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Outlook for charities is 'questionable', say advisers

Barnardos closure is just the ‘tip of the iceberg’, according to Grant Thornton.

Image: HowardLake via Flickr/Creative Commons

THE FUTURE OUTLOOK for a number of not-for-profit organisations is questionable and some boards may have to decide to cease operations completely.

The dismal prediction from charity advisory firm Grant Thornton comes after Barnardos announced it would be closing for one week as a way of cutting costs.

The advisers added that they would not be surprised if more charities followed suit.

“This is merely the tip of the iceberg,” explained Turlough Mullen. “The sector has never been in such a perilous state due to the economic downturn.”

A fall-off in funding from both voluntary contributions and Government allocations were inevitable consequences of the downturn, admitted Mullen, but he added that charities need to recognise these risks and diversify their fundraising activities. “Boards of charities need to keep a close eye on future funding requirements to avoid an insolvent position.”

The reality is that, in spite of the fact so many of these organisations like Barnardos 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.

A many as one in 10 charities are at risk of folding as they do not have the funds to plan beyond the next six months.

At Barnardos, State money accounts for about half of total funding and substantial cuts to allocations, as well as a drop in voluntary contributions, has created financial difficulties.

The group announced it would close its doors for one week as a way to manage its pay roll costs.

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Chief executive Fergus Finlay has praised the 400 staff members at the charity who have put their commitments to projects ahead of their personal salaries.

Speaking to Newstalk Breakfast today, he said the measure would save two per cent of the pay bill.

Asked about his own salary, which costs Barnardoes about €88,000 per year, he said “if I could work for nothing, I’d work for nothing.”

Finlay added that the closure has been planned “very carefully” and a quiet week was picked and emergency contacts set up.

More: Graphic of the Day: Barnardos’ School Costs Survey

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