Old values – new roles – big challenges
Thank-you Win. Good morning all, Bore Da.
I am delighted to be here in Cardiff, and to be taking part in what promises to be an exciting, engaging event.
This conference comes at a crucial time for the third sector in Wales.
It comes at a time in which many charities are adapting to major changes.
- Changes to their funding
- Changes to the political and social context in which they work
- And changes to the lives of the people they work with and to the communities they serve.
As the title suggests, I would like to examine some of these changes – both the good and the challenging – to explore how charities might respond.
I will argue that, regardless of any current upheaval, there are certain core values that remain at the heart of the voluntary sector.
Values that must – and I hope will – out live the current period of flux and change.
This conference carries the theme of ‘facing the new realities’.
The phrase carries a slight air of foreboding, doesn’t it. Facing new realities is the kind of euphemism political parties use when they’ve just lost an election by a landslide.
When the truth is that they have experienced a terrible defeat, but want, at all costs, to avoid appearing defeated.
Sadly, I think it’s rather an apt phrase to use in this context.
In many ways, the new realities for Welsh charities will be extremely tough.
Many charities in Wales are bracing themselves for the most challenging funding climate for a generation.
And that’s not me speaking – it’s what Welsh charities themselves are saying.
WCVA has been carrying out regular surveys of voluntary groups in Wales to find out how they’re being affected by the recession – and how they’re responding.
The most recent survey, carried out in October, makes for some sobering reading.
It suggests that 49% - so practically half – of all Welsh charities feel their financial situation is worsening.
Many are saying they’ve had to let staff members go since the recession hit in 2009, some are saying they expect having to make more people redundant in the months ahead.
A month earlier, in September, WCVA published a fascinating report into the impact of the recession on Welsh charities.
It revealed Welsh charities were reporting:
- A decline in investment income;
- An increase in the use of reserves to keep projects afloat;
- A decline in income gained through fundraising events and individual donations;
- And an increase in demand on their services.
These issues are mirrored by the Commission’s own findings.
Since the downturn began, we have been conducting regular Economic Surveys of Charities across England and Wales, the most recent of which was published in March 2010.
It revealed that 60% of charities surveyed had been negatively affected by the downturn – most by a decline in income.
Both the Commission’s and WCVA’s research also suggests that larger charities are more vulnerable and less optimistic about the future than smaller ones.
Size, in this respect, is no buffer against financial hardship.
And charities can, sadly, expect more bad news in the form of public spending cuts.
Figures from the Third Sector Partnership Council suggest that around a third (32%) of the voluntary sector’s income in Wales is sourced from the Welsh Assembly and UK Government. A further 13% of charities’ income derives from local government funding.
So an estimated 45 pence in every pound of charity income in Wales comes from statutory sources.
That’s likely to change.
Some commentators fear the Welsh economy over all is more vulnerable to cuts than the UK economy, largely because of the higher proportion of public servants in Wales.
PriceWaterHouseCoopers estimates that Wales might lose a total of 52,000 jobs – that’s across all sectors – as a result of cuts to public spending.
Cuts in Westminster are therefore likely to affect charities in Wales two-fold:
First, directly, in the form of a reduction in statutory funding of charities
Second, indirectly, as job losses across Wales take their toll on the economy and thus on levels of private giving and on increased demand for charitable services.
So this is the big challenge facing Welsh charities in coming years. To borrow a much-repeated phrase from Bill Clinton’s 1992 election campaign:
“It’s the economy, stupid”.
But of course charities are not just passive respondents to events outside their control.
There are steps trustees can take to reduce the risks to their charities and to help their charities respond to the challenging climate.
The Commission has published the The Big Board Talk, which advises trustees about the questions they should ask about their charity and its finances.
It was first published at the height of the recession, but the advice and guidance it provides remains relevant to charities preparing for a ‘new wave’ of economic challenges.
It covers areas such as accessing reserves, reviewing banking arrangements and investments, assessing contractual obligations and pension schemes.
It also advises trustees to look at their fundraising strategies, their volunteering strategy, and their approach to asset management.
It encourages charities to ask whether they can use these resources more effectively. Whether they can squeeze out more value.
The Big Board Talk also advises trustees to consider how their charity might benefit from collaborating with others.
Collaboration has huge potential to improve charities’ effectiveness and to cut costs.
A few days ago, the Commission published new research into patterns of collaboration among small charities across England and Wales.
It revealed that around half of all charities had engaged in some form of collaboration – such as informal information exchange, sharing equipment or joint fundraising campaigns.
At the more formal end of the spectrum, smaller charities are making joint funding applications, sharing workspaces or staff members and delivering joint services.
And the overwhelming majority – 82%– of small charities say their experience of collaboration has been successful.
Charities say they benefit from joint working in a wide variety of ways.
