An insight into the not for profit sector

As the south-west’s largest chartered accountancy and business advisory firm, Monahans serves a range of businesses which operate across multiple sectors.

To ensure we are offering a service that responds to the needs of our clients, we are always trying to find ways to analyse the sentiment of each market. As part of these efforts, we commissioned a survey with management teams, senior executives, and business owners at more than 300 micro, small, medium and medium/large-scale enterprises throughout the region. The key aim was to gauge how businesses in the region have been faring over the last year. In this article, we dive into the charity and not for profit sector to understand the current perception of the industry.

The UK not for profit sector is vast. In 2023, it was reported that it had 168,893 registered charities, with another 20,000 organisations without charitable status featured on the register. It’s an area we specialise in at Monahans and we’re proud to have a team of experts with years of experience on hand to support all organisations operating on the sector.

From working closely with our clients, we know the not for profit industry has been faced with many obstacles this year. With academy schools having to eat into their reserves to cover costs, to charities providing further support for beneficiaries to tackle the cost of living crisis, and finally, the sharp increase of bills, the pressure has been rising. You can read more about the key challenges in a recent blog.

Respondents gave the buoyancy of the market an average score of 6.2 out of 10 (10 being the highest), which was the lowest of all sectors.

What position are organisations in?
While there is a glimpse of positivity in the fact 36% of organisations reported being in a better position than a year ago, an equal percentage felt worse off and as a result, it was one of five sectors that reported the worst change.

Despite this position, turnover has largely remained steady across organisations, with increased turnover reported by 27% in the last financial year. Steady turnover is a testament to the sector’s ability to persevere through difficult times.

What does growth look like for the sector?
Amongst the hurdles faced by the sector, generating new business was rated as the top challenge over the last 12 months which may have prohibited similar growth to recent years. All businesses across all sectors are feeling the pinch so it’s no surprise that they are cutting back their costs too. Businesses that support multiple charities for example may be cutting back on investment.

Recruitment and retention, inflation and cashflow were also reported as significant challenges. In response to this, 55% reported a reduction in headcount which was the highest of any sector. The fact that over half of organisations reported a decrease in headcount is a true reflection of the pressure that the cost of living crisis has had on the sector; as a result, businesses have reduced the number of jobs.

Looking towards the future, rising operational costs may pose a threat but we are working with our clients to implement strong financial plans and help them retain optimism, and providing tools to help them navigate the bumpy road ahead. A change of government creates further uncertainty but the last 12 months has taught us to find solutions which we can shape to each individual client.

If you are looking for a team of experts to help your not for profit business achieve long-term success, get in touch with the team today.

To download the full report, visit the Monahans website: https://www.monahans.co.uk/publications/swresearch-july24

James Gare