With the economy looking a little stronger, what is in store for the Third Sector for the next 12 months and is your organisation in shape to succeed?

Recession bites further

Traditionally the toughest time for organisations is the two quarters following the end of a recession. Third Sector organisations are no exception to this and charities that previously relied on high interest rates, strong investment returns, corporate giving and government funding are anticipating a tough 12 months according to our recent survey ‘Managing Charity Finance Through Uncertain Times’.  65% of charities expected a fall in government funding levels in 2010 and half of respondents did not expect an improvement in the economic climate until the last quarter of 2010.

Getting fit

So what can you do to get into shape for the next 12 months and be stronger in 2011? Here are our seven ‘get fit’ Fs to help you through these turbulent times:

Funding – review your funding mix, are you over reliant on one stream? Do you have multi-year contract funding or one-off grants that may be soon up for renewal? Consider how you intend to meet any shortfall in your income streams.

Forecasts – make sure that you do these and that they are realistic. Plan in some ‘what if scenarios’ just in case that expected grant doesn’t materialise. Regularly review and flex as appropriate, take action early if required.

Finance – manage your cash. Chase debtors. Ensure pricing of services is competitive and includes overhead costs sufficient to recover your full costs. If in difficulties, seek help; arrange payment plans with the large creditors and keep key stakeholders informed.

Focus – on the most important activities that meet your charitable objectives. Review projects available and the costs to provide them carefully. Prepare regular management information and set key performance indicators. If cut backs are required, be mindful of associated costs such as redundancy and contractual costs.

Fundraising - How would you cope with a fall in donations? Review your existing fundraising activities and explore new approaches to develop practical outcome measures. This could be particularly useful if reliant on government funding.

Fraud – is on the increase in the sector. Now is the time to review fraud risks and your anti-fraud policies. Instil an appropriate culture in your organisation through HR policies and whistle-blowing procedures.

Join Forces! – Merger does not necessarily mean a legal merger of organisations; consider collaboration on projects or joint ventures of related activities, project partnering or grouping. This can save or steamline costs, increase income and build experience for the next project.

And a bonus ‘F’: don’t be FRIGHTENED to explore new opportunities. Battening down the hatches can cause an overly internal focus. Investment will be required to maintain existing services and develop growth and all organisations should be long term planning to ensure that they continue to move forward.