Job cuts and asking staff "to do more with less" to tackle rising costs and dwindling income are significantly impacting the wellbeing, confidence and morale of charity workplaces, a survey of dozens of leaders in the sector is warning.

Instead of cuts, charities are urged to put in place alternative measures to tackle financial pressures, including improved governance, better use of technology and diversifying income streams.

Those that are able to adapt their operating models amid financial challenges "while remaining anchored to their mission" will emerge as the most resilient to such pressures, say researchers.

The survey's findings has been published by the charity Services for Education and involved the views of 72 charity leaders.

Financial sustainability was the biggest pressure area faced by 40 leaders surveyed and while organisational culture was mentioned less often, by seven, while half described a “dynamic balance” between the two.

A third said financial pressures and impact on staff was a “constant tension” they faced.

“Finance is rarely experienced as a purely technical issue. Its consequences are felt through workload, morale, wellbeing, confidence, restructures, staffing decisions and the capacity of organisations to continue delivering meaningful impact,” said researchers.

Alternatives to cost cutting mentioned include improving reserves management, diversifying income, redesigning services and investing in impact measurement.

Embracing digital transformation and developing new approaches to service delivery, where also mentioned.

Investing in governance

Investment in bolstering governance is another alternative approach, such as ensuring there is “effective trustee oversight, diverse board skills, constructive challenge, succession planning and leadership development”, said researchers.

“In several cases, financial pressure had acted as a catalyst for innovation rather than simply retrenchment,” they added.

Services for Education chief executive Sharon Bell instigated the survey after talking to other charity leaders at a recent charity finance conferences.

“The financial pressures facing charities are very real, but I wanted to understand what happens when those pressures reach the boardroom and start influencing the decisions that determine an organisation’s future,” said Services for Education chief executive Sharon Bell.

“What struck me most from the research is that financial sustainability, impact and culture are not competing priorities.

“They are interconnected. Financial sustainability enables organisations to deliver their mission; culture enables people to adapt and respond; and impact is ultimately why the organisation exists.

“The danger is that culture can become the hidden casualty of financial pressure. It may not appear to be the biggest problem on ‘the dashboard’, but if people are exhausted, morale is falling and organisational confidence is being eroded, the consequences will eventually affect impact.”

She added: “This research is intended to encourage a more honest conversation between trustees, chief executives and their teams about the difficult choices charities are having to make – and how those choices can be made in a way that protects both the organisation and the people it exists to serve.”

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