Grant Thornton (NI) LLP has partnered with the IoD to host a series of roundtable discussions exploring the opportunities and challenges faced by local businesses.
In the first roundtable Michael Barnett and Michelle Maginnis from Grant
Thornton’s Audit team were joined by IoD members and industry leaders at the firm’s Belfast office to discuss activity within the Third Sector.
Participants included David Babington, CE of Action Mental Health, Alan Hanna, Director of Diabetes UK in Northern Ireland, Gareth Kirk, CE of Action Cancer and Brendan Mackin, Board member of NI Trade Union Education & Social Centre and Charter NI, and Chairman of Intercom.
Michelle Maginnis: In recent years, the Third sector has suffered from dwindling external financial support and budget cuts at a local level, forcing charities to explore new avenues to survive.
With the availability of funding at the forefront of everybody’s minds, what is your perspective on the local funding environment at present?
DB: With respect to mental health, we’ve always traditionally found it harder to get funding outside the public sector. Our charity would get 1% of our income from outside the public sector, so we depend on the Health Trusts, The Big Lottery, Trusts and Foundations and in our case European funding in Northern Ireland makes a significant contribution.
AH: For Diabetes UK, 1% of our income comes from statutory sources and everything else is generated from fundraising. What we are currently seeing is an increase in competition for donations. Organisations that had previously been securely funded from European or statutory sources are now out looking to diversify their funding streams. Looking across the sector the tension is palpable.
GK: We have no public sector funding at all and it’s such a strength. We need to raise about £4m a year, which is a lot of money, and we have about seven or eight diversified income streams. However there are so many people now fighting for their share of the pie that to some extent it is causing big issues for us as well.
DB: The real problem is about attitude and approach. Ongoing cuts in the Third sector are going to impact on the public sector. Everyone is talking about partnership and collaboration as a solution, but actually we all do it day to day. In many cases, however, it is the interaction with the public sector, and ensuring that they become genuine partners with the Third sector, which is missing.
AH: We know that there is to be a post election budget in July. It’s not going to be a good news budget for public sector expenditure, for the Barnett Formula or for money coming into Northern Ireland. Is there voluntary income? Yes, but it’s not a huge pot, and it’s a major challenge to break into that area. Are there philanthropic trusts out there who may well consider funding? Yes there are, but fundamentally they will look for an organisation that is stable, that is funded, that is well run and well governed before they’ll invest their funding - the very things that a lot of organisations no longer are because they don’t have the reserves and they don’t have that government income and support.
BM: The cuts have led to around 2,500 job losses in the voluntary and community sector already. That would have created major headlines if it happened in the public or private sectors but there hasn’t been a word about it. There will be more job losses to come. I think it’s going to get more and more brutal.
Michael Barnett: Do you think given time that Northern Ireland charities could adapt to a more sustainable model?
DB: I think there are some which will always be reliant on government funding so there will have to be some consolidation in the sector as funding decreases. It is happening now within the overall ESF funded sector.
BM: The whole issue of the social economy has suddenly taken a big leap forward again. The likes of Intercom are looking for funding on the basis of social enterprises as a way of reducing dependency on public funding.
AH: Nearly every other shop on the high street is now a charity shop and there is a lot of emphasis on social enterprises to close the funding gap. Whilst social enterprises are an option for charities, they are huge work and a return is never guaranteed.
Using social media
Michael Barnett: Support from the public has been mentioned as a significant revenue source. Do you think that the sector has been good at fully explaining how it fills the gap between the public provision and the needs of the people the charities support?
AH: I think we have to use all the communication channels that are open to us. Our client group would be predominantly older so we still rely on press and relationships with local papers but we are also increasingly looking at the young people with Type 1 diabetes who have a very different view of life, and starting to use the online space to reach out to them.
DB: One particular issue we have as a sector in mental health is that we have got that natural block around the stigma of mental health. Fortunately with Twitter and Facebook it’s actually starting to reduce.
GK: We’ve embraced social media quite substantially but we’ve continued to use the traditional mixes of billboards, advertising, PR, one-to-one and everything else and I think it probably works very, very well for us given our target audience.
Michael Barnett: The role of Charity Commission for Northern Ireland in the sector is increasing. How will it impact on the sector operationally? Will it enhance public perception or do you think it will create additional regulation that you’ll just have to deal with?
