Charities and social enterprises hit by downturn

Aug 21 2009 By Alastair Gilmour, The Journal

IT’S not only retail and leisure services feeling the blast of economic downturn; North East charities have been hit equally hard.

Reduced funding and an increased demand for their services have created new challenges – as if the task wasn’t already big enough. With companies and individuals reluctant to donate the sums of money they once did, projects are being cancelled or put on hold.

Recent research by Voluntary Organisations’ Network North East (VONNE) shows that more than 95% of 130 organisations it questioned said funding was their biggest challenge. A rise in social problems related to high unemployment resulted in nearly a third saying they were struggling to cope with increased demand.

Among the organisations worst affected are those dealing with homelessness and mental health problems. Advice services and hostels are struggling to cope as demand outstrips resources, consequently charities such as the Northern Rock Foundation have had to rethink their strategy. The Foundation receives a minimum of £15m a year over 2008, 2009 and 2010 from Northern Rock as part of the arrangement under which the bank was taken into temporary public ownership. In response to the changing regional circumstances, its trustees have agreed that from 2010 there will be increasing investment in homelessness projects and a new focus on developing initiatives specifically for those who are financially excluded. Overall, it is funding "fewer, better grants".

Recent figures from the Citizens Advice Bureau show that its offices in the region dealt with 30% more debt inquiries between April last year and March this year, compared to the previous 12 months. More worryingly, a significant number of organisations said they were relying on their reserves to top up their incomes.

One group well aware of the situation is Community Foundation Tyne & Wear and Northumberland, which works with businesses to distribute donations as well as alerting them to worthy causes in some of the North East’s most deprived areas. Despite the funding squeeze, the foundation’s new chief executive Rob Williamson says the foundation is still welcoming big donations from local families and companies such as Procter & Gamble and Ringtons – including the £100,000 given to The Women’s Fund by Dame Margaret Barbour, who originally set up the fund in 1999.

There are currently a number of ways in which local government supports charitable causes, including the Grassroots Challenge, which encourages new endowment funds at the Community Foundation. This incentive means that for every £1 donated, the Government matches it, which can see donations treble once tax relief is taken into account.

In addition, the Hardship Fund announced in this year’s Budget is available and could see worthy causes which earn more than £200,000 a year qualifying for a grant of between £50,000 and £250,000 if they are able to show that financial hardship has had a direct impact on their services.

A tough year ahead there may be, but there is still a degree of optimism in the sector – last year the Community Foundation gave £7.8m to 1,700 organisations.