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Kreston Global’s Charities Report: Views of the third sector for 2024

| Duncan & Toplis | 18 April 2024

As the UK grapples with a cost-of-living crisis and inflation sits higher than the Bank of England’s 2% target, many business sectors across the country are having to adapt - and the third sector is no exception.

As members of Kreston Global and part of the Kreston UK Charity Group, we’re able to gain valuable insights into the financial outlook and challenges for the third sector, across a collective client base of more than 2,000 charities of various sizes offering a range of services across the UK.

The Charities Report 2024 allows us to understand the experiences of these charities, which in turn can provide important guidance on how the sector can adapt and grow.

What is the financial position of UK charities?

Despite the uncertain economic times, the report shows that many charities are confident with their financial outlook for 2024, with almost half (43%) believing their financial outlook is positive.

However, there are still many financial challenges for the sector and one example of this is rising costs. Over the last 12 months, charities have seen costs rise across the board with increases in wages, energy and insurance. Of those that responded, 81% of charities have seen wages increase, 76% have seen energy costs increase and 78% have seen insurance costs increase.

What’s more, an overwhelming majority (83%) of charities are experiencing pressures on their income streams. As a result, just over two-thirds (67%) of charities are taking a strategic approach and exploring new ways to grow their income. This includes tactics such as growing their major donors, as well as looking into grants, trusts and foundations, legacies, and corporate giving.

Third sector recruitment challenges

The report shows that recruitment continues to present a challenge to charities across the UK, with more than half (54%) finding it hard to recruit and retain employees.

In line with the cost of living crisis and changing attitudes to work patterns, charities have started to offer new incentives to recruit and retain staff. Increasing salaries is the most popular incentive that charities have used to attract/retain employees, followed by more flexible hours and more remote/hybrid working.

However, despite these efforts, the sector is still struggling with workforce issues and this also applies to trustees and volunteers, as well as employees. More than half (52%) are finding it difficult to find volunteers and 40% stated that they are finding it hard to recruit and retain trustees.

Are charities prioritising ESG?

Environmental, Social, and Governance (ESG) is an important concept for charities, allowing them to demonstrate their commitment to responsible practices and how they deliver long-term sustainable value.

However, the report suggests that the ESG picture being painted by charities is an unclear one. Less than half (48%) of charities have undertaken activities to increase the diversity and inclusivity of their team in the last year, and most charities will not be focusing more on ESG/sustainability in 2024.

Adapting to digitisation

The report shows that the majority (78%) of charities believe they are keeping up with digital changes if required and charities are, on the whole, not affected by - or unaware of - cyber attacks.

Most (86%) said they have not experienced an attack in the last 12 months and of the 14% that did, 11% said the attack was stopped by anti-virus software and only 1% stated that the attack significantly impacted their ability to deliver services.

What part does politics play?

The report suggests that the majority of charities surveyed appear to have a lack of confidence in the major political parties in the UK, with 65% thinking that a change in government in 2024 would make no difference to their charity.

However, if there was a change of government, those in the survey have a clear preference for Labour over the Conservatives. Of those that responded, 59% of charities believe that the Labour Party would have the greatest positive impact on their charity if they came into power. Similarly, of those who responded, 61% of charities believe that the Conservative Party would have the greatest negative impact if they came into power.

Whether we see a change in government or not, this year will be a crucial time for charities to secure their futures, grow their business strategies and continue adapting in line with the dynamic nature of the sector.

Niall Kingsley, Head of Charities at Duncan & Toplis, said: “This report shows that the charitable sector has been hugely impacted by various financial factors including the cost of living crisis, growing energy bills, and rising inflation. When combined with a struggle to recruit, despite attempts to attract employees with increased salaries and more flexible working, it is a concerning financial outlook for UK charities.

“Despite this, it’s positive to see the resilience of the sector shining through, with the report showing that charities remain confident in their financial outlook, as well as believing they still have the capacity to deliver their required services in 2024.”

To find out more and to read the full report, please click here.


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