Clare Mills, director of policy and communications at Charity Finance Group (CFG), shared insights and predictions about the challenges and opportunities charities might face in 2024.
The world is constantly changing, and for charities, adapting to these changes is crucial to remain effective and impactful. Let's delve into some key takeaways and consider how charities can prepare for the future.
1. Economic Challenges and Opportunities
The presentation highlighted several economic factors that can impact charities in 2024. Clare mentioned that inflation rates are showing signs of decreasing, which could ease some financial pressures. However, it's important to note that lower inflation doesn't necessarily mean lower prices; it simply implies a slower rate of price increase. For charities, this can be a relief, especially when managing cash flow.
If your charity has financial reserves, now is the time to see if you are using those and making the most of your investments. You could also assess your cashflow management for opportunities to earn some short-term deposit interest.
2. Challenges with Local Government Contracts
Local government contracts play a significant role in the charity sector, but they face their own set of challenges. Many charities depend on these contracts for funding. Clare highlighted that some local governments, like Birmingham City Council, are struggling with financial difficulties, issuing Section 114 notices, which restrict spending to legally required services only. This can be a cause for concern, especially for charities that provide discretionary services. Lack of funding through grants, coupled with a lack of inflationary increases in contract fees for commissioned services, is increasing the pressure on charities. We are also seeing statutory services experiencing increasing demand for support from people. If charities are unable to provide those services, who will step in?
3. Climate Emergency Remains a Concern
The climate emergency continues to be a pressing global issue. Charities are vital in supporting individuals and communities affected by displacement, extreme weather events, and other climate-related challenges. This is not just a UK problem; it's a worldwide concern. Charities will need to be prepared to play their part in addressing this critical issue.
4. Focus on Equity, Diversity, and Inclusion
Embrace Equity, Diversity and Inclusion: Clare urged charitable organisations to look at their internal and external activities and evaluate how they are doing at eliminating barriers to participation, celebrating and welcoming diversity, and ensuring a sense of belonging among staff, volunteers and your beneficiaries. Who isn't being heard? Clare recommended building a plan with the help of sector experts and reporting regularly on progress. This not only demonstrate an organisation’s values, but it can also help attract and retain diverse talent and stimulate innovation within teams.
5. Digital Transformation and AI
Digital transformation offers numerous tools and opportunities for the charity sector. Automation and AI can help improve efficiency, allowing staff to focus on more engaging and impactful work. However, Clare advised caution in the use of AI, emphasising the importance of understanding its limitations, potential biases, and energy consumption. A responsible approach to AI is essential.
6. Reserves Policy and Transparency
The presentation highlighted the importance of having a clear reserves policy. Charities should not only include this in their annual reports but also communicate it transparently to their teams and stakeholders. Transparency fosters trust and helps employees understand the purpose of the reserves.
7. Theory of Change
While not everyone may have a formal "theory of change," it's essential for charities to have a structured decision-making process. This process ensures that decisions align with the organisation's mission and objectives, leading to more effective outcomes.
8. Preparing for 2024
So, how can charities prepare for 2024 and beyond?
- Revisit Charitable Objectives: Clarify your organisation's purpose and make sure that all activities align with your strategic objectives.
- Digital Declutter: Streamline your digital files and resources to improve organisational efficiency and reduce energy consumption.
- Explore AI Responsibly: Investigate how AI can benefit your charity but be mindful of its limitations, potential biases, and environmental impact.
- Embrace Equity, Diversity, and Inclusion: Promote EDI to attract diverse talent and stimulate innovation within your team.
- Theory of Change: Establish a structured decision-making process, even if it's not in the form of a formal theory of change. Ensure that your decisions consistently align with your charitable goals.
In a rapidly changing world, charities must adapt, innovate, and collaborate to continue their vital work. By preparing for the challenges and opportunities that lie ahead, charities can make a significant impact in 2024 and beyond.
The future is uncertain, but with the right strategies and a dedicated team, charities can navigate the challenges and continue their mission to make the world a better place.
Learn more about CFG and how to become a member on there website here.
Explore our "Navigating Change" series for more insightful blogs and resources on topics crucial to the social sector.
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