The most common benefits include improvements to services for beneficiaries, enhanced reputations, increased access to funding opportunities and reductions to operating costs.
The Commission was hugely encouraged by this research and we hope it will persuade more charities in Wales and England to consider collaboration.
Previous surveys had suggested only 9% of charities had considered collaboration – which to me suggests 91% have been missing out on valuable opportunities.
There are signs that charities in Wales are well aware of these opportunities
A recent report by the Third Sector Partnership Council into charities’ responses to the downturn includes some great examples of collaboration.
Here are just a few:
Community Housing Cymru and Care and Repair Cymru have formed a group structure which sees the two organisations sharing back office services and pooling policy teams to create efficiencies.
The two charities believe the new structure will help them provide services more efficiently and lead to a stronger voice for housing in Wales.
Two hospices, St David’s Foundation Hospice Care and Usk House Day Hospice have merged to enhance their services across a wider area.
And a group of substance misuse providers have formed a new joint company, which has already bid successfully for national contracts.
All these examples reflect an innovative, forward-looking approach on the part of the charities. They demonstrate that trustees and staff members are putting services to beneficiaries first – surely their primary duty.
Charities should also remember that while competition for state funding is likely to become tougher – there will continue to be grants and support available.
So trustees must ensure their charities have the competitive edge.
That includes being able to demonstrate impact. Being able to show funders and grant makers why and how you make a difference.
The think-tank New Philanthropy Capital recently published a report into the way charities communicate the impact they have.
Based on charities’ annual reports, they found that only two thirds of charities examined set out clearly what problem they exist to tackle. And why dealing with that problem is in everyone’s interest.
I would recommend you study that report to assess whether there is more your charity can do to explain why it’s worth supporting and funding.
It is also clear that the government in Westminster is keen to see more partnerships between charities and private companies.
When it comes to bidding for funding controlled from Whitehall, Welsh charities might find that making friends in business has distinct advantages.
And in the wake of public sector cuts, charities across Wales in England are likely to rely increasingly heavily on corporate and high-value philanthropy.
So I’d advise all charities to find out more about attracting corporate support in their communities.
I’d now like to move on to the question of opportunities available to charities in Wales in the months and years ahead.
Because it’s important we don’t wallow too enthusiastically in doom and gloom.
And there is good news out there, there are positive signs.
First – it’s clear that the voice of the voluntary sector in Wales is strong. And the Welsh Assembly Government appears committed to involving charities in policy making.
The Third Sector Partnership Council, which the Commission attends as an observer, helps ensure charities play a role in developing public services in the principality.
And, on a broader level, I’m impressed by the commitment to partnership working within the voluntary sector in Wales.
There are strong relationships at work here:
- Among charities
- Between charities and communities
- And between the sector and the statutory authorities.
This is also reflected in the vital role played by CVCs in supporting and advising charities in Wales.
I hope that CVCs will continue to provide these services to charities; their unique expertise is likely to be in ever greater demand as charities face tough choices about their future.
So at the risk of pre-empting discussions you’re having this afternoon – there’s a strong argument for saying the Big Society has been alive and well in Wales for some time.
In many ways, the concepts associated with it, such community-focused voluntary activity, involvement of charities in service development and delivery, are already a reality in Wales.
But as the relationship between state and society shifts across the UK, it is likely that opportunities for charities to deliver services in Wales will increase.
That the relationship between the public sector and the voluntary sector will become stronger still – even if this happens on reduced budgets all round.
Of course, there are fears among many in the sector that this reflects governments’ view of charities as a cheaper option.
So it is important that charities and representative bodies such as WCVA continue to fight their corner. Cardiff Bay and Westminster must understand that charities can’t operate on thin air.
Second, public trust and confidence in charities across Wales and England is high.
The Commission’s latest survey into public attitudes, published earlier this year, reveals that charities remain among the most trusted groups in society.
People trust charities to provide a caring service; people trust charities to provide independent advice.
And – crucially – people who have come into direct contact with a charity report even higher levels of trust.
This suggests charities are providing quality services which leave a positive impression in peoples’ minds.
This is vital, not least because it’s likely that charities in Wales and England will come to rely on public support increasingly heavily in years ahead.
And this is also why it’s vital that charities uphold and promote the core values that have served, over the centuries, to develop and strengthen public support for charity.
One of these core values is independence.
As charities adapt to new relationships with one another, with governments, and with private companies, it’s vital that trustees remember where their ultimate loyalty lies.
And that’s with their charities’ mission and objects, with their intended beneficiaries.
It might be tempting to adapt your charity to the requirements of new funding streams, but it’s vital that any changes to your charity’s activities are in line with your mission.
Of course charities can, where appropriate, update their objects and activities in line with social developments and the needs of beneficiaries.
But trustees must be sure they do so for the right reasons and in a way that is sustainable in the long term.
