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Third Sector Trends in Yorkshire and the Humber
Tony ChapmanSt Chad’s College, Durham University
Involve Yorkshire & Humber Third Sector Trends Report Launch 2nd May, 2014
A robust study
Study conducted between June – October 2013. Promoted by many CVSs and local authorities. Online questionnaire resulted in 1,000
responses. A 9% response rate for the sector. Key characteristics are comparable with a
similar study in NE & Cumbria in 2012 (N=1700).
The size and structure of the third sector
How big is the sector? In 2010-11 there were 10,278 organisations operating in
the region compared with 10,662 in 2006-7: a fall of nearly 4%
Sector income rose from £1.56bn in 2006-7 to £1.62bn in 2010-11: a rise of 3.5%.
Sector expenditure increased from £1.40bn in 2006-7 to £1.51bn in 2010-11.
Sector assets increased from £2.32bn in 2006-7 to £3.22bn in 2010-11.
The number of TSOs per members of the population has remained about the same at the ratio of 2:1000.
What economic contribution does the sector make?
Full-time employees between 50,000 and 77,000. Part-time employees between 54,000 and 84,000. Full-time equivalent staff between 68,000 and 105,000. Volunteer numbers between 234,000 and 362,000. The estimated ‘actual value’ of salaries to the regional
economy is currently £1.2bn. The estimated ‘nominal value’ of the time given by
volunteers is between £106.5m and £164.3m a year. Volunteer contribution could be much more than this if
‘under the radar’ organisations taken into account.
What do TSOs do?
38% of TSOs’ main role is to deliver front-line services to beneficiaries (including, for example, training, accommodation or social care).
33% of TSOs’ principal role is to deliver support services (such as advocacy or advice and guidance).
16% of TSOs mainly provide indirect support services including: research, policy or campaigning (5%); infrastructure organisations such as councils for voluntary services (10%) or as grant giving foundations or trusts (only 1%).
TSOs that employ staff are different from those which don’t
The ethos of the employing organisations makes a difference too
Smaller TSOs
Do not employ staff - purely voluntary. Tend to work mainly at a local level. Not very interested in partnership . Rely on a range of income sources: grants, gifts,
fundraising, in-kind support but not generally contracts.
Make a big contribution to the ‘social glue’ and specific needs – but many fewer in inner city areas.
Tend to have been established for a long time.
Larger organisations
Tend to employ staff and volunteers. Mixed income sources – but can be quite
enterprising. Most likely to deliver direct services (45%), or
advocacy or IAG (35%). Ethos can vary significantly (30% TSOs practice
and plan like private sector businesses, and 20% like public sector).
More interested in partnership and contracts
MAR
KET
COMMUNITY
STATE
Insp
ired
by en
terp
rise a
nd U
SP
Mar
ket d
riven
, valu
e led
Skill
relia
nt –
main
ly sta
ff
Busin
ess-l
ike go
vern
ance
‘Inde
pend
ent’
but ‘
partn
ersh
ip
orie
nted
’Reactive to public sector priorities
Driven by CEOs not Boards
Focus mainly on soft outcom
es
Stronger grant orientation
Dependent on mix of em
ployees
and volunteers
Inspired by ‘needs’ and ‘interests’Mainly ‘people reliant’ – especially ‘volunteers’
Very ‘independent’ in ethos and orientationGovernance by ‘committee’
Financial resources not a driving force
Sector finance
BORROWED MONEY
INVESTMENT INCOME
SUBSCRIPTIONS
CONTRIBUTIONS IN KIND
GIFTS
EARNED INCOME
GRANTS
CONTRACTS
0 10 20 30 40 50 60
0.5
3.2
21.9
20.6
24.8
15.1
45.7
9.3
1.5
3.6
7.3
9.9
19.8
26.9
50.7
53.7
Larger TSOs (over £50,000 in-come)
Smaller TSOs (under £25,000 in-come)
Reliance on different income sources
Risen
signif
icant
ly
Remain
ed a
bout
the
sam
e
Fallen
sign
ifican
tly0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
9.6
74.0
16.314.2
55.8
30.0 Smaller TSOs (income below £25,000)
Larger TSOs (income above £50,000)
Change in levels of income in last 2 years
£0-£5,000
£5,000 - £50,000
£50,000 - £250,000
£250,000 or more
0 10 20 30 40 50 60
23.8
33.2
36.9
42.8
53.3
46.3
36.9
27.2
11.7
19.8
26.3
29.6
Income will decrease
Income will stay the same
Income will increase
Expectations about future income levels
Assets and reserves
Micro TSOs Small TSOs Medium TSOs
Large TSOs0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
29.5
19.3 16.011.2
67.5
61.4
28.6
9.9
0.0
19.3
55.4
61.2
0.0 0.0 0.0
17.8
£250,000 plus
£10,000 - £250,000
Less than £10,000
No assets/reserves at all
Levels of ‘free reserves’
Are TSOs dipping into reserves?
