Recession hits not-for-profits

Waikato Times

HELPING OUT: Vivian Leddy buys a poppy from Korean war veteran Denis Warren in Hamilton. Charities could save costs while keeping their identities by sharing infrastructure, one change advocate says.

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Charities hit hard by the downturn are grappling with the idea of merging with similar organisations to cut costs, a survey has found.

The biennial survey by business advisory Grant Thornton found that most not-for-profits were trying to keep spending to the essentials and understand their business risks better.

Some had also strengthened their links with key donors.

But despite the current conditions, only a quarter would actively consider a consolidation or merger and about half were opposed.

Those who were open to the idea had "very little interest" in amalgamating branches and were more in favour of focusing on core businesses.

The report also criticised the "high percentage" of organisations that were looking only a year ahead, when they should be budgeting two to three years in advance.

An advocate of change in the sector, Barnardos chief executive Murray Edridge, said he thought the number of not-for-profits looking at amalgamation was conservative. The sector faced duplication and lacked co-ordination, partly due to the competitive funding model which organisations have to follow.

Amalgamating resources could take a lot of forms, and Barnardos had began doing so by providing umbrella support for groups with less infrastructure, and sharing some of its management staff. "When you're doing similar things, people can perform joint roles."

Mr Edridge said charities were still facing financial hardship due to the lagged effects of unemployment and greater social needs. "Fundraising's been quite hard because there's been a lack of discretionary money in some areas. Some individuals have been far more generous as a consequence of the recession."

Changes to tax deductions on donations, and a greater commitment to long-term funding from the Government had helped.

But the criticism that many not-for-profits were not planning far enough ahead was a legacy of being funded on a year-to-year basis, Mr Edridge said.

- © Fairfax NZ News