FINANCE: 25 FASTEST GROWING CHARITIES - Most of the fastest-growing charities are small organisations campaigning for local causes and not the household names that people would expect, as Lexie Goddard discovers

LEXIE GODDARD

The Government uses Refugee Action advisers, scattered around 11 cities across the UK, to help refugees find their feet when they first arrive in the country from places such as Somalia, Afghanistan, China, Turkey, Iraq or Pakistan.

The charity offers impartial advice on everything from how to access Home Office support, to where to go for healthcare, legal advice or education.

A large chunk of its time is also spent lobbying the Government. The charity is aiming to influence the contents of the White Paper on people seeking asylum: Secure Borders, Safe Haven. It also deals with emergency evacuations in countries such as Bosnia and Vietnam.

Refugee Action, which spends less than 5 per cent of its income on administration, fundraising and communications, has only had a fundraising and communication department for 18 months. It previously had a very low number of donors, relying instead on its contract with the Home Office. It is now seeking more independent donors.

Refugee Action received £260,000 in donations when The Guardian showcased it, along with Action Aid, as one of its Christmas charities, which gave fundraising manager Jane Mackelworth confidence in future initiatives.

"The Guardian campaign showed us that there is a lot of goodwill from the public towards seekers of asylum, even though we are constantly battling against negative press, particularly in some tabloids,

says Mackelworth.

Its next main objectives are to work for women refugees, those subject to racial harassment,and to produce a pack on asylum seekers for schools.

The vast majority of the charity's 110 full-time staff are operational and 30 per cent are former asylum seekers. This percentage rises among the charity's 60 volunteers, many of whom give their services for free as they are prevented from taking paid jobs.

CASE STUDY DIRECT MARKETING PAYS OFF FOR ST JOHN AMBULANCE

"I'm not remotely surprised that we are now one of the fastest-growing charities as it's exactly three years since I arrived,

jokes Alastair Mulvie, director of fundraising for St John Ambulance. Jokes aside, the charity's 1,157 per cent hike in income over recent years, thanks to a hefty increase in voluntary contributions, is pretty impressive.

Mulvie puts the growth down to a couple of factors, such as a direct mail drive to 300,000 households and an extensive door-to-door fundraising campaign that took place two years ago.

These marketing initiatives significantly increased the charity's donor base of around 8,000 individuals and led to it receiving a lot more major gifts - the biggest one being a donation of £2 million.

Mostly, however, he credits the biggest factor in the charity' growth as a new company-wide strategy, which aimed to rid it of its image as "the people who turn up in uniform at football matches and carry off supporters if a fight breaks out".

The strategy was decided by the trustees, PR and fundraising departments and presented, via a roadshow, to the charity' 45,000 volunteers in 48 counties across the UK.

The strategy focused on, among other things, the need to target a younger audience (50 per cent of its members are in the six to early twenties age range) and get more corporate partners on board.

As a result, Norwich Union gave £150,000 to an initiative in which 25,000 school teachers were trained in first aid, skills they passed on to their pupils.

The strategy also looked at improving the basics: in particular, how to recruit and retain the volunteers who are so crucial to St John Ambulance's work.

Mulvie also praises the work of the eight-strong St John Ambulance public relations department, claiming: "We've tried to be much more proactive in our PR. We now have a very clear vision that's been promoted well.

He adds: "PR drives our fundraising objectives and persuades corporations that we are an organisation worthy of support. It also tells people that we are not this stale, sturdy charity but are doing some revolutionary work."

tabular

Compiling a table of the UK's 25 fastest-growing charities is, as Third Sector discovered, not an easy task. Since the figures did not exist, we asked Caritas Data to re-jig its well-known Dresdner Top 3,000 Charities figures by removing grant-making trusts, and ranking organisations by the increase in their total income over the past five years.

We expected the usual household names to dominate the tables but, aside from a few such as St John Ambulance, small charities led the way.

As Nicholas Brooks, head of the voluntary-sector arm of accountancy practice Kingston Smith, points out, this is all perfectly logical. After all, if a pint-sized charity receives a huge government grant, as in the case of the Ulster Wildlife Trust, which received £1.3 million, or a hefty piece of lottery funding, such as World of Glass (St Helens), it can double in size at a stroke.

However, Brooks is surprised by the lack of famous names and the appearance, instead, of so many charities that campaign for very specific, local causes, such as Weston Hospicecare. This charity raises funds for people living with cancer in the Weston-super-Mare area.

"Of course, it is easier to show dramatic growth if you are smaller but I'm still surprised that there aren't more household names in the table,

he says.

"Aside from the Catholic charities, most of the organisations are campaigning for a very specific cause largely on a community level. It may be that it's easier for them to grow fast by fundraising to locals who can relate to the cause, than for a larger charity such as the NSPCC where every single member of the public is a potential donor."

Then there's the problem of measuring growth. Karl Wilding, head of research at the National Council for Voluntary Organisations (NCVO), believes that income is not the most reliable indicator of a charity's growth. He prefers to measure according to expenditure.

"Apart from the dramatic effect on the growth of small charities of receiving one-off legacies or grants, organisations tend to interpret the accounting standards in slightly different ways,

warns Wilding.

The NCVO 2002 UK Voluntary Sector Almanac analyses both income and expenditure to demonstrate overall growth levels in the charity sector for 2001.

According to the NCVO, the total income of UK general charities in 2001 was £15.6 billion - up by 4.2 per cent on 1999, while their total expenditure was £14.9 billion in 2001 - a rise of £14 billion since two years ago.

While the pint-sized charities have, for one reason or another, made their mark on the league table, Wilding says it is still the large players that are driving overall growth in the sector.

