Charity Horizons: Initial findings from our survey

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10 July 2015

The ICAS Charities Committee would like to thank the many ICAS members across the UK who responded to the Charity Horizons survey we conducted in April this year.

We received 260 responses in total: 196 responses were completed from the perspective of a charity employee or volunteer; and 64 were completed from a charity advisor perspective.

The purpose of the survey was to find out how charities are adapting to today's more challenging financial environment and to examine how this has impacted on relationships between charities and their funders.  Our initial analysis of the survey responses has produced some unexpected findings in addition to confirming that financial concerns are very much to the fore.

Due to the number of responses received and the amount of information provided, the Charities Committee intends to undertake a more detailed analysis of the survey responses and to publish more in depth results in due course.


The survey responses reflect the views of a wide range of charities from small charities purely run by volunteers to very large charities with more than one hundred staff.  The perspectives of charities with different charitable purposes and with different legal forms are reflected as are the perspectives of charities providing public services and grant-making charities.

The responses have not been analysed beyond the charity or advisor perspective (i.e. the perspectives of smaller charities have not been analysed separately from the perspectives of larger charities).  However, the responses received from a charity perspective reflect larger charities disproportionally to the general population.  This is likely to be due to larger charities being able to employ chartered accountants in finance roles.  Overall the survey results reflect the experiences of ICAS members across this diverse sector.

Participants in the survey did not answer every question.  Therefore, where the results are expressed in percentages, the percentages reflect those who expressed an opinion (i.e. excluding those who didn't answer a question or answered 'don't know').

The most interesting results to emerge so far are around the relationships between charities and their funders and the differing perceptions of the advisor community compared to the sector itself.

In the remainder of this article we set out the findings from our initial analysis of the survey responses.

Charity challenges: The charity perspective

From the analysis we have undertaken so far of the responses received on charity challenges, it will come as no surprise that the main challenges over the next twelve months are believed to be financial in nature.

The survey asked charity perspective respondents about the top three challenges their charity is facing in the next twelve months.  An analysis of the responses indicates that the top challenge is financial in nature (72% of respondents), along with the second main challenge (41%) and third main challenge (36%).  Some of the responses given are fairly generic; for example, there were many references to finance, funding, and fundraising.  However, specific financial concerns were raised about a number of matters including public sector funding and declining membership.

By asking respondents to provide information on the top three challenges it is possible to highlight additional concerns held from a charity perspective.  Skills has been identified as a separate category and concerns in this area include, the recruitment of senior staff, the recruitment of new trustees and more general training needs.

Managing change and operational issues is a broad category and reflects the range of challenges charities are faced with at both a strategic and a day to day level.


Number 1


Number 2


Number 3


Concerns about public sector funding




Declining membership




Other financial




Total with concerns about charity finances








Managing change and operational issues




Red tape












Many of the challenges which are not primarily identified as financial have financial implications attached and as a whole there is a real sense from the answers given that charities are trying to respond to pressures which are largely, but not exclusively, external.  This does not necessarily mean that innovation is being stifled by these external factors but perhaps that innovation is more driven by necessity than vision and aspiration.

Sources of income

The responses to the question on sources of income were ranked according to the number of times each source of income appears in a charity's top three.  Overall the top three sources of income, in order, are:

  • Donations (excluding legacies)
  • Fees, charges and sale of goods
  • Contractual income from local government

This highlights that for those charities covered by the survey, donations, which are a very traditional source of income for charities, is the main source of income.  Fees, charges and the sale of goods is the second main source of income.  Therefore, while some charities, such as private schools, traditionally rely on fees, this may indicate that charities have needed to seek innovative ways of supplementing traditional sources of income.  Contractual income from local government is ranked as the third main source of income; this may reflect the growing significance of charities as providers of public services.  However, perhaps it is a surprise that its ranking is not higher and this may reflect that the sector, as a whole, is less reliant on the public purse in pursuing charitable purposes than is the current perception.

In summary, there is a correlation between the top three sources of funding and charity challenges with references to fundraising and diversification of income being consistent with reliance on donations and the ranking of fees, charges and sale of goods.  Also, references to difficulties in respect of public service funding, although small in number, is the most common specific reason given as a financial challenge.

The living wage

In the July 2015 emergency Budget, the Chancellor's announcement that a national living wage is to be made compulsory for over 25s from April 2016, gives scope for a different perspective to be taken on the answers to the survey question on this topic.

The answers to the question on the living wage are very positive from the perspective of achieving the living wage, with 55% of those who responded to the question indicating that their charity has adopted it.  This equates to 67% after responses from charities which do not employ staff are excluded.  The results also show a real willingness by charities which do not currently pay the living wage to do so with only 3% indicating that they do not wish to adopt the living wage.

