Freeman Blog

Recession, Whammies ... Actions

Posted by Mark Freeman
Mark Freeman
Mark Freeman & Associates was established by Mark Freeman to bring together a number of trusted associates who...
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on Wednesday, 25 April 2012 in Freeman Blog

Approximately 3.5 years ago the world entered into a recession that still continues to this day... although thankfully there are some rays of light at the end of that particular tunnel.

The not-for-profit sector was cushioned from the onset of the recession for about two years, but then it certainly was hit, and perhaps not in quite the same way as the corporate world was!

Some time ago I commented that our sector had sustained not a double but a triple whammy (1) the reduction in donations and giving, whilst demand for services increased (2) the cut in grants and government funding and (3) the poor return on investment seen by foundations and trusts over a number of years. However, there was a fourth whammy lurking quietly in the wings - the lack of action and indecision following the 2008 recession.

In 2008/09 when the recession was starting to bite, the third sector did go some way towards protecting itself, but not quite far enough to protect itself from those three whammies.

For example, some time ago, I sat at a round table discussion about mergers within the sector and why they happen. At the end of the debate we all agreed that the very worst reason for seeking a merger was financial instability or survival. Now, three years on, we see a PWC report indicating that up to one in every five charities is considering or will "have to" consider a merger because of finances...seems to me a little late for some of these organisations!

But where should we be focussing our actions now in the knowledge that the recession for the not-for-profit sector is likely to last for two years after the worldwide recession is over?

There are three areas that organisations need to examine closely if they have not already done so, and in the following order:

1) Cost cutting and examination of true operating costs

2) Marketing and awareness raising

3) Fundraising diversification, investment and ROI

But...the ultimate question that every charity must consider is, should we continue as we are or shut up shop? This is probably the hardest question that Trustees will ever have to answer...but they should be asking it. Actions speak louder than words!

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Mark Freeman & Associates was established by Mark Freeman to bring together a number of trusted associates who could offer charities sound professional and practical advice for trustees and senior management.

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