Raising adequate finance on an ongoing basis, has always been one of the main areas of concern for charities. Today this is more complex than ever due to the impact of covid and the very uncertain economic outlook for the UK and other economies.
There have been very significant increases in the price of energy and fuel in the UK. Food prices are rising with shortages expected. Inflation has reached levels not seen for decades, which has a direct impact on mortgage rates. All of these factors, impact the disposable income of families and consequently the income which charities depend on to operate.
The UK government is facing very difficult times, borrowings have increased, a result of the impact of covid and more recently the Central Bank has been forced to intervene to remedy a dramatic drop in the value of Sterling. All these measures indicate that there will be gaps in the public sector where charities have historically been obliged to assist. Indeed, many charities today feel that governments view charities as service providers.
The result is an increase in demand for charities to provide services at a time when their income and indeed in many cases, accumulated reserves have decreased and one must bear in mind that unlike commercial enterprises, charities are unable to pass on their operating costs.
It is a legal requirement for all charities to ensure that directors and trustees have effective oversight over all transactions undertaken by the charity. This is particularly important when a charity operates in countries which do not have strict anti-money laundering controls in place.
A strict regulatory framework and the requirement for increasingly robust controls, place responsibility on the trustees and directors of charities, to ensure compliance with the objectives of the charity and that effective leadership and internal controls are in place.
The increasing costs of undertaking charitable ventures also present a very real risk to the going concern prospects of many charities. Energy costs will be at least partly subsidised by the government for several months, but plans beyond that remain unclear. The impact of the cost of living crisis and fall in real wages may result in the loss of salaried members of staff to the typically more competitive commercial sectors.
These challenges are taking place not only within the borders of the UK but also globally. In GCS we are no strangers to these problems as our mission is to spread the Gospel worldwide. By definition, this obliges us to go to countries where there are major problems, both social and economic.
As GCS operates globally, a large proportion of our expenditure is incurred in providing overseas aid which means that any decrease in the value of Sterling has an immediate impact on the work that we can carry out abroad. To this end we are concentrating our efforts on raising finances, to enable us to continue and extend our core values throughout the world.
Anthony Mackenzie
Director of Finance
