1. Third Sector Trends in Yorkshire and the Humber Tony Chapman St Chad’s College, Durham University Involve Yorkshire & Humber Third Sector Trends Report Launch 2 nd May, 2014

2. 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).

3. The size and structure of the third sector

4. 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.

5. 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.

6. 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%).

7. TSOs that employ staff are different from those which don’t The ethos of the employing organisations makes a difference too

8. 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.

9. 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

10. MARKET COMMUNITY STATE Inspired by enterprise and USP Market driven, value led Skill reliant – mainly staff Business-like governance ‘Independent’ but ‘partnership oriented ’ Reactive to public sector priorities Driven by CEOs not Boards Focus mainly on soft outcomes Stronger grant orientation Dependent on mix of employees and volunteers Inspired by ‘needs’ and ‘interests’ Mainly ‘people reliant’ – especially ‘volunteers’ Very ‘independent’ in ethos and orientation Governance by ‘committee’ Financial resources not a driving force

11. Sector finance

12. Reliance on different income sources

13. Change in levels of income in last 2 years

14. Expectations about future income levels

15. Assets and reserves

16. Levels of ‘free reserves’

17. 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.

18. 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.

19. Working with the public sector

20. 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.

21. 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%).

22. 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.

23. 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.

24. 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.

25. The future: a mixed picture

26. What will happen the sector as a whole? (% ‘agree’ or ‘strongly agree’) Much more reliant on volunteers to deliver front-line services37.9 Much more reliant on volunteers with fundraising33.4 Much more reliant on free support from local CVSs20.3 Much more reliant on grants from charitable foundations31.9 Much more reliant on money given by the general public19.9 Much more reliant on free support from the local council16.9 Much more reliant on grants from the public sector for core costs19.4 Much more reliant on contracts/sub-contracts from the public sector16.4 Much more reliant on free professional services from private sector13.2 Much more reliant on funding from private sector businesses12.8 Much more reliant on contracts/sub-contracts from private business9.7

27. 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%).

28. 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.

29. 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%).

30. So how are TSOs preparing for the future?

31. 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 %).

32. 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%).

33. 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.

34. 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).

35. Conclusions and things to discuss?

36. 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.

37. Tony Chapman Policy & Practice St Chad’s College, Durham University 18 North Bailey Durham DH1 3RH 07949 022 627 tony.chapman@durham.ac.uk

38. 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