As we approach the last quarter of 2023 charities across the UK continue to experience unrelenting change. 

In our increasingly complex world, the most successful leaders in the sector will navigate two distinct but interconnected paths. The first is about being proactive on emerging technologies and trends. Embracing large language models, generative AI and big data science. The second is about being excellent at the ‘business as usual’. Navigating a complex regulatory environment and salient events such as C-19 recovery and the Cost-of-Living (COL) crisis.  

In this blog we take stock on some of these new and familiar trends as we enter the back end of the year. 

The first path 

AI adoption: accelerated adoption of digital technologies by charities, enabling them to deliver services, fundraise and engage donors online, was fuelled by the Pandemic. Embracing the uncertainty and disruption of AI is now crucial. Big charities are funding a plethora of projects with potentially game changing outcomes. Alzheimer’s research is one of the ‘go to’ examples but charities can start small. The Chesapeake Conservancy, a mid-sized US non-profit, began partnering with Microsoft’s AI for Earth initiative half a decade ago. Streamlining mapping data with a view to applying lessons for the future. At the start of this year the same charity announced the creation of a deep learning model, developed in-house, that accurately maps wetlands with an accuracy of over 90%. A full 75% of UK charities are not embracing these opportunities and this stands in stark contrast to the Prime Minister’s objective of making the UK the geographical home for the industry. 

Data transparency: proving the social good provided to the most vulnerable and marginalised in society requires agility, creativity and collaboration. It is important for securing crucial funding and public trust. But the sector cannot rely on goodwill from a public that is keen to move on from the Pandemic and is still struggling with the COL. For leaders, data transparency will be key. The Bill and Melinda Gates Foundation has a ‘gold standard’ approach to the measurement of impact and the publication of datasets. Setting the bar high is important as givers expect more information at a time when budgets are tight and access to information online has become the default expectation. 

‘Black Swan’ events: operating in this context of uncertainty and volatility makes it difficult to plan and anticipate future scenarios. Uncertainty stems from various sources, such as Brexit, climate change, political instability or social unrest. Uncertainty also affects the morale, motivation and wellbeing of charity workers. To make informed decisions within this context is difficult. Superforecasters at our partners Good Judgement Inc allows charities to predict future events with greater accuracy than subject matter experts who are prone to overconfidence. Our own Future.Ctrl methodology takes this insight and allows charities to implement the policies today that ultimately defend against these out of the blue events.  

Cybersecurity: increased reliance on digital technologies exposes charities to greater risk. Cyber and ransomware attacks not only compromise the confidentiality and financial stability of charities, they cause reputational damage and legal liability too. The trend will become more pervasive as services continue to be digitised and charities increasingly rely on automation. Cyber Essentials – the UK government-backed scheme – is important, but charity leaders need to think about what they are doing to go above and beyond. With a quarter of charities experiencing cyber-attacks last year leaders need to be stress testing their systems and putting in place contingency plans. Much of this support can be free or pro-bono so there is little excuse when disaster strikes. 

The second path 

Diversified income: income and financial sustainability are perennial challenge for leaders across the sector. Fragility of traditional income sources for charities, such as grants, contracts and events, was further exposed by the Pandemic and proved the importance of income stream diversification. Charities need to push the envelope by exploring new ways of generating revenue through social enterprise, crowdfunding, corporate partnerships, gaming, contactless donations and online retail. Partnering with private sector organisations with a social conscience is one route.  Macmillian mitigated losses during the Pandemic through novel partnerships with Boots and Virgin Money. They launched new products and services such as the Macmillan Coffee Morning Kit and the Macmillan Lottery. Looking to the private sector for inspiration will be key as the economy recovers through 2024. 

Collaboration: collaboration helps share resources, people, skills, knowledge and networks, as well as amplify voice and influence. But the UK sector has traditionally focus inward, fostering partnerships domestically, rather than looking at what is being done abroad. In an increasingly globalised world there should be no excuse for even the smallest charities to ensure they are integrating and learning from those further afield. In 2022 the British Council announced £5 million in grants for UK and overseas cultural partnerships. Among the collaborations were successful tie ups between mid-sized Scottish and English charities with cultural organisations in China, India and Bangladesh. Charity leaders need to embrace international fora by default and utilise new technologies to speak with and collaborate with leaders abroad.  

Inflation: while inflation fears in the UK are beginning to cool, the public is still feeling the impact of a 40-year high in October 2022. Just as the Pandemic hit people’s back pockets, the current environment has delivered a ‘double whammy’ impact on the sector. For charities the focus during tough times needs to be on forming closer relationships with potential givers without an expectation of funding now. Trust in the sector has partially recovered since 2018 so the opportunity exists. Now is the time to be proactive about engagement. Having those conversations will pay dividends in the long term for when the general public and organisations are in a position to be more financially flexible.  

Regulation: an increasingly complex regulatory environment aims to ensure accountability, transparency and integrity among charities. But compliance with a myriad of laws and standards governing activities are a perennial headache for charity leaders. Not following the rules can result in fines, sanctions, or loss of trust. Leaders need to ensure they are influencing changes up stream before they impact the bottom line. While not perfect, the Charities Act 2022 reforms are an example of where discussions with Government early on led to changes that smoothed and clarified processes for trustees. Making voices heard at a senior level, for example over the UK’s continued involvement in Horizon, or a UK-only alternative, helps reduce the likelihood of poor regulatory outcomes.

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