A trend is a trend is a trend… until it bends

Our quarterly Charity Forecast polls present a snapshot of NCVO members’ confidence. We ask a number of questions about members’ plans and expectations for their operations and finances in the coming months. I think the results just might have started to show something interesting – that confidence may be beginning to return to parts of the sector.

I’m being cautious here. We’ve seen one of the most dangerous things a politician can do is prematurely proclaim the sight of green shoots of recovery. And voluntary organisations planning to expand their work over the coming months isn’t necessarily a good thing, as the debate over food banks show us.

We’ve just published our latest edition of the UK Civil Society Almanac, which showed us the substantial drop in government income that the voluntary sector faced between 2010/11 and 2011/12, with a shrinking overall voluntary sector. We know that at this time the economy wasn’t in great shape. And if we look back to 2011 on the graph below we see that more than half of organisations were planning to cut their spending, according to those who responded to this survey.

But since then the numbers planning to cut their spending have dropped and the numbers planning to increase their spending have grown. I’d be interested to hear from members whether this is taking on a bigger role, in the positive sense, or rather having to expand to meet rising need – or both.

An opt-in poll has limitations

It’s worth adding a big health warning here. Charity Forecast is an opt-in poll, it is not based on a rigorous sampling method (unlike the Civil Society Almanac) and not weighted to the profile of all NCVO members. An opt-in poll has many limitations. Maybe the organisations who would have answered more pessimistically have gone out of business; equally maybe those who are doing well don’t feel the need to express their situation through a poll response. The number of responses, especially recently, have been healthy (an average of 850 respondents for the last couple) but an opt-in poll on its own is of limited value. Nevertheless, we think the longer term time series of polls is now demonstrating some consistent enough trends that this is worth debating.

For half a decade now, many of the stories in our sector have been about austerity. And we still see regular indications, sometimes from other surveys, that many organisations are in a difficult situation and concerned about the future. Some of my own trustees have been very clear that they are still seeing the worst of times affect their peers.

But with all these caveats in mind, I feel confident enough to ask if we are seeing a change in mood. Are some organisations starting to prepare for an upturn?

A squeezed middle?

Either way, clearly not everyone is optimistic. NCVO members can see the full results of Charity Forecast, which this time we’ve also broken down by size of organisation. There’s some indication there may be a ‘squeezed middle’ in the voluntary sector, with organisations of £100,000-£1m income more pessimistic than those which are smaller or larger. This makes intuitive sense to me – an organisation big enough to be running some significant services but not big enough to spread risk and income around its operations is more vulnerable, and may have less room to manoeuvre when making plans for the future. Organisations of this scale are likely to be particularly exposed to the decisions of a small number of commissioners.

Maybe one of the biggest lessons that will emerge over the coming years is the different paths that different organisations are taking within the sector.

We’re thinking about how we can try to understand these different clusters, and what characteristics the sort of organisations that do well have. But the reality is we’re currently still in the business of hunches.

Can we predict the future?

One of the reasons we established Charity Forecast was to see if we could come up with an index with predictive power. In other industries, confidence surveys such as purchasing managers’ indices are considered reliable indicators of market health, with the advantage of being published long before official measures emerge. We don’t know yet whether we can do this with Charity Forecast and we won’t know for a while.

Again – I want to be clear – even at the risk of being dull, NCVO is not the sort of organisation that will make bold claims from an opt-in poll, with all its flaws, but looking at the trends over time I think this is now worth having a discussion about.

NCVO members can access the full poll results. Otherwise, let me know your thoughts, particularly if your organisation is optimistic about the future.

One more thing…

We also asked a question in this round of the poll about which party or parties you thought were most likely to form the next government – Charlotte’s written about your answers to that.