity is not already embarking on cost reduction then why not start looking at the following;
- Review the existing cost bases (office rent, telephone, fundraising costs, etc) and prioratise time in order to the impact of relevant cost base if the cost reduction could be achieved.
- Revisit your internal business processes e.g. how things are done. You will be surprised that a lot of the activities are built up historically, and you can easily remove the waste.
- Find out where to you get best value services – is it inside the charity or from someone else outside. Why not outsource (finance, HR and IT etc) or share the back office services with someone in similar situation.
- Look at whether you are financially viable based on the funding sources and the combination of your funding. Merger could be a way for you to survive you mission.
You are not alone in this situation, therefore share with others and make the best out of the crisis. Specilaist like Charity Accounting Services with their indepth charity sector knowledge could help you. However, acting in time is crucial for your charitiy’s survival.