Small organisations least likely to use reserves (48%) compared with 68% of the largest.
28% of the largest TSOs used their reserves to invest in new activities compared with 21% of the smallest organisations.
31% of the largest TSOs used their reserves to meet essential costs compared with 14% of the smallest organisations.
Who is borrowing money?
Only 6% of TSOs have borrowed money over the last two years.
Larger organisations, with incomes above £250,000 most likely to borrow money, but 83% have not done so in last 2 years.
Some TSOs borrow money to bridge a gap in cash flow, but only 1% of the whole sample and just 3% of the largest organisations.
Working with the public sector
Relationships with the public sector 77% of TSOs say they understand the nature
and role of their organisation. 77% of TSOs say the public sector respects
their independence. 64% of TSOs say the public sector informs them
on issues that affect them, but 29% “disagree”. 46% of TSOs say they public sector involves
them in developing and implementing policy - 50% of medium sized TSOs disagree.
45% of TSOs say public sector organisations act upon their opinions - but 40% disagree.
Who is interested in contracts? 32% smallest TSOs not aware of opportunities compared
with 2% of the largest TSOs). Many TSOs are not interested in getting involved in
contract working (33%): but only 11% of the largest TSOs have no interest.
Some organisations are not ready to get involved in contracts: 6% say they need more information, 10% need extra support before they do contracts, and 12% perceive that there are barriers to involvement.
Only 15% of TSOs are actually delivering contracts. Larger organisations are by far the most likely to be doing
so (41%).
Partnership bidding Over 75% of micro TSOs are not considering this
compared with just 9% of the largest TSOs. 55% of the largest TSOs have been successful in
partnership bidding, compared with just 28% of medium sized TSOs.
18% of medium sized TSOs have been bidding but have not yet been successful, and a further 27% are considering getting involved in partnership bidding.
TSOs are not forced into partnership, it’s a choice.
Future expectations about partnership working
47% of TSOs say partnership working will increase over next 2 years (only 2% think it will decrease).
27% of TSOs say partnership working is not applicable to them, but it is mainly micro (50%) and smaller (44%) TSOs who say this.
Around 20-25% of TSOs, irrespective of size, believe that partnership working will remain at about the same level.
Who expects to be doing more contracts in two years time?
83% of the micro and 67% of small TSOs say contract working is not relevant to them.
29% of medium sized and nearly 40% of the largest TSOs expect that it will increase.
14% of medium sized and 19% of the largest TSOs expect that involvement in contract working will decrease over the next two years.
The future: a mixed picture
What will happen the sector as a whole? (% ‘agree’ or ‘strongly agree’)
Much more reliant on volunteers to deliver front-line services 37.9
Much more reliant on volunteers with fundraising 33.4
Much more reliant on free support from local CVSs 20.3
Much more reliant on grants from charitable foundations 31.9
Much more reliant on money given by the general public 19.9
Much more reliant on free support from the local council 16.9
Much more reliant on grants from the public sector for core costs 19.4
Much more reliant on contracts/sub-contracts from the public sector 16.4
Much more reliant on free professional services from private sector 13.2
Much more reliant on funding from private sector businesses 12.8
Much more reliant on contracts/sub-contracts from private business 9.7
Will the demand for services increase?
