The ongoing effects of the cost of living crisis are further stretching resources as demand for charitable services are increasing – are you prepared to manage financial difficulties?
ONGOING STRUGGLES
In April 2024 the Charity Excellence Framework reported that they had been ‘increasingly hearing about charity closures and… redundancies.’
Sadly, this is being felt all too keenly here in Wales where we have seen the following:
- Chwarae Teg closed due to funding issues.
- The Care Collective closed citing increasing costs as one of the reasons for closure.
- Scope announcing the closure of 41 of its charity shops across the UK. Four of these are in Wales in Llandudno, Bangor, Pwllheli and Newport.
STRETCHED TO BREAKING POINT
The current financial crisis has led to a decline in the percentage of people donating to charities. The Charity Commission cited a drop from 62% in 2020 to 49% in 2024, while the number of people requiring charitable services has increased from 3% in 2020 to 9% today.
This, in conjunction with increases in National Insurance payments and a lack of available funding, is leading to closures across the sector and a significant number of mergers.
This impact is being felt across the board, from large charities to grassroots organisations. This can lead to significant pressure on charities and can force them into a situation where they may need to close entirely.
MANAGING FINANCIAL DIFFICULTIES
Managing financial difficulties is not easy, but having the right management systems and processes in place can help you spot them early and help mitigate some of their effects. The Charity Commission guidance document Managing Financial Difficulties – CC12 can help trustees with this process.
FURTHER SUPPORT
If your organisation needs support with this area, then we are here to help. Please contact your local County Voluntary Council or WCVA and we will do our best to guide you through this.