Goodbye stellar returns, hello to beans on toast

A solemn chief executive is told by her nervous bank manager that she can't have further funds. Hurried talks take place with a rival about a shotgun merger. She draws up a long list of immediate redundancies. All new projects are on ice to retain cash. Insolvency seems to beckon.

This is not Canary Wharf in 2008, but a third sector organisation in the UK in late 2010 - possibly yours. If you think this sounds fanciful, think again, because your charity, like most, was built up during the good times. Donations flowed in from comfortable citizens; property left in legacies produced bumper cash harvests; investments yielded stellar returns, taking grant income to a new high; and resurgent public spending brought in contracts a-plenty as Labour spent, spent, spent.

That was then. By 2010 the nation has spent two years hunkering down to a beans-on-toast economy and unemployment has hit two million. People have stopped their direct debits. 'Chuggers' (thank god) are a thing of the past. Hedge funds no longer fete charismatic charity leaders, and stagnant investments have left foundations with little to give away. The Treasury's cupboard is bare, so contract income is down. Local authorities disinvest to save public sector jobs and David Cameron's bright-eyed new Conservative government wants us to grow - but, if the sector is realistic, we're a priority only for the second term.

Our benighted chief executive is not the only one in trouble - there are thousands like her. So what should she have done differently? First, she should have spent 2009/10 making her charity efficient. In the nice years, all organisations get a bit overweight. Things that should be sorted get left. Money gets thrown at things (and people) that it shouldn't be thrown at.

Second, she should have been splitting her overheads with other charities, putting aside the tribal stuff and creating sensible alliances - better to huddle together for warmth than freeze to death alone. Finally, she should have sharpened her business strategy by improving the offer, innovating and getting ahead of the game: in recessions, only the better organisations survive.

So what's your chief executive doing in 2008? If he or she is sitting tight and waiting for the weather to change, be very worried - not only about your job, but also the survival of your organisation.

Yes, I'm afraid it really is that bad.

Craig Dearden-Phillips is chief executive of Speaking Up

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