Understanding the Financial Health of Small Voluntary Organisations in Camden: Key Insights

Introduction

As part of the John Lyon’s Charity’s Replication Fund, Clear Thinking Consultancy has worked Young Camden Foundation and several of our members to conduct a detailed financial analysis of ten voluntary organisations that support children and young people in the London Borough of Camden. The analysis used the AMPACC financial costings tool, an excel-based solution designed to help small voluntary organisations accurately calculate their service costs and make informed financial decisions.

Key Insights

1. Financial Reserves:

Only 1 in 5 of the participating organisations had at least three months of running costs in reserves, which is the recommended minimum. 1 in 3 had less than a month's running costs saved up, with smaller organisations particularly impacted. This puts them at risk of financial instability in case of unforeseen challenges.

2. Flexible Workforce:

Almost half of the organisations use workers flexibly, employing them as sessional workers, contractors, or volunteers as needed. This flexibility is beneficial for organisations, allowing them to adapt their workforce to changing needs. However, it also highlights job insecurity within the sector, as none of the organisations used interns. This poses a potential challenge for future workforce sustainability.

3. High Rent Expenditure:

For those who pay it, rent was identified as the highest expenditure for most participating organisations. Two-thirds of them paid less than 5% of their income on rent, but three paid over 15%, with the highest paying a third of its income on rent. This suggests that the sector may be facing issues related to high rental costs in certain areas.

4. Under-resourced Sector:

The per person per day (pppd) figure, calculated by dividing the total staff and direct overheads by the total number of service delivery days, highlights that four participating organisations are under-resourced, with a pppd below £100. This indicates that they do not have enough overheads to support their organisation effectively. None of the organisations are over-resourced or 'top-heavy', and all are operating carefully and creatively within their means.

5. Capacity and Wellbeing:

Smaller organisations appear to be at higher risk due to a lack of reserves and the challenge of coordinating a high number of workers. This can potentially impact delivery quality and staff wellbeing. These findings underscore the need for better quality funding that covers full costs to ensure job security and address potential risks to the long-term workforce in the sector.

Conclusion

The findings from this financial analysis provide valuable insights into the financial health of small voluntary organisations in Camden. They highlight the need for targeted support to help these organisations address their financial challenges, maintain job security, and build capacity for long-term sustainability. Funders and partners can play a crucial role in providing this support and fostering a thriving voluntary sector in Camden.

Moving Forward

YCF will continue to support these organisations in implementing their learning from this process. We will work with them to identify and define their financial priorities and develop tailored strategies to address their specific needs. Additionally, we will advocate for more open and responsible funding practices that consider the full costs of projects and support the long-term sustainability of the sector.

Funding Support:

We encourage funders and partners to consider the key insights from this financial analysis when planning their support for the voluntary sector. By investing in the financial resilience and sustainability of small voluntary organisations, we can create a more resilient and effective sector that can continue to deliver essential services to children and young people in Camden.

We offer our thanks to Clear Thinking Consultancy, Kita Ikoku, and Olivia Sixsmith for their work in bringing this information together, as well as the following members organisations for their committed participation: Survivors Can Shine, Store Schools and Projects, Moving Waves HVH Arts, The Apex Project, Gospel Oak Action Link Youth Club, Creators House, Be Lifted Now, British Somali Community Centre.

Sam Speer, Partnership Development & Grants Manager – February 2024, based off report by Kita Ikoku, Company Director, Clear Thinking Consultancy – December 2023