How to survive the cuts

16 Sep 2014 Nick Garbutt    Last updated: 6 Jul 2015

Sir Stuart Etherington, chief executive of NCVO
Sir Stuart Etherington, chief executive of NCVO

Northern Ireland is yet to feel the full force of austerity cuts and Welfare Reform is still not implemented. We spoke to the leader of England's charities to find out exactly what we can expect.

Sir Stuart Etherington, chief executive of NCVO, NICVA’s equivalent for England, has some very sobering news for charities in Northern Ireland.  It’s not all doom and gloom, but there’s not much room for optimism either.

“I wouldn’t say we’re on life support in England, but it has been a significant challenge,” he said.

Sir Stuart has been in post for 20 years – so he has worked through both the boom and the lean times for the sector.

What he has to say is especially disturbing because bigger and wealthier charities in England, with more diversified revenue streams are better placed to survive public spending cuts than smaller organisations here.

“Remarkably the sector in England is bearing up reasonably well: employment figures for those working for charities is steady, but survival for some has been a real challenge. Charities have had to change the way they work, increase efficiency and, in many cases rely on reserves to continue operating," he says.

Welfare Reform

So what of Welfare Cuts, what difference has that made?

Sir Stuart said there was one area of massive growth in the sector: Food Banks. And advice services, themselves vulnerable to cuts are increasingly becoming overloaded: with the Citizen’s Advice Bureau now facing more inquiries about benefits than debt.

NCVO has recently completed a survey on the cuts: reviewing the impacts on five regions of England. Surprisingly the results were the same, both for the North and South, and wealthy as well as well as economically struggling areas.

So there is already a blueprint for what will happen here.

“To take one example Yorkshire and Humberside – for the last full year figures we have, the Citizens’ Advice Bureau took 21,000 inquiries over this period and is struggling to cope. One lesson you could learn from this in Northern Ireland would be to argue as forcefully as you can for an increase in government support to advice services so that they can cope with the impending surge in demand."

Who the cuts hurt most

In England austerity cuts have had the most severe impact with charities involved in Social Care, Employability Services, Training and Advice most badly affected.

An area of special concern is Social Care. In England these services are provided by local authorities rather than health trusts, and local government has been especially hard hit by austerity measures. The day he was speaking Radio Five Live were broadcasting a report into domiciliary care, which revealed that it was now only available for the most severe cases in many areas – increasing the strain on hospitals which are already at crisis point

“Our experience is that the most vulnerable are advice services, employment and training, all of which have a heavy reliance on public spending, and are likely to have lower reserves.

I would imagine the problem is worse in Northern Ireland where there tends to be a higher level of reliance on public spending and lower reserves. “

Safest are those charities in spending areas which have been ring-fenced: in England that is health and overseas development.

Generally the sector has found three ways to survive, not all of them palatable: reducing the levels of service provided; collaborations and mergers between charities to reduce over-all costs and drawing down on reserves.

And those most likely to remain successful are those that can retain a high profile and therefore prominence in high priority public policy areas, reduce their dependency on public spending and diversify, and those with enough reserves to survive losing key funding streams.

Chief Executive Pay

Cuts have not been the only area where the sector has been hit in the recent past – there have also been three major issues which have had a negative impact with the press and media: executive pay; the fund raising techniques used by some charities; and campaigning.

The good news is that all available data suggests that none of these have caused any lasting damage to the reputation of the sector.

In Northern Ireland there was a furore in the media about executive pay: initially in the Belfast Telegraph and also on the Nolan Show

In England similar issues surfaced in August of last year when both the Daily Telegraph and Daily Mail ran negative stories, primarily on the pay packages of chief executives in overseas development. Here is one from the Daily Mail  http://www.dailymail.co.uk/news/article-2550648/Fury-234-000-salary-boss-Save-Children-Charity-chiefs-huge-wages-reined-say-MPs.html

In Northern Ireland the sector has yet to respond in a co-ordinated fashion to concerns about pay packages, yet concerns remain at the prospect of future coverage. This, however has already happened in England.

A group led by NCVO chair Martin Lewis, the former BBC broadcaster, was set up to bring forward recommendations.

“When the media storm broke out it was interesting to see that there was very little involvement from the people who actually set the salaries – the trustees of charities – so we made sure that this group had several involved in the project, said Sir Stuart.

It reported back in Spring of this year and had two main recommendations:

  • That charities should publish the actual salaries of CEOs, not just the pay bands they were in
  • And that both on the website and in annual reports there should be a rationale from trustees, explaining the basis on which the salaries have been set. This should be no more than two clicks away from the home page, introducing total transparency both in terms of what is being earned and why.

This policy is now being adopted and rolled out by many charities.

Fund Raising

The Fund Raising issue has been around for some time and much of the negativity is around street collections and agency fund raising, but Sir Stuart does not see it as a major concern.

“This is not a major problem as there is robust regulation in place and although there will continue to be the occasional piece of reportage, I do not see this as an especial worry.”

Campaigning

The question of charities campaigning for causes has been much in the news. There has been the controversy over the Lobbying Bill, but there have also been more disturbing criticism principally from a few Tory MPs around campaigning per se: and the notion that this is not something a charity should do. As many charities see campaigning as being absolutely central to their purpose, an assault on a core activity is causing concern.

However, Sir Stuart stresses that there has been no formal effort to change the basis on which charities campaign and for many it is very much part of what they do and something expected of them by both members and supporters.

“Obviously in the run up to an election we are all going to have to be sensitive to what we do and say, but my overall message is, of course,  to act within the law, but to  carry on campaigning! “

The opinions, views or comments in this article do not necessarily reflect any views or policies of NICVA.

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