At Work: Finance and IT - Strategy - It's tough for those smaller charities

Charles Nall, corporate services director at the Children's Society

The papers recently carried reports that the top 10 charities are growing at 11 per cent a year, while the sector grows at 4 per cent.

According to CAF's Charity Trends 2006, the top 10 charities had a total fundraising income of £1.35bn last year. Eleven per cent of this is nearly £150m; 4 per cent growth would have been £55m. The difference represents a transfer of £95m within the sector from smaller charities.

Looking back, it is clear that in the late 1990s the top 20 charities began to pull away from the rest as their size gave them both economies of scale and brands with pulling power.

Digging into Charity Trends 2006 suggests the top 500 charities increased fundraising income last year and the next 500 lost income. Within the top 500, it was the top 300 that had most to be pleased about. CAF reports that charities ranking between 100 and 200 performed nearly as well as the very largest in 2005 - a well-focused charity with a fundraising income of between £5m and £10m seems to offer an alternative mix of enough resources and a sufficiently distinctive identity to succeed.

The strategic difficulties come with fundraising incomes of between £10m and £50m - their growth has suffered since the late 1990s - and the charities with incomes of less than £5m.

For the £10m-£50m income charities, strategies in this environment are similar to those for a commercial organisation: growth, distinctiveness through innovation and new customers, particularly service provision for government.

For sub-£5m charities, a wide range of models is emerging in addition to these, including forming loose associate groupings, aligning with a much larger charity and embarking on the fascinating road that is social entrepreneurship. However, size is not a barrier to these strategies.

In confronting the unique position of each charity, its leadership has a wealth of options. But the underlying fundraising pressures and income opportunities are here to stay for the foreseeable future. The moral is to ask yourself what particular set of pressures and opportunities is faced by your charity, then answer them with strategic choices while you still have the freedom to choose.

KEY POINTS

- CAF figures show that the top 10 charities are growing faster than the sector as whole

- Charities with fundraising incomes of between £10m and £50m have the most difficulties.

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