Friday, 16 August 2013

CaRT merged into the EA

The almost certain implementation of a cap on 'tax relief' has put many charities into a tail spin. In a report commissioned by Price Waterhouse Cooper, the Charity Finance Group and the Institute of Fundraising. The report describes the reality as 'a perfect storm' and goes on to reveal that charities have all experienced a net reduction across all income streams. Not only that but the majority have already been hit by Government spending cuts.  What is obvious is that the competition for public cash is going to get even harder.

Caron Bradshaw, CEO, of Charity Finance Group, said: “If further evidence were needed, that the Government are 'foot shooting' with policies which undermine the long term future of many charities, this is it. In the light of these results the relief cap is a frightening prospect, which will bring minimal benefit to the exchequer but blow a further hole in the sectors’ finances. Tentative promises of consultation are not enough. The damage has already started and George Osborne must rethink."

The reports creates a worrying picture of the state of the sector. It is possibly the worst time to make the leap into the third sector. Whilst it has been trumpeted by the ex BW group as a resounding success that CaRT has been created. The reality is that the government wanted shut of British Waterways and there was no real opposition to handing over the reigns.  The vast majority of charitable fundraisers unsurprisingly admit that raising money has been harder in the past year and the tax relief cap will make the situation much worse.

The situation hardly creates a set of ideal conditions for charities to make long term investment decisions. Not only do investments have to generate income and protect capital, but risk has to be justified and trustees cannot play fast and loose with the funds. Trustees have to monitor and be accountable for the performance of their portfolios.

Some long established charities now see the only option for survival being to enter into a merger with other charities. I expect it to get even tougher in the next few years as the current funding caps become the new norm. Plus the continuing uncertainty around what the Government might do next.

There is no charity in the third sector likely to want to partner a merger with CaRT. The 'poke in the eye' that was the governments 'bailout from the EA infrastructure transfer' gives some insight into the ministers thinking and expectations for the future of CaRT. So what next for CaRT. I have said it before, I will say it again. I can see CaRT being merged into the EA sometime in the future, rather than the other way round. There's is an old saying that "Directors are like teabags - you never know how strong they are until you put them in hot water." Well, they're all in hot water now. The next year or two should provide CaRT with a remarkable opportunity prove its mettle. 

Coffee anyone?

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