Independence also implies party political impartiality.
While charities are permitted to campaign on issues relevant to their objects, you have to maintain the fact and perception of neutrality.
In other words, when it comes to using your voice to speak out for your beneficiaries, you have responsibilities as well as rights.
Political independence is important at all times – but it’s especially vital during the run-up to elections – such as next year’s Welsh Assembly elections.
If you’re unclear about the rules, please read our guidance on campaigning, Speaking Out. Like all our resources, it’s available on our website.
Another core charity value is accountability.
Charities must be open and transparent about the way in which they raise and spend money.
We know that the public places increasing value on sound financial management in charities. That was another finding to emerge from our research into public trust and confidence.
So, please, remember the basics: submit your annual return or accounts to us in time.
Don’t allow your entry on the register to become marred by a big red sign reading ‘documents overdue’.
That doesn’t inspire confidence, it doesn’t look good.
Finally, there’s the issue of public benefit.There has been some controversy around this issue in recent years, following changes to the public benefit requirement in the 2006 Charities Act.
But unlike some journalists, charities themselves know that public benefit has always been at the heart of charitable activity.
It’s why charities have tax breaks, receive public funding, and receive billions each year in private donations.
Ultimately, a charity is an organisation that helps people in order to help society.
That’s a principle that must be upheld. So I urge you to take pride in public benefit reporting.
To consider it your opportunity to prove why your community needs you and why Wales needs you.
Of course, regulation is also an important factor in public confidence.
And here, too, changes are a foot.
As you may know, the comprehensive spending review hit the Commission hard.
We had expected significant cuts, but losing a third of our funding over four years came as a disappointment.
It means that we will have to fundamentally review the approach we take to regulating charities.
In response to the cuts, we have launched a strategic review, which will establish what risks face the charitable sector in Wales and England, and how the regulator should respond.
We’re asking big, bold questions.
Such as whether we should only investigate concerns into charities of a certain size, or whether we should stop giving individual advice to charities.
Or whether we should make it harder for charities to register in the first place.
The review kicked off with a public consultation, which we’re asking charities and the public to take part in.
We acknowledge, of course, that charity trustees are busy people, for whom the Charity Commission is not an urgent priority.
But if you do have a chance, please visit our special blogsite for the review. You’ll find it at charitycommissionreview.blogspot. And have your say.
Because it’s vital that charities themselves help shape the future of their regulator; and it’s vital that Welsh charities’ views are represented.
Let’s not forget that the challenges, risks and opportunities facing charities in Wales and England might differ in the years ahead.
The Commission itself reflects the specificity of the sector in Wales, though our presence in Newport. The team does fantastic work helping charities in Wales keep up to date with regulatory developments and helping them increase their impact. I would like to take the opportunity of this public platform to thank Harry and all his team in Newport for the fantastic work they do.
So please, share your thoughts and ideas – we welcome every contribution you can make.
I’d also like to use this opportunity to put in plug for the Commission’s online services.
As you may know, the Commission’s is pursing a strategy to provide our services online only by 2012.
We’re doing this because we know by accessing services online, charities receive quicker results and incur fewer costs.
It also saves us money without reducing the quality of the services we provide.
While the website isn’t perfect yet – we know it’s getting there. A recent survey of 4500 users of the site showed that 80% say it’s easy or very easy to use. We were thrilled.
So if your charity isn’t online yet – please make the change!
Not least to receive CC News, our quarterly newsletter which keeps you on the ball with regulatory and legal updates.
Please, if you haven’t done so already, share your email address so that we can send you the newsletter.
Either update your charity’s details on the ‘manage my charity’ section of the website to include an email address.
Or you can sign-up to receive free email updates from the Commission on the front page of our website.
It won’t take a moment, I promise.
Just before I go, I’d like to share a few choice facts and figures about charities in Wales.
To remind you just how important the sector is. And of why we need to protect it.
There are over 9,000 charities in Wales. That’s not including those working in Wales but headquarted elsewhere in the UK.
These 9,000 charities are managed by 42,000 trustees – meaning that one in every 70 people in Wales carries ultimate responsibility for at least one charity.
Around 250 new charities register every year in Wales.
And, hot off the press, I can share some examples of charities registered in Wales during the past month:
- Vision for Mission is a new charity working to advance the Christian faith and relieve poverty in North Wales.
- The WRPA Benevolent Trust is a new charity based in Cardiff, which works to relieve hardship among former Rugby Union Players.
- And New Foundations, also based in Cardiff, has been set up to advance the education of home taught children and children who find it difficult to cope in mainstream schools.
These three examples alone serve to demonstrate how diverse and how vibrant the charitable sector in Wales really is.
And they give us hope that charities in Wales will continue to thrive and prosper, despite undoubted challenges ahead.
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