The number of charities in Ireland is expected to fall in the coming years due to a drop in government funding and fundraising, according to new data released by accountancy firm Grant Thornton.
According to Grant Thornton’s '2012 Not-for-Profit Survey', the main reasons contributing to the expected decline in the sector are:
* a slowdown in Government and voluntary funding;
* growing problems with financing organisations;
* and on-going struggles with corporate governance.
Government funding is nearly twice as important as voluntary fundraising to charities, with those surveyed saying that 60% of their funding comes from the state and 34% of funding as a result of voluntary contributions.
As a slowdown in Government funding becomes more apparent due to the economic climate, 73% of charities have had to introduce other forms of fundraising in the past 24 months. The pressure that funding uncertainty brings is obvious, according to the report, with 83% of respondents unable to plan activity beyond two years due to low levels of reserves and the shrinking pool of available funds.
As well as planning for tomorrow, financing current activities is also a significant concern of the charities surveyed. Nearly one in three (32%) of the nonprofit organisations surveyed cited day-to-day funding pressure as the most challenging issue facing their operation.
Commenting on the publication of the 2012 survey, Turlough Mullen, Partner at Grant Thornton, said: “The charity and nonprofit sector has expanded greatly in the last 20 years – with nearly 75% of all non-profits in Ireland being created in that time period – at the same time, the sector has never been in such a perilous state due to the economic downturn.
"Charities need to recognise the risks, diversify their fundraising activities, adopt best practice in the sector and achieve rationalisation though alliances and mergers with likeminded organisations."
The survey can be downloaded from Grant Thorton’s website.