How can charities navigate another crisis?
Have you recently sat in a charity strategy or finance meeting and discussed the horrific situation developing in Ukraine and the humanitarian disaster? If you have, you are not alone.
The first instinct will be to offer disaster relief to the people of Ukraine, the refugees and defenders of their country, either by way of services, supplies or grants. We all want to help where we can. Eventually, the talk focuses on the impact the Ukrainian crisis is having on your organisation.
As we emerge from the global pandemic, yet another Black Swan event has occurred to test everyone’s resolve. The financial reality is tough decisions were having to be made before 24th February. With inflation hitting a 40-year high and the cost of living in the UK increasing, charities were already facing pressure and war in Ukraine has exacerbated these problems, with financial markets more volatile due to the ongoing uncertainty:
Now is not the point to panic, but to put into place some simple steps that will guide your charity during this period of uncertainty.
Monitor your income streams and diversify these where you can. Fundraising may be diverted to household consumption and Ukrainian disaster relief in the short term, but legacies are holding up and now is the time to invest into fundraising as we emerge from Covid restrictions
Review your reserves. Do you need so much? Are you spending too much? Consider having two or three different reserves, reflecting different time periods or capital expenditure needs. Uncertainty is your enemy. Avoid panic selling of your assets
Take a total return approach. Charities with investments will have made some good gains in recent years, so now is the time to spend some of them, notwithstanding recent falls in markets
Do you need to continue with the same operating model, holding that property, using the same service provider, etc. Consider how you can make some longer-term savings or efficiencies
While charities will need to adjust to a post Covid world, now is a good time to take stock of your organisation. It may appear painful in the short term, but early planning will prevent nasty shocks having a long-lasting impact on your organisation.
If any of this resonates and you are looking for assistance, please do not hesitate to contact James or Guy.