This month, the Charities Aid Foundation reported: “Fewer people are giving to charity and those that do are giving less, resulting in a £2.3bn real terms fall in total donations in the last year. Charities with incomes of less than £1m reported total combined deficits of £306m in 2011, compared with an overall surplus of £325m in the 2007 financial year.”
In 2010, Accountants Baker Tilly spoke about ‘managing charity finances through uncertain times’ and reducing costs. “A charity needs to assess whether its staff have the correct level of skills to carry out its activities. So whilst it is good news that charities are reviewing their cost base, the bad news is that 10% are making staff salary cuts and nearly a third are deferring projects.”
Chris Allison, Managing Director of Auditel, the UK’s leading independent Cost Management specialist, says: “At this difficult time, charities, like every other type of organisation, are looking to reduce their operating costs. But, in our experience, it is possible to retain valued personnel rather than having to rehire when things improve. Therefore, to accomplish this, charities need to take a really hard look at their business costs.
“However, we find it rare for a charity to have a full-time cost management specialist on their books. It’s a luxury that few can afford. The responsibility usually passes to other members of staff, many of whom do not possess the relevant experience and have more than enough duties already!”
Allison adds that as a result, some opt for what appears on paper to be the ‘cheapest’ suppliers. Adopting this purely headline cost-based model may seem logical, but it fails to take into account a wide variety of additional factors contributing to the overall situation. Thus, many organisations are spending far more than they need.
A cost effective solution
Many charities are turning to outsourced independent providers of cost management services. By so doing, they can access specialist insider knowledge and eliminate the financial loss of taking key individuals away from their core responsibilities. This takes advantage of a thorough methodical analysis of their expenditure without the cost of employing in-house specialists.
Allison again: “Our Total Cost of Purchase Model® is not about cost savings, although that’s important. It’s about a holistic and ethical method of securing essential business services that not only look at price, but at every aspect of the procurement lifecycle. Employing this model, a highly-skilled Auditel specialist enables charities to lower their business costs year-in and year-out”.
Here are examples of Auditel’s many success stories:
Target Housing is a South Yorkshire based charity which has been providing accommodation and support to homeless and vulnerable people for over 21 years.
Savings on Mobile Telecoms 65%; Fixed-Line Telecoms 65%; Gas 37%; Electricity 31%
Total savings to date over £70,000.
The Peepul Centre is a unique and inspirational social enterprise, providing a multi-purpose venue for the local community.
Savings on Gas, Electricity, Contract Cleaning, Washroom Services and Fire and Security Systems
Total savings to date: £77,477
Ongoing additional projects: Catering and Stationery Costs.
Papworth Trust is a charity and registered social landlord, based in Cambridgeshire, working with people with disabilities across the East of England and London.
Savings on Electricity – £139,640; Gas – £49,063
Total savings to date: £188,703 (25%)
The Deputy Chief Executive of Target Housing reported: “Auditel’s savings mean that our operating expenses are lower and that we can redistribute the money to subsidise other areas and improve our services. It would have been impossible for us to achieve these results.
“Auditel has become an outsourced member of our management team. They are a breath of fresh air. You always know where you are with them. They do what they say they are going to do and are completely honest. I wouldn’t hesitate to recommend them to other businesses.”