80% of medium sized and larger TSOs think demand for their services will increase or increase significantly.
Only about 1% of TSOs, overall, think demand for their services will fall.
For those TSOs which deliver public sector services now... 28% say public sector expectations will rise ‘significantly’ and
a further 40% feel that expectations will rise to some extent. TSOs are more likely to think that statutory agencies’
expectations about their services will rise in West Yorkshire (29%) and South Yorkshire (34%).
What will happen to individual TSOs: in next 2 years: the “optimists”
44% of TSOs expect the number of volunteers will rise (largest TSOs = 58%).
41% of TSOs expect number of contracts to increase.
35% of TSOs believe that their income will rise over (rising from 27% of micro TSOs to 43% for the largest TSOs).
26% of TSOs believe that the number of paid staff will increase: expectations are similar across all organisational sizes.
What will happen in next 2 years to individual TSOs: the “pessimists”
23% of TSOs expect income will fall (30% of the largest TSOs).
21% of TSOs expect the number of employees to fall (30% of largest TSOs).
18% of TSOs expect the number of contracts to decline: (20% of largest TSOs).
Only 10% of TSOs think that the numbers of volunteers working for them will fall. Smaller TSOs are the most pessimistic in this regard (14%).
So how are TSOs preparing for the future?
Preparing for the future 1 42% of TSOs are taking steps now to
increase earned income: rising from 18% for micro TSOs to 64% for the largest TSOs.
31% of TSO are working more closely with other TSOs: from 17% of smallest to 46% of largest TSOs.
29% of TSOs are changing the way they run their services: 48% of the largest TSOs are doing so (which feels like a small %).
Preparing for the future 2 21% of TSOs are taking action to increase
the level of donations from individuals. Larger TSOs are the most active (29%).
Just 5% of TSOs are taking action to merge with another organisation: The largest TSOs are most likely to be doing so (10%).
Fewer than 5% of organisations are taking action to take over a service from another TSO: larger organisations are the most likely to be doing this (11%).
What are the training priorities?
44% of TSOs have a training budget. Rising from 10% of the micro organisations to 84% of the largest. Training top priorities are bidding for grants &
fundraising for 44% of TSOs – irrespective of TSO size. Marketing and publicity is prioritised by only 25% of
the micro organisations and 46% of the largest. Tendering and commissioning is prioritised by 21% of
smaller TSOs, rising to 46% for the largest TSOs. Only a third of largest TSOs put a high priority on
training to develop their strategic management, business planning, managing staff and volunteers and financial management.
Money isn’t the answer to all problems
Know how to scan the horizon for long-term opportunities (good TSO foresight).
Know when to and not to engage in activities (good enterprising skills).
Know what assets are now and potential for development (aware of importance of capability).
Know who they are there for and know what difference they make (know about impact they make).
Conclusions and things to discuss?
Times are likely to become more challenging, but it’s not a crisis
Public sector funding under pressure – unlikely to be a major injection of money in future – but they don’t fund everything!
Volunteer and giving levels probably quite flat. Needs and beneficiaries are likely to rise. Competition may intensify within the sector. But this doesn’t necessarily spell ‘disaster’ – smaller
organisations less threatened. Larger organisations need to be resilient, flexible and
enterprising but also ‘realistic’ – but recognise that their future is their own responsibility.
Tony ChapmanPolicy & Practice
St Chad’s College, Durham University18 North Bailey
Durham DH1 3RH
07949 022 [email protected]
Perception of sustainable organisational resource
“its natural or equilibrium position in the medium
term” which is tied in with mission and organisational
planning
Measured assessment of impact of resource decline: plans devised to return to equilibrium or restructure
within realistic resource base
“Asset base”
New opportunities successfully
exploited
Recognise periods of growth as
“ephemeral” and build reserves
“Uncontrollable” periods of decline
offset drawing upon reserves
Better governed TSOs can accommodate to change
