Medium-sized charities will struggle to exist with diminishing public funds

Diminishing public funds and emerging social needs will render the business models of medium-sized charities unfit for purpose, a Charity Finance Group conference has been told.

Alex Whinnom, chief executive of Greater Manchester Centre for Voluntary Organisations, told the CFG northern conference: “Lots of people have got used to having a lot of public money but there isn’t going to be public money in the future.”

He said the medium-sized charities’ business model had been particularly dependent on increased government commissioning.

Charities would be faced with “two huge issues” over the course of the current government, he said: survival, and meeting rising demand for services from beneficiaries.

“The business model of medium-sized charities is pretty much not going to work anymore,” he added. “We are going to have to earn much more of our own money and make more use of volunteers if we want to keep going at all.”

Mr Whinnom said the 40 plus food banks used mostly by working families in Greater Manchester were a “shameful” example of escalated poverty.

Medium-sized charities are defined in the National Council for Voluntary Organisations’ UK Civil Society Almanac as those with annual incomes of between £100,000 and £1m.

Charity Commission data shows that in England and Wales there are about 25,000 medium-sized charities with a total income of nearly £7.4bn. The most recent almanac, which covered 2011/12, said 54 per cent of these charities received government money totalling £1.9bn. Public spending has since declined, and further cuts loom.

Andrew O’Brien, head of policy and public affairs at the Charity Finance Group, said some medium-sized charities might be contributing to their own plight by failing to operate full cost recovery when delivering public services.

“There are still a lot of charities subsidising these services because they want to help their beneficiaries,” he said.

He added that medium-sized charities also often do not have the branding, marketing and fundraising capacities of large national charities, nor the close connections to localities that smaller charities might have.

Other issues include spiralling pension liabilities and dwindling reserves.

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Posted in Charity News.