Major New Report Highlights Risks to Irish Charities
One in 10 charities are at risk of folding as they do not have enough funding to plan past the next six months, it emerged today.
Another 50% revealed they cannot look beyond 12 months, with a further 27% admitting they will struggle to fund services over the coming two years.
17% said they did not intend on complying with voluntary governance codes
The not-for-profit survey found cuts in Government and voluntary funding, problems with finance bodies, and on-going struggles with corporate governance were main concerns for charities at risk of collapsing.
Accountancy firm Grant Thornton said charities need to plan for the future, recognise risks and diversify fundraising to avoid going bust.
Turlough Mullen, a partner with Grant Thornton, said the outlook for many non-profits is questionable, with some having to cease operations altogether.
“As the economic crisis continues to deepen, we see that no sector is unaffected,” he said.
“The reality is that, in spite of the fact so many of these organisations do excellent work, we will see consolidation and rationalisation in the not-for-profit sector, just as we have seen in many areas of business.”
Almost 1,000 charities took part in the survey, with a third revealing day-to-day funding pressure as the most challenging issue facing their operation.
Government funding was nearly twice as important as donations, with 60% of funding coming from the State compared with 34% from voluntary contributions.
But seven out of 10 charities have had to create new forms of fundraising in the past two years as Government spending was slashed.
Meanwhile, almost one fifth (17%) said they did not intend on complying with voluntary governance codes in the future.
Risk management and disaster recovery also ranked low in priority for the sector, with 74% indicating they do not maintain a register of risks and 83% not having any form of disaster recovery plan.
Mr Mullen said the charity and non-profit sector expanded greatly in the last 20 years, with nearly 75% of all non-profits in Ireland being created in that period.
At the same time, the sector has never been in such a perilous state due to the economic downturn, he added.
“A fall-off in funding through voluntary collections and Government allocations was an inevitable result of the downturn but there are ways and means of negating these threats,” he added.
“Charities need to recognise the risks, diversify their fundraising activities, adopt best practice in the sector and achieve rationalisation though alliances and mergers with like-minded organisations.
“In short, boards of charities need to keep a close eye on future funding requirements to avoid an insolvent position.”
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