Charities battle for ever-scarcer funds in more demanding world, survey finds
Sourcing new funding streams and getting full cost recovery from providing services are the two biggest funding challenges facing the UK's charities, as government funds continue to fall and competition intensifies.
Social impact measurement is also becoming increasingly important.
These are findings from the latest biennial Funding Challenge survey from accountants Baker Tilly, published today.
The survey, which had 140 respondents from charities of all sizes and sectors across the UK, revealed that almost half of the charities experienced a drop in government funding over the past year. Respondents also reported that increased competition for funds was the biggest change they had experienced in relation to funding in the last 12 months.
Almost two-thirds (63%) said sourcing new funding streams was a key funding challenge, and 55% said full cost recovery of service provision was a problem.
“As well as government funding cuts, charities face more onerous tender processes, ever-greater demands to demonstrate impact and value added, a move to a payment by results culture, and continued competition from the private sector on service delivery,” said the report.
The survey also found a sharper focus on social impact – almost half of respondents cite increased demand for social impact measurement from funders. Of these, 53% state the demand is primarily from government, 39% from private funders and 22% from partners.
In particular, the report shows there is now an overt focus on outcomes in public sector commissioning, according to 64% of respondents. This demonstrates that “measuring social impact is not just nice to have but an increasingly important strategic tool”, it says.
One of the report's authors, Karen Spears, head of Baker Tilly's national charities and not for profit restructuring and recovery group, said: "While the UK economy is showing early signs of growth, our survey suggests that the recovery cycle for some charities is yet to begin. The sector remains resilient, but trying to secure income in a period of prolonged austerity while having to do more remains a difficult balancing act."
View the report here
