The going gets tough for charities as spending cuts bite

Due to the impact of both the recession and Government spending cuts, the Bradford-based housing charity he works for is in more demand than ever. Unfortunately, those same austerity measures means Keyhouse has less money to deliver vital services.

The organisation is not alone. According to a report published this week, increasing numbers of charities are axing jobs and services, with some risking closure as budgets shrink.

“Over the years the local authority in Bradford has been very supportive of the work we do, which ranges from offering legal advice on housing and welfare rights to providing supported housing for groups like refugees and teenage parents who need assistance to live independently,” says Graham, Keyhouse’s head of projects.

“We receive 70 per cent of our funding from statutory sources, including Bradford City Council. As the authority looks for ways to save money, we have seen cuts of between eight and 12 per cent across the various services.

“In one instance, the local authority wanted to pull one our supported housing contracts entirely. We pulled together the data on who was being supported and showed that these were some of the most vulnerable people in Bradford with multiple and complex issues.

“There is a lag between when a recession takes place and when homelessness peaks. But we’re seeing more people coming to us saying they’re homeless and we’re starting to see people affected by the changes to housing benefit.

“We realise that these are tough economic times, but the fact is that cutting services like ours may help to meet reduced budgets now, but in the long term it will create even more cost.”

It’s the kind of sentiment echoed by countless charities up and down the country. The When the Going Gets Tough report, which was produced by the think tank New Philanthropy Capital in partnership with public sector insurer Zurich, showed two-thirds of charities have already been forced to cut frontline services and nearly three-quarters said they were making staff redundant. Almost one in 10 admitted they risk closure in the next 12 months.

One of the biggest bugbears to emerge from the research, was changes to the way services are commissioned by local authorities.

“When councils put services out to tender they tend to make a decision on bids by applying what’s called a financial risk test,” says Graham. “Of course a big company with a healthy turnover is going to look like a safer bet than a charity or non-profit organisation whose main aim is not to make money. The problem is that this approach doesn’t take into account the quality of the service being offered.

“We are also facing very specific challenges. Changes to legal aid will mean that support and advice on welfare rights issues will no longer be funded. The question is, where are people going to go for advice? As I told our local politicians, the answer is their MP’s surgery. That seemed to shock some of them, because the consequences of the change hadn’t been properly considered.

“These kind of decisions always have domino effect and once you remove a service, all you do is create problems further down the line. All of us who work in this sector understand that budgets have to be trimmed, but if one of the organisations which funds us is having to cut back I would much rather they came to us and negotiated where money can be saved.

“Currently, there is a tendency to parcel up various services for tender. It’s a case of every egg being put in one big basket, but if or when that basket breaks the impact on already vulnerable people will be devastating.”

Keyhouse employs 70 staff across various offices in Yorkshire and while the charity hasn’t yet closed any of its services, the impact of the cuts is still being keenly felt.

“Staff have left and we haven’t replaced them,” says Graham. “If we keep doing that, quality on the frontline begins to suffer. When the pressure is on from funders, out job is to try to insulate our clients as much as possible.

“We have a lot of stressed staff. You start to see the cracks. We’ve tried to find other funding streams, diversify our finding and do more joint working with other organisations. However, for a long time we have relied on contract work so we don’t have a history of churning out grant applications. There is money around, but it’s about having the time and resources to actually pursue it.”

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