One in three charities rely on single source of funding, reveals survey

September 2019

One in three charities rely on single source of funding: A survey of charity leaders has revealed that a third are concerned that their organisation is too reliant on funding from a single source.

According to the survey of 200 charities by insurance firm, Ecclesiastical and Third Sector, more than half (54%) the respondents polled said that if they lost a major source of funding it would take 12 months to rectify. Almost one in ten (8%) said that if this was to happen, the charity would have no choice but to cease operations. 

The survey also found a lack of funding reserves for many charities, with more than half (56%) admitting that if the worst was to happen, they would not have the reserves to continue for 12 months. 

Measures to diversify 

According to the research, charities are taking measures to diversify their income in order to better manage their financial risk, with six in ten saying this has been a success. More than half (56%) said that to secure additional funding they are providing extra services, with almost half (49%) reporting they were commercialising activities to generate revenue.

Other ways of diversifying included applying for awards (44%) seeking corporate partnerships (41%) and delivering government programmes (34%), as well as securing a new major donor (33%), changing the investment strategy (23%) and expanding the charity (6%). 

More than half the leaders polled said they have plans to further diversify over the coming year. 

Other short-term concerns facing charities 

While the top concern for respondents was funding (54%), other concerns highlighted were Brexit (51%), attracting and retaining talent (43%), breaching data regulations (41%) as well as political instability and the threat of a cyber attack (both with 38%). 

“These findings should be a wakeup call for the sector, and are consistent with CFG’s own research which indicated that the majority of our members are reliant on a single source of funding for the majority of their income,” commented Richard Sagar, policy manager at Charity Finance Group (CFG).