The dominant theme of the year ahead is political uncertainty and the potential instability in the markets and public finances that comes with it. The general election in May promises to be the most unpredictable for a generation, with a strong possibility of another coalition government.
Charities are already under threat from shrinking council budgets that will come into force in April. Government grants and contracts are a significant source of the sector’s income, so the next key question will be how much further the new government will rein in public spending in the years ahead.
These political and financial risks are compounded by reputational risks. Charities, especially the big ones, have been under fire from parts of the media and some politicians for high executive pay, some aspects of their campaigning and some of their fundraising methods. Their activities in the election period are now governed by the lobbying act as well as by Charity Commission rules.
All this puts a premium on strong and sure-footed leadership and financial management, as one of our expert contributors points out. The next 12 months are unlikely to be easy for charities, whoever comes to power, and there will no doubt be further closures and amalgamations.
But it could be a time of progress on other fronts. Hopes remain high that new forms of social investment will catch on and benefit small as well as large charities. Advances in information technology are likely to continue to produce new opportunities to run smarter systems and improve links with donors. And if the economy continues to improve, so will the prospects for paying down more quickly the national debt that overshadows all else.
All things considered, 2015 is likely to be a time of excitement rather than security, uncertainty rather than predictability. And which sector has the strongest track record of finding ways to cope with everything that’s thrown at it? Why, the third sector, of course.