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Published 19 October 2010

A mood of uncertainty has emerged among charity leaders regarding the future of their organisations in

the wake of the financial crisis, according to reports.

A recent report by Rathbones Investment Management revealed that over 55 per cent of charity trustees it surveyed are either concerned or very concerned about the outlook for the charity sector.

The National Council for Voluntary Organisations, (NCVO), went even further, warning in its report that charity leaders' confidence levels in their organisation's finances currently stand at an all-time low. Over 57 per cent of respondents were said to be concerned their financial situation would worsen over the coming year - a feeling accentuated by respondents' loss of confidence in the sector's economy and the UK economy as a whole. The result has seen a slump in net confidence levels, which have fallen by 24 percentage points since June and now stand at minus 40 per cent.

Slightly more optimistic was a report by PKF Accountants and the Charity Finance Directors' Group (CFDG), which claimed the charity sector has "illustrated its ability to adapt and self review", with many organisations "feeling positive about the future as a result".

It found that while just under a quarter of charities have had to make significant reductions to their operations as a result of the economic climate, nearly a quarter also feel that the recession has not had a significant bearing upon them. Indeed, 89 per cent of those surveyed believe they will emerge stronger from the recession, citing increased opportunity for expansion and collaboration.

However, while attitudes as to the future of the sector are mixed, the immediate effect of the recession on charity finances has been unmistakeable. The CFDG/PKF report found that an estimated 60 per cent of charities had to make financial adjustments during the recession, with 41 per cent making cost savings over the last two years and 28 per cent relying on funding reserves to carry out their activities. Nearly three quarters of UK charities are also preparing themselves for a fall in their main source of income over the next year.

Richard Weighell, head of the PKF business risk services team said: "We know the Big Society agenda will provide some opportunities for the sector and for existing charities within it, but the extent of these opportunities is unknown.

"On the whole, most charities are going to need to make some changes in order to protect themselves and to maximise their ability to take advantage of emerging opportunities. There needs to be clear and considered decision making and strong project management backed up by reliable information, excellent communications and good advice."

Matt Kendall

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