Keeping small charities sustainable

Keeping small charities sustainable

It's Day 3 of Small Charities Week which means it's 'Policy Day'!

Steve Smith, our Partnerships and Policy Officer, writes about how we keep small charities sustainable:

The vast majority of charities in the UK are small voluntary organisations with an annual income of £1m or more accounting for 80% of the sector’s total income, yet make up only 3% of the total number of charities. In turn, organisations with an income of £100,000 or less, make up 82% of the sector in terms of the number of charities, but account for less than 5% of the total income. A similar pattern is seen with expenditure.

Around half of all small charities have an income between £1 and £10,000. Overall income for these organisations totals £1.9bn and spending at £2.2bn. This may be partly because they are drawing on assets in addition to income, but may also indicate they are running a deficit. 

London alone accounts for over 24,000 organisations with an income of nearly £19 billion and expenditure of £18.5 billion in 2014/15. We know that the vast majority of Southwark charities have an income of less than £100,000.

Increased demand for the services and support that small local charities offer places additional workloads on already busy staff and volunteers. At the same time small charities find it more difficult to secure funding to meet that demand. Many Councils have reduced or no longer offer grants. The result is that more small charities are having to diversify their income streams and switch from statutory funding to chase funding from other funders and donors or generate earned income.

The commissioning and procurement of local services has a significant role to play in the prosperity of small charities. In recent years there has been a growth in the commissioning of larger contracts which are often won by big national organisations. However, the added social value that small charities can bring to help shape and deliver public services across the country has not escaped the Government. Last December three new measures were announced as part of a programme to help tackle the challenges of getting small charities into the public service supply chain. Read them here

One proposed measure is to develop a place based Public Service Incubator scheme that helps small charities get commissioned. The Incubators will enable collaboration with commissioners and develop services that improve the lives of those in need. It will record the barriers that small charities encounter in this process and create guides and tools to overcome them.

The other is to explore the development of a commissioning quality mark that will set out a best practice standard when working with small charities. Commissioners will be assessed against set criteria and use the mark to demonstrate their commitment to small charity-friendly commissioning. 

More small charity partnerships could be the way for a stronger and more sustainable sector. The benefits for doing so could prove vital to the continued successful delivery of services and improve impact to beneficiaries. There is, however, an understandable reluctance to want to merge with “competitors” and to dilute messages and relinquish overall control. That said, not every partnership is a good one. It’s important that care is taken in selecting a partner so that the fit is right for all parties. Management structures, governance, resources and the apportionment of risk are key to making things work. There needs to be a clear shared vision.

Some small charities are creating partnerships through the necessity of sharing resources to survive. In other cases, for example, when issuing new funding tenders, commissioners are advising that bidding organisations seek to build collaborative approach with others, so their activities, programmes, projects or activities are not duplicating existing services but are complimentary instead.

Partnerships can often bring more than the sum of the parts of each organisation, and whilst it is not a silver bullet to cure all of the sectors issues, is a way to help support and sustain small charities that is yet to be fully explored.

Provider Led Groups (PLGs)

Community Southwark have created Provider Led Groups/ Networks. These are themed groups populated by civil society with the aim of creating a powerful network to ensure local public sector commissioning intentions, policies and priorities are the right ones.

These PLGs are designed to encourage peer support between communities and organisations of different sizes and stages of development. Find out more here.

Our for further information on any of the PLGs or networks or how to get involved please contact Steve at: steve@communitysouthwark.org or call 0207 358 7017.

Southwark Giving

Southwark Giving is a placed-based giving scheme which is being set up to find new ways to address hidden, unmet and emerging local community needs. Find out more about Southwark Giving on the Southwark Giving website here.