The status report shows that one in five of its member organizations has reduced its operations compared to what was planned, largely as a result of reduced public support and sharply increasing costs. Only 7% of members say they have been able to expand.

For half of the organizations, public funding has decreased since 2022’s change of government. A third also report decreased willingness among companies to contribute this year. In addition, 7 out of 10 organizations said they are pessimistic about developments in the world.

Giva Sverige’s Giving Index for May, which is included in the report, shows that giving remains strong – increasing in the first quarter of the year. However, optimism about future giving is decreasing and Giva Sverige notes that the increase does not outweigh the withdrawn support from other funders and increased costs.

Charlotte Rydh, Secretary General of Giva Sverige, comments:

“Some see giving from the public and companies as something that can easily replace public support, but the reality is rarely that simple. Different types of funders fulfil different functions, and together they create the stability required for long-term investments and sustainable operations.”

Since its inception in 2023, the Giving Index has proven to be an accurate indicator, both for the development of giving and for the mood of the economy. On two occasions, increases in the Giving Index have been followed by increased confidence in the future among households and companies according to the Barometer Indicator, which is the National Institute of Economic Research’s indicator of the mood in Swedish society.

Rydh adds:

“The Giving Index was introduced with the ambition of being able to quickly understand how external events affect giving from the public and companies. So far, the index has also proven to be useful for the opposite; to use the development in giving as an indicator of how the entire economy is moving. The fact that optimism about future giving is now decreasing should therefore also be seen as negative for other sectors of society.”

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Chaired by CIOF executive director of engagement and EFA president Ceri Edwards, the session saw Laurence Lepetit, EFA board member and executive director of France générosités speak alongside Willeke van Rijn, CEO of The Resource Alliance, and Keith Kibirango, CEO of New Global Markets, on the theme “Reframing aid – standing up to the cuts and a new global narrative”.

Highlighting a global context with a tendency to shrink civic space and call into question the legitimacy of some nonprofits’ and foundations’ work – as well as increased pressure on fundraising teams from economic models under strain, Lepetit, van Rijn, and Kibirango discussed how the sector can respond.

The USAID funding cuts have sent shockwaves across the sector with that money unlikely to make a return, they agreed, while the move of politics to the right sees a gradual shrinking of civic space in many countries globally. This then is a moment to reflect on what to do differently, attendees heard – and importantly, to act.

“If the funding is not coming back, we need to think about other opportunities,” said van Rijn. “This is no time to do nothing. Income diversity is essential – are we tapping into the resources that are there? The average donor in the US and France is in their 60s for example, so we’re missing whole generations – are we going to where they are?”

Kibirango highlighted a need for INGOs of the Global North to rethink their role and relevance as a sector: “Despite the cuts, for many parts of the Global South life hasn’t really changed,” he said. “Fundamentally, the vast majority are still in poverty despite the billions of dollars going to INGOs annually for years, so as a sector we also need to think about our role and relevance. Are we doing projects that others can do better and cheaper? What we can do that no one else does? How can we collaborate rather than compete?”

NGOs are not only experiencing significant cuts and obstacles to foreign aid but attacks on their legitimacy, said Lepetit, highlighting the growing trend of shrinking civic space. Across Europe, she noted, charities are losing their charitable status for being deemed too political, attacked for who they’re said to support, and seeing laws and tax incentives change to their detriment.

Collaboration across the sector, nationally and internationally, is the key to an effective response: “We need to work together to mitigate the impact and reframe the narrative,” she said. “There is great power in the day-to-day democracy within our organisations – we need to build on that.”

Key takeaways for survival in today’s global context

Build coalitions between nonprofit and philanthropic actors to “share knowledge and change narratives together,” said Lepetit, highlighting EFA’s new Fundraising4Democracy hub and upcoming European Fundraising4Democracy Tour.

Leaders need to be brave and bold, and accept change, said van Rijn: “If you are not transforming or innovating, you are dead. The challenges ahead are significant but so is the collective strength of our organizations.”

In the face of the USAID cuts, Kibirango said, it is time to think differently and look for new opportunities: including rethinking cooperation between NGOs from the North and South: “Beyond the West,” he said, “look at the East and Africa!”.

The survey was run by Kansalaisyhteiskuntapolitiikan neuvottelukunta (KANE), a Government-appointed board advising on civil society policy matters, and was completed by a total of 1,252 associations and foundations, of which