Whilst all sectors of society – families, pensioners, students, trade unions and businesses – are fearful of the measures that George Osborne will outline in his budget on 23rd March, it is arguably the not-for-profit sector which has the most reason to be concerned.
Already, the sector has been hit by the 2.5% increase in VAT and the imminent end of Gift Aid transitional relief. Of course on top of this is the drastic reduction or, in many cases, termination of the Government funding upon which many charities rely upon, and decreasing public donations to charity as a result of the economic downturn. However, the Coalition believes that its vision of a Big Society, where more of us volunteer our time to help local charities and community initiatives, can fill the gap created by reduced central funding.
We recently carried out a survey amongst a select number of our NFP customers. Encouragingly, most remain fairly upbeat about the prospects for their organisation over the next year to 18 months. However, what was most striking about the survey’s findings was that almost 90% of respondents do not feel that the Government has clearly communicated and set out exactly how the Big Society will work. Less than 20% think that the Big Society has the potential to make up for cuts in charity funding and, perhaps the greatest indictment of the Coalition’s strategy, less than 12% have actually seen an increase in volunteering for their organisations since the Big Society was launched.
Clearly the budget is going to hit the third sector hard – some commentators have predicted net reductions in central funding in excess of 50%. Whether or not one agrees with such an aggressive approach to reducing the deficit, what the Government must do for the NFP sector is put in place effective guidelines and legislation to allow charities to maximise funding from other sources. This means simplifying the tax relief system to encourage easier and more widespread usage of Gift Aid and Payroll Giving. And, most importantly, the Government must ensure the investments that it does make in the charity sector are aimed at promoting fundraising, giving, volunteering and The Big Society itself. Without a clear vision, simple and understandable processes, and the necessary support and training for NFP organisations, the Government’s strategy is unlikely to succeed.