Undoubtedly, this level of commitment by the sector to the living wage is creating cost pressures and the Budget announcement will add to this.  However, paying the living wage is consistent with the values of the sector and the results show that very many charities already see this as a priority.

Read further Budget commentary from ICAS about charities and the living wage.

Relationships between charities and their funders

There has been much discussion about the relationship between charities and their funders particularly public sector funders.  Anecdotally, the impression is that tighter public finances have led to the deterioration of relationships, particularly where services are provided under contract.  However, the results of this survey do not bear that out.  Charities' perceptions of their relationships with public service funders are very positive, particularly where there is a contractual relationship.  This is despite contract and grant-funding negotiations being perceived as more difficult.

Most charities (66%) indicate that they would welcome the development of funding models where the risks can be shared between the sector, public service funders and private funders.  There are various barriers to innovation in this area and there are lessons here for government who should be cognisant of sector views and should be assisting the sector in breaking down these barriers.

Charities perceptions of relationships with public service commissioners are very positive, with 82% of respondents saying these are constructive or very constructive. Relationships with public service grant funders and non-public service grant funders are also largely viewed as positive but agreement on this point is slightly less strong: 66% viewed relationships with public service grant funders as constructive or very constructive and the score for non-public service grant funders was 69%.  However, while funding negotiations with public service commissioners and grant funders are perceived as being more difficult than in the past, only 48% of charities receiving grant funding from a non-public service funder viewed negotiations as more difficult.

Grant-giving bodies' perceptions of funder and recipient relationships are consistent with the perceptions of charities, although 65% of grant-giving bodies compared to 69% of charities agree or strongly agree that relationships are constructive.  Interestingly, only 22% of grant-giving bodies believe negotiations about funding are tougher than in previous years compared to 48% of charity recipients.

Sector perceptions of relationships: highlights

 Charities perceptions of public service commissioners

  • 66% of respondents who expressed an opinion would welcome or strongly welcome the development of funding models where risks can be shared fairly between charities, public service organisations and private funders, for example, social impact bonds, while 32% had no strong view either way and only one respondent disagreed.
  • 82% of respondents who expressed a preference either agree or strongly agree that their charity has a constructive working relationship with public service funders.
  • 67% of respondents who expressed a preference either agree or strongly agree that funding negotiations are more difficult than in the past.

Charities perceptions of public service grant funders

  • 65% of respondents who expressed a view agree or strongly agree that their charity has a constructive working relationship with public service grant funders.  17% expressed no views either way with no respondent disagreeing and only 2% of respondents strongly disagreeing.
  • 68% of respondents who expressed a view agree or strongly agree that funding negotiations are more difficult than in the past.  27% expressed no view either way.

Charities perceptions of non-public service funders

  • 69% of respondents who expressed a view agree or strongly agree that their charity has a constructive relationship with non-public service grant funders.  29% of respondents neither agree nor disagree.
  • 48% agree or strongly agree that that funding negotiations are more difficult in the past.  44% neither agree nor disagree.

Grant-giving bodies perceptions of recipients

  • 65% of respondents who expressed a view agree or strongly agree that their grant-giving charity has a constructive relationship with grant recipients. 33% gave a neutral answer and only one respondent strongly disagrees.
  • 22% agree or strongly agree that funding negotiations are more difficult than in the past.  56% are neutral on this issue with 20% disagreeing or strongly disagreeing.

Advisor perceptions appear to be a bit less positive about the relationships between charities and their funders, for example only 50% of advisors agree or strongly agree that relationships with public sector commissioners are constructive, compared to 82% of sector respondents.  93% of advisors believe that contract negotiations are tougher compared to 67% of charities.  The sample size is much smaller which could explain some of the differences in strength of views but, on the other hand, advisors generally have experience across a greater number of charities.


The initial results of the survey indicate as expected that concerns about financial matters are very much the focus of sector concerns.  In conducting our more detailed analysis we will consider how charities are responding to shorter-term challenges and the extent to which they are identifying and developing strategies to deal with the challenges they face over the medium-term.  We will also consider the perspectives of charity advisors on how the sector is responding to today's and tomorrow's challenges.

Relationships between charities and their funders give scope for optimism in that these are generally positive even in view of the constraints placed on funders and public service funders in particular.  Good working relationships provide a good basis for seeking improvements, for example, in procurement practices or payment practices, in instances where charities are less content.

There is an appetite in the sector for innovation and change and while some of this appears to be borne out of necessity, there is a desire to explore new funding models which could enable charities to play an even greater role in transforming public services.  The survey responses indicate that charities have a willingness to take on risk and to work with government and local government to achieve change.  As the constituent parts of government in the UK receive more financial and decision-making powers, the greater the onus on devolved and de-centralised administrations will be to find new ways of funding and delivering public services.  Time will tell whether there is a determination to overcome any obstacles which stand in their way.


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