DB: I think the Charity Commission does give members of the public that reassurance. I think for us it’s like a chartered mark or a rubber stamp of approval.
GK: Good organisations should never have any fear of regulation because they’re probably following best practice anyway.
BM: I agree with David on the benefit of the Charity Commission; I think it’s a worthwhile step that has been taken. But as a sector we’ve also got to look again at how we return to creating employment in the sector.
AH: My worry is that it may lead to a further increase in bureaucracy.
BM: We’ve got to separate bureaucracy from regulation. There’s no doubt regulation is necessary but the big question is, is layer upon layer of bureaucracy necessary to do it?
Michelle Maginnis: Do you find a lot of duplication in administration?
AH: Yes, you could prepare a report for one funder and have to prepare an entirely different report for a different funder describing essentially the same thing.
Role of Trustees
Michael Barnett: One by-product of the new Charities Act is that it has become more difficult to recruit Trustees, ironically because of greater clarification of the obligations of the role. How are you going to be able to retain your key people in the organisation and attract key people to your trustee positions?
DB: From my perspective it’s becoming much more of a challenge. We’re finding it very hard to get any ethnic diversity on boards. We also want to attract young people to the board as well, to bring new energy and passion to our cause.
GK: There are a lot of organisations in the sector that can stand equal or better than the best in the private sector and the best in the public sector in terms of their governance and controls, how they reward people, their policies, their processes, and certainly around values and behaviours.
Michelle Maginnis: Has it been more or less difficult over the past year to attract volunteers?
GK: Our volunteer time is probably worth £750k a year to us. Retired people continue to be a key volunteer resource although we have found that retired people, who were previously available for volunteering, are now babysitting or child minding in some cases, and they have less time available. On the other hand, we have about 15 fundraising groups across the province. The groups have been established for about 40 years and with some exceptions, it’s probably the same people involved in those groups 40 years on.
AH: I think there is also an issue in relation to new technology. We have to cope with societal changes but the need for our support remains. We continually try to find different ways to support – for example that can be online communities rather than groups coming together in a physical place. Leadership and stability needed Michael Barnett: It is a tough time for the sector, there’s no doubt about that, but it is not all negative. What do you think has been the most positive change in the sector in the last 18 months? And, looking forward to the local Assembly elections next year, if you had a wish list for our politicians, what message would you send?
DB: I think the closer working relationships we’ve been forced to forge as a result of the financial constraints have been good. I’d like to think that the public sector recognises that we are part of the solution to their issues and their problems in delivering a variety of services to our population.
AH: I agree. We have formed a partnership which includes Tesco, Diabetes UK and the British Heart Foundation. We’re working together on programmes that will hopefully come about through Tesco fundraising, but will enable us to work across the whole population and also influence Tesco in terms of their corporate responsibility. I think that’s symptomatic of how the sector has been developing. At this point it is difficult to know where we’re going to be in the next 24 hours never mind the next 6-12 months, but there is a greater sense of moving to delivery, to a vision of what we can achieve in this part of the world, and there is more ambition to get out there and do it.
GK: I think there will be a number of takeovers in the sector over the next few years. There’s quite clearly far too many organisations and charities in the province fighting for a very small pie and I think some consolidation would be a quite positive thing to happen.
BM: I have a certain degree of cynicism around the joined up approach. I think if we’re going to be a joined up society we certainly need to bring in the public sector and the private sector properly. In the past they have tended not to fully commit to finding joined up solutions. The reduction in corporation tax is firmly on the agenda. I can look at it and say yes, it could be a catalyst for regeneration, but the other thing is corporation tax will only be introduced on the basis that the subsidy from Westminster into Northern Ireland is reduced. We’re a small economy, so pulling £200m or £300m out of our economy will have a monumental effect. I’d like to see the political institutions continue in place but I’d like to see more thought-out strategy.
GK: Whether you’re pro or anti corporation tax, I actually think the lack of leadership, the instability of Stormont, the inability to develop any policies, agree any policies or to deliver them, is a bigger factor in undermining the whole economy of Northern Ireland. So we really have to get the institutions working, functioning properly and making decisions. Once we get that platform in place I think a lot of our issues will actually be addressed within the third sector.
Michael Barnett: Thank you all for your participation in today’s discussion. There is a consensus that the next few years are going to be testing for the sector. On that note I wish you well in navigating your organisations through the challenges that lie ahead.