Recession - we're still not out of the woods

At the end of a tough year, Joe Lepper asked charity finance directors to give their predictions for 2010. Cuts in public spending and further reductions in voluntary income are among their forecasts

Recession illustration
Recession illustration

JAMES WYNNE - Director of finance, Welsh National Opera

Among the main challenges will be coping with the uncertainty about income streams, including voluntary donations, public funding and investment returns. This is not helped by the certainty that VAT will return to 17.5 per cent at the end of this year and the fact that interest rates are currently low. This will affect the ability of charities to plan for the medium term. Coming out of the recession, the challenge will be to increase our earned income. However, our endeavours to increase income from the box office and from new and existing fundraising sources will have to be balanced by the need to remain cautious.

MARTIN SMITH - Finance director, The Fire Fighters Charity

The charity sector will be the last to feel the impact of the recession fully. Income is therefore likely to be hit harder in 2010 than it has been in 2009. Suppliers, which are further advanced in their recession cycle, could enter a period of recovery in 2010. This could mean fewer opportunities to secure the low prices that have been on offer. It might also be the case that stock market values will fall again before adopting a steadier rate of growth later in the year. This, along with changes in interest rates and inflation, will affect charities differently, depending on whether they are holding money or want to spend it. The challenge for us will be to continue to use diversified income streams to reduce the impact of the recession and to capitalise on any savings available from suppliers.

GEETHA RABINDRAKUMAR - Director of finance, Scope

Charities will continue to find it difficult to maintain levels of voluntary income during the recession and are likely to see a further increase in demand from people who use their services. They will need to be prepared for a lag in the impact of the credit crunch on the sector, with an inevitable reduction in government spending and a potential fall in the income available from grant-making trusts and foundations. The main challenge for Scope will be to continue to maintain the delivery of high-quality services as local authority budgets become more constrained.

BOB HUMPHREYS - Finance director, Oxfam

After a tough 12 months, the charity sector is looking forward to 2010 with a mixture of hope and trepidation. The hope is that economic recovery will reverse the drop in income suffered by many charities during 2009. But with the UK economy still not out of recession, donations are likely to remain depressed during the next few months and investment is unlikely to recover quickly. As an international NGO, we face an additional challenge: falls in the value of sterling mean the pound buys less in most of the countries where we work than it did a year ago. Of course, 2010 is also election year. Given Oxfam's work with funding agencies such as the Department for International Development, we will be watching carefully for overseas aid announcements from the major parties.

JACKIE TURPIN - Head of finance, Joseph Rowntree Charitable Trust

The year 2010 could be another year of massive upheaval for the sector. Immediately in the wake of the general election, we are likely to see a radical overhaul of public expenditure. Add to this the fragility of the economic recovery and the threat of rising inflation, and many charities will begin to find themselves squeezed. The challenge will be to balance an increasing demand for resources with falling income streams. As a foundation, the Joseph Rowntree Charitable Trust will also need to consider how to maximise the return from its endowment as well as preserving its real value. This is challenging in an environment where we are coming to terms with the credit crunch and the world financial order is changing.

MAJOR ALAN READ - Territorial financial secretary, Salvation Army

Many charities will need to look at the level of their reserves, which might have fallen because regular donors have been unable to maintain their usual level of giving during the recession. It is likely that some charities will need to increase their fundraising efforts to recover the amount of voluntary income they need to meet their expenditure requirements. Charities are also going to have to start gearing up for the changes to pension regulations that are due to happen in 2012.

The challenges faced by the Salvation Army in 2010 will be similar to those faced in any other year, except that our services are likely to be more in demand than ever because of the effects of the recession.

JOHN GRAHAM - Finance director, Royal British Legion

Charities are in a squeeze due to falling income and greater demand on services. Our voluntary income is holding up, but we are facing a huge challenge: to balance the needs of our core beneficiaries who served in the Second World War, who are at the age when their need for help is greatest, with an increasing demand for support from today's service community. This includes soldiers who have been injured in current conflicts and who need help to recuperate and reintegrate into the community. With traditional support under pressure as ageing members become unable to continue their stewardship, we will have to find ways of balancing our commitment to the older generation with finding ways to support the new.

SUSAN COHEN - Finance director, Seashell Trust

Whichever party wins the election, the Chancellor will have no alternative but to impose severe cuts in public spending. The headline inflation rate is at its lowest for many years, and it will be difficult for fee-charging charities to increase the amount they charge. Charities will have no alternative but to restrict their expenditure in order to balance the budget. However, education charities such as ourselves, working in areas of high government priority such as special educational needs, could well see funding sustained or even increased as the Government looks to the third sector to deliver more public services.

LIAM MCCARTHY - Director of finance, St Ann's Hospice

St Ann's Hospice is only just beginning to feel the real effects of the recession across the board. I am expecting the first quarter of 2010 to be very slow in terms of voluntary income, and prospects for the remainder of the year do not look encouraging. The major challenge for the hospice sector will be the predicted cuts in government spending. Like most hospices, St Ann's receives a third of its income from local primary care trusts. The PCTs will have some difficult decisions to make on how they spend their money, with a whole range of conflicting priorities. The chances are that contributions to hospices will not be increased, and there is the possibility of capping or even reductions.

MARIE MAGIMAY - Head of finance, Stonewall

In 2010 I hope we will be moving further out of hard economic times. A key challenge for Stonewall will be to continue to be a vital concern to our supporters. We need to communicate clearly the impact a regular monthly donation has on our work and the fight for equality. If a supporter who gives us £10 a month is reviewing their commitments, our dialogue with them needs to be explicit and compel them to retain their support.

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