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Report: Ireland will soon have fewer charities

The survey found that the future outlook for many non-profits is questionable…and boards may have to decide to cease operations altogether.

Image: gruntzooki via Creative Commons/Flickr

NEW DATA COLLECTED from 990 charities shows that the number of not-for-profit organisations in Ireland is expected to fall in the coming years.

According to accountancy firm Grant Thornton’s 2012 Not-for-Profit Survey, a slowdown in Government and voluntary funding, growing problems with financing organisations and continuing struggles with corporate governance are feeding into the decline of such organisations.

The recession has affected all aspects of the economy, including the work of charities operating out of Ireland. As Government funding is no longer what it used to be, 73 per cent of charities have had to turn to other forms of fundraising over the past two years.

The pressure of funding uncertainty has led to 83 per cent of the respondents of the survey to say they are unable to plan activity beyond two years. Low levels of reserves have added to the problems of a shrinking pool of funds.

Government funding is nearly twice as important as voluntary fundraising to charities, with the breakdown somewhere around the 60:34 mark.

Financing current activities remains a concern for nearly one in three charities surveyed who said day-to-day funding is the most challenging issue facing their operations.

The survey also looked at other issues, including governance and risk management.

Almost one fifth of those surveyed do no intend to comply with voluntary governance codes in the future, while risk management and disaster recovery rank low in priority for the sector.

Only 12 per cent have already signed up to the code of practice on fundraising and 42 per cent say they will not participate for a variety of reasons.

Almost three quarters of respondents do not maintain a register of risks and 83 per cent indicated that they do not have any form of disaster recovery plan.

Commenting on the survey’s publication, Turlough Mullen of Grant Thornton said the sector has never been in such a “perilous state”.

He said that the not-for-profits need to negate the threats of the downturn by diversifying their fundraising activities, adopting best practice in the sector and achieving rationalisation through mergers and alliances with like-minded organisations.

In short, boards of charities need to keep a close eye on future funding requirements to avoid an insolvent position. The future outlook for many non-profits is questionable and, in some cases, boards may have to decide to cease operations altogether.

“As the economic crisis continues to deepen, we see that no sector is unaffected. 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,” Mullen added.

A recurring theme in the responses to the survey was a lack of meaningful communication with government and the increased red tape in dealing with it.

All 990 respondents to the survey were charities and non-profits with charitable status from the Revenue Commissioners.

Download the full Grant Thornton report here>

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