Analysis: 2013 - 'another rocky year for charities'

From fundraising to management, six voluntary sector experts give their predictions for the coming twelve months

The year ahead
The year ahead

What does 2013 hold for the sector? Some of the challenges are already in the diary - including revised pension requirements, online Gift Aid claims and new Disclosure and Barring checks. Six voluntary sector experts assess the likely impact of these and other factors that charities will have deal with this year, such as pressure for pay rises and universal regulation of fundraising, the need to mark out a distinctive identity and opportunities to transform service provision.

FUNDRAISING

Adrian Sargeant  - "Let's have universal FRSB membership"

Adrian Sargeant is professor of marketing and fundraising at Plymouth Business SchoolThis should be the year when membership of the Fundraising Standards Board becomes compulsory. It makes no sense that the arrangements for handling complaints about nearly all other forms of marketing communication rest with a body we are compelled to respect - the Advertising Standards Authority - while organisations involved in fundraising must opt in to be regulated. Little wonder the public hasn't a clue how it works.

The Institute of Fundraising and others should campaign for blanket inclusion and for the FRSB to be properly funded so that it can play both proactive and reactive roles in the same way as the ASA. Slicing a small percentage off Gift Aid would be the fairest way of funding this.

On other fronts, the increasing costs of donor acquisition and a gently declining donor pool will make 2013 the year we focus on retention - encouraging supporters to be more loyal.

A combination of factors will finally make this possible. Software suppliers will stop seeing themselves as players in the database industry and realise they're actually in the relationship industry. As they do so, they will merge their technical capabilities with educational resources that can help even small non-profits to get better at building relationships.

We are also going to see the Institute of Fundraising's Advanced Diploma in Fundraising run for the first time in the autumn. The diploma focuses on managing the fundraising function, but the advanced diploma will focus on how to create the institutional and societal environment in which giving can flourish.

There is now a better understanding of the role of donor identity. That trend, too, will continue in 2013. Most charities know why their donors support them, but few are reflecting on what gives rise to that motivation. What are people saying about themselves when they give? Understand that and you can enrich supporter relationships by increasing the 'warm glow' of giving.

Adrian Sargeant is professor of marketing and fundraising at Plymouth Business School


FINANCE

Caron Bradshaw - "Income will come under pressure"

Caron Bradshaw is chief executive of the Charity Finance GroupFor many charities, this year will be another rocky one. Although it's predicted that inflation will fall to 2 per cent by mid-year, rising costs will come when most income streams - donations, investments, government funding - are under increasing pressure. At the same time, below-inflation increases in welfare benefits, coupled with councils protecting only those in critical need of support, mean that demand for charity services will increase.

April brings the introduction by HM Revenue & Customs of what it calls Real Time Information: employers will be legally required to report PAYE in real time, so system changes and data cleaning will be vital.

Auto-enrolment in pensions will continue and, by the end of the year, it will have been introduced for charities with more than 500 employees.

Online Gift Aid claims will be introduced in April, bringing a significant upheaval in systems and additional costs for many larger charities. But the Gift Aid Small Donations Scheme will allow small charities to claim up to an additional £1,250 a year of Gift Aid on small donations with no paper trail.

The new Statement of Recommended Practice will finally be out for consultation in the summer. It's crucial that charities actively engage with this, particularly when the public are asking more challenging questions of charities. My optimism is subdued about social investment - I expect we'll hear a lot more from Big Society Capital and intermediaries. It's a fascinating area, but is by no means the panacea for the whole sector that it's often made out to be. Pension worries will continue to preoccupy boards and hamper merger and restructure plans, particularly in charities caught in multi-employer pension schemes.

Finally, I foresee welcome progress on red tape from the Law Commission's review of charity law, starting in March. But this might be overshadowed by creeping regulation from overseas, most notably the US Foreign Account Tax Compliance Act and steps towards EU tax harmonisation.

Caron Bradshaw is chief executive of the Charity Finance Group


LAW AND GOVERNANCE

Rosie Chapman - "More emphasis on self-regulation"

Rosie Chapman is an independent consultant and former director of policy at the Charity CommissionOn the legal front, the Charity Commission will continue to grapple with public benefit cases, such as the Plymouth Brethren's appeal to the charity tribunal over the commission's refusal to give it charitable status. Expect also to see William Shawcross, the commission's new chair, continuing to make strong statements about charity independence and to court controversy among charities that regard themselves as social businesses.

From day to day the commission will focus on fraud, serious abuse and counter-terrorism, and on registering new charitable incorporated organisations. The jury's out on whether CIOs will catch on: the charitable company model is familiar to funders and lenders, so dual regulation is no longer the burden it once was, and it is likely to remain the most popular structure.

Meanwhile, the vast majority of charities will simply submit their annual returns to the commission and be left alone. There will be increasing emphasis on self or voluntary regulation - for example, the Professional Standards Authority for Health and Social Care's new accreditation scheme for health charities will go live in 2013.

The personalisation legislation that brings in direct payments to service users has huge implications for charities and there will be many gainers and losers. Implementing the provisions of the Public Services (Social Value Act) 2012 will also bring opportunities and challenges in commissioning - not least the temptation for charities to go 'off-mission' in pursuing contracts.

Some charities' governance structures will need to catch up with the dramatic changes in the funding environment. For example, a priority will be trustee skills audits to ensure the board has the right financial and new business skills.

