What does charity finance have in store for 2020?
Like most sectors across the UK, the charity sector is going to face a variety of challenges in 2020. At this moment in time a large majority of the problems are arising on the financial side. However, it’s not just a finance problem as many believe that charities need to see large scale changes in the rules surrounding benefits, housing, social care, employment, and taxation.
Many different types of funding for charities have been hit in the last few years. Partly down to fundraising which has seen a slight decline. However, another problem has been down to the local authorities that have been hit by budget cuts which have been passed onto charities. This is a difficult position for charities who may be struggling to adequately fund themselves with sustainable revenue streams.
A lot of the recent news has suggested that charities do not spend enough money ‘on the cause’. In fact, the opposite is often true. Many charity financial disasters have happened because they seem to invest much of their money into the front line and don’t invest enough in the back-line such as management and systems. Charities need to strike a balance to ensure they fully service their charitable remit whilst also maintaining a stable and sustainable base.
This has become more complicated since the announcement of the National Living Wage increase due in April. Recent research suggests at the moment the charity sector pays 25% of its staff less than the Real Living Wage. Recruiting and retaining staff is also a real problem for the charity sector as many charities struggle to invest in training. They often need to recruit from outside the sector to get the skilled workers they need which brings additional cost.
The charity sector could be facing a difficult year ahead, with the National Living Wage increases in April and recent funding cuts it is certainly not going to make life any easier for them. Where charities are reliant on external funding that is under threat of reduction, they should consider how to maximise self generating income streams to continue the valuable work they do.
How can we help
At Hawsons we have a dedicated team of accountants at our offices in Sheffield, Doncaster, and Northampton. Our dedicated team fully understands the complex, ever-changing regulatory requirements of the charity and not-for-profit sector. Irrespective of your size we wish to support you to maximise the benefits you could achieve through our specialist professional advice.
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