Charity magazines have recently highlighted a report produced by Learning Disability Charity HFT, outlining research which revealed that over half of providers surveyed had handed contracts back during the year.
Indeed, the challenging commissioning environment has been well documented for several years now and a review of multiple charities annual reports reveals high profile, national and regional charities including, Scope, Alzheimer’s Society, Action on Hearing Loss and the Papworth Trust, have undertaken major strategic overhauls in recent years, as a result.
The Need to Rebalance and Diversify Income Streams
This has seen some move away from the provision of commissioned services completely and others significantly consolidate them, at the same time as relocating and downsizing their Head Offices, selling assets, and choosing to focus on reaching beneficiaries in different ways.
Whilst the rationale behind such major strategic moves, often involving multi-million pound changes in turnover levels are clear, as is the need for charities to rebalance and diversify their income streams, these decisions are of course not without multiple and significant risks.
The Knock-On Effect On Other Income Streams
A perhaps, less frequently considered risk, is that charities income streams are often inextricably linked, and a move away from the direct delivery of services can impact other fundraising income streams, such as legacy giving and challenge events. Therefore it will certainly be of interest to see the effects of such decisions across the sector over the coming years.
Furthermore whilst such strategic risks may indeed prove to be worthwhile for large charities with strong brand profiles, medium and smaller charities could find that the same courses of action have very different consequences for their own organisations.
The Need for a Thoroughly Researched Strategy
One thing is clear however, and that is, the increasingly difficult environment charities are operating in means a thoroughly researched and considered income generation strategy is imperative, to ensure their future sustainability.
With a new budget and a new financial year on the horizon there’s never been a better time to give Underwood Consulting a call and find out how their strategy development services could help your organisation to take such factors into consideration when rebalancing and diversifying its income streams.