Lastly, I anticipate that many charities will continue to approach the Charity Commission for permission to pay trustees, and the numbers doing so will grow - whatever ministers say.

Rosie Chapman is an independent consultant and former director of policy at the Charity Commission


POLICY AND POLITICS

Ralph Michell - "There's scope to do things differently"

Ralph Michell is director of policy at AcevoThe coming year will be a tough one. The further we go into the current spending review period, the closer to the bone the cuts will bite. The public sector agencies that many voluntary organisations work with have got used to making unpleasant decisions - but those decisions will only get harder. Some services that councils were clinging on to will be stopped. Other services will have to take big cuts. And although people disagree about what's happening to individual giving, there aren't many arguing that it's going up.

Meanwhile, the shape of social need will continue to change. The economy is likely to continue to bump along the bottom, and the combination of benefit cuts coming into force and the implementation of the universal credit will have a massive impact. The explosion in the number of food banks that were set up last year hit the national news, but all kinds of other social issues that voluntary organisations deal with are also changing in scale and shape.

But there will be opportunities too. There is scope to do things differently. It might be patchy, but some commissioners will want to transform services rather than salami-slice them - or salami-halve them, as might now be the case. And in some areas, 2013 heralds significant structural reform, such as the introduction of payment-by-results contracts in offender rehabilitation, bringing challenges but also opportunities. We will get the chance to influence politicians as the cold-war campaign for the 2015 General Election intensifies. And it is worth remembering that, amid the gloom, some organisations are thriving - doing more, not less, for their beneficiaries. Some are raising more from fundraising, some are experimenting with social investment. The sector continues to innovate.

All of this puts a premium on good leadership. The events of last year will have put pressure on individual chief executives in the sector: I suspect the same will be true this year. The use of Acevo's support services for leaders under pressure has been on an upward trajectory for the past two years. Fortunately, the sector is full of great leaders.

Ralph Michell is director of policy at Acevo


MANAGEMENT AND HR

Valerie Morton - "A double whammy coming on staff"

This spring will see the introduction of the new Disclosure and Barring Service check, which will replace the existing, notorious Criminal Records Bureau check. With many charities heavily reliant on volunteers, the knowledge that this DBS is to be portable - allowing a charity to carry out an online check to see if an individual's circumstances have changed - comes as a great relief. Many volunteers, including trustees, are involved in a number of different charities. The existing system has placed an unwanted administrative burden on charities and has been a frustrating piece of bureaucracy at the start of a relationship - hardly the best way to create a good impression. Although the DBS will require charities to set up new processes, it will at long last remove that dreary competition you end up playing at parties of 'who has the most CRB certificates?'

My hunch for the coming year is that trustees and managers will face worrying difficulties in balancing the books. This will arise from the combination of two factors: first, the new automatic enrolment of staff into pension schemes - with the obligation on employers to make a contribution of 1 per cent, rising over the years to 3 per cent; and, second, the likely fulfilment of pent-up demand for pay rises after so many years of restraint or pay freezes in times of austerity. Charities will feel that they need to reward staff for their commitment over these difficult years and employees will not be prepared to accept yet another year of stagnation.

Staff costs, of course, are a significant percentage of many charities' budgets. The double whammy is that pay rises will not be enough to improve morale and charities will experience an unprecedented level of staff turnover. The charities that gain will be those that offer an inspiring place to work, where new recruits can feel comfortable committing several years to the next stage of their careers. The losers will be those organisations that fall into the trap of thinking that pay increases alone will improve morale.

Valerie Morton is a trainer, fundraiser and consultant


COMMUNICATIONS

Max du Bois - "Be ruthless in defining goals"

Max du Bois is executive director of Spencer du Bois brand consultancyIn terms of techniques, trends and comms issues, 2013 won't bring anything new and there will be no big surprises. The real concerns are not things like the move from desk-based connectivity to the more 'intermate', device-based communications: these things are happening already, and they are distracting us from the perfect storm of recession, government cuts, dwindling reserves, an over-crowded sector and the lack of differentiation that will hit in the coming year.

If a recent survey by the Charities Aid Foundation is right, one in six charities is concerned about facing a cataclysmic financial situation that will make it necessary for it to merge or go out of business. In 2013 only those charities that differentiate themselves from others will survive and thrive. So charities have to be brutally honest about what purpose they serve and why people should support them rather than one of the many other options in each sub-sector.

Communications in 2013 will need to return to what it should always have been - a way of reaching out to people and galvanising them to act in a way that will help us achieve our goals. We need to be ruthless about defining what this goal is and to whom we need to talk - no more trying to be everything to everybody and, as a result, being nothing much to anybody. No more going for everyone to get no one.

Thomas Edison, inventor of the light bulb and founder of the global corporation General Electric, famously said: "We have no money, therefore we must think." In 2013 we must be bold, inventive and ruthlessly thoughtful.

We must stop merely thinking that we have to do more with less and find out how to actually do this. It ranges from sweeping away the internal silos that all too often get in the way of being innovative and effective, to being single-minded in relentlessly understanding how to engage our audiences and to sticking no longer to the safe - and increasingly ineffective - ways of doing things.

In the words of Yoda: "Do or do not, there is no try."

Max du Bois is executive director of Spencer du Bois brand consultancy


- See what Rob Jackson believes will happen to volunteering during the year ahead

- Read what Pete Alcock says 2013 has in store for the sector

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