Charities can weather economic storm

Third Sector

15 July 2008

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Charities are robust enough to withstand the effects of the economic downturn, suggests research by nfpSynergy.

The think tank studied the finances of the 56 UK charities with the highest voluntary incomes over the past 25 years to assess the impact of economic fluctuations on individual donations.

npfSynergy predicted that voluntary organisations’ incomes will slow or remain static but will not drop, and that it could take 10 months for the impact of the downturn to filter through to the sector.

The findings revealed that, although average charity income growth slows or becomes static in an economic downturn, it doesn’t fall.

It found voluntary income is the first source of income to be affected by fluctuations in people’s disposable incomes – on average 10 months after any rise or fall in GDP growth.

There is then a further seven-month delay before any impact on other sources of income, including grants, investments and fees, is felt.

"Charities shouldn’t just accept defeat, said Jonathan Baker," a researcher for nfpSynergy. "The voluntary sector should be robust enough to weather well and charities still have time to create a resilient action plan to protect themselves against income volatility before the onset of any possible recession."

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