According to Wilding, income is concentrated in larger organisations.

Almost £9 out of every £10 of income is accounted for by those charities with annual incomes of more than £100,000 - even though only one organisation in 10 is of this size.

"The big charities still account for the bulk of growth in the charity sector,

says Wilding. "Those that had an income of more than £10 million grew their income by 78.7 per cent between 1991 and 2001. Between those years, total income grew by 31.7 per cent, so the largest charities have more than doubled their growth in the sector. Growth trends for smaller charities, however, are much flatter."

Growth seems to be presented as a positive factor, but is it always good for charities to grow? Again, it seems to come down to size. Shirley Scott, chief executive of the Charity Finance Directors Group, says that controlled and incremental growth is generally good while sudden growth as a result of a grant can cause a host of problems, especially for the smaller charities.

"The hidden costs of growth for small charities can be very high,

says Scott. "Taking on just one or two more members of staff to handle a grant or legacy can mean having to tackle new employment laws, such as suddenly having to offer staff stakeholder pensions.

"If you have more than five staff you also have to comply with health-and- safety regulations, such as needing to appoint a health-and-safety officer and being liable if someone injures themselves at work."

Scott continues: "A sudden rise in income can also affect a charity's accounting procedures, which differ according to your income."

Charities leaping up to the next income bracket might have to provide an external audit or independent examination, which means paying for help if you don't have the staff to handle the figures. A significant rise in income could also have tax implications.

"So while growth is great for big charities, which already have the infrastructure in place to absorb changes, for small ones, it can be a mixed blessing,

says Scott.

Wilding agrees: "What happens when small charities receive a grant and have to administer a project that is as big as they are?

he asks. "Do they have payroll facilities in place? Do they have an exit strategy for leaving the project? And, when the project is over, what about the extra staff the charity had to hire in order to cope?"

Wilding adds: "The dangers for organisations in the voluntary and private sector are the same. The things that gave you a competitive advantage, such as operating in a niche sector, may disappear when you grow. This is what happened with internet service providers; they provided free access but grew so fast that they couldn't cope with the demand and were forced to offer a much poorer service."

Of course, growth isn't always plain sailing for larger charities. Professor Gordon McVie, joint director-general of what is now Britain's biggest charity, Cancer Research UK (which would top our table, had it not formed so recently), warns of the dangers of losing the personal touch with donors (see Newsmaker, p15).

One possibility is that donors might perceive the love child of Cancer Research Campaign and the Imperial Cancer Research Fund as too big to need their money. McVie recognises this and is tackling the problem by strengthening local-level PR, among other measures.

Another problem for larger charities, as anyone who works in one knows too well, is that decisions can take an age to be approved, as the paperwork shuffles through countless departments.

The message is: however big they get, charities must remain true to their ethos or donors might defect to smaller ones with more grass-roots campaigning.

Ironically, one of the factors limiting charities ability to plan and prepare for growth is a lack of money. Few local-government or charity foundation grants include a core-cost element. This can make it hard to finding money for "luxuries" such as training.

According to the Association of Chief Executives of Voluntary Organisations (ACEVO), growth in the charity sector is often held back because organisations can't afford the staff training that the commercial sector takes for granted.

ACEVO reports stories of chief executives who forgo training courses in order to let their staff take part as they can't justify spending the money on themselves.

"In the charity sector, where you have to account for every penny, it is difficult to justify sending your chief executive away to train,

says Stephen Bubb, chief executive, ACEVO. "But we believe that training is essential and not just for senior management; there should be learning at all levels.

If people don't have the business skills, then how can organisations in the third sector ever be expected to grow and perform?"

CASE STUDY IN KIND DIRECT HELPS OUT WITH DAY-TO-DAY NEEDS

In Kind Direct - a little-known charity with just 16 staff - is proof that you don't need a big name and a heaving fundraising department to boast enviable growth figures.

That said, In Kind is not your typical charity. It is a clearing-house for surplus goods from the retail and corporate sectors, passing everything from toilet rolls to laptops on to charities at discounted prices.

Donors such as Microsoft, Kimberly-Clark and Littlewoods get to boost their corporate social responsibility credentials and shift seasonal items or goods in damaged packaging. Charities pay an average 10 per cent of the original price of the goods.

In Kind charges charities with an income of under £50,000 a year £75 to register, and up to £500 for those that earn £5 million-plus. There is also a handling fee of 5-10 per cent of the value of the goods.

This covers the production of an 80-page monthly catalogue, storage of goods, sorting, repackaging, transport and administration costs.

The registration and handling fees make up 40 per cent of In Kind's income so it needs to find the other 60 per cent from charitable trusts and other cash donors. "The registration fees alone don't cover salaries so we have to fundraise,

says Robin Boles, chief executive of In Kind.

In December 2000, In Kind, which was founded by HRH The Prince of Wales six years ago, received £170,000 in government funding. Boles and her fundraising manager raise money largely by approaching trusts, selling the fact that it can reach charities in particular areas by delivering goods through its transport network. Given that clothing firms such as Littlewoods donate, In Kind also targets homeless charities.

Boles's response to her charity's fast growth is: "It is driven by a need within the sector, especially from small charities, to gain access to a wide range of goods that would otherwise be beyond their reach.

She concludes: "Basically, it's just a really good idea."

CASE STUDY REFUGEE ACTION HARNESSES GOODWILL DESPITE BAD PRESS

This 21-year-old charity makes it to number eight in our "fastest-growing" table thanks largely to its funding from the Home Office. It also has a knack of landing grants from the likes of The Diana Princess of Wales Memorial Fund, and the Esmee Fairbairn Foundation, one of the UK's largest independent grant-making foundations, which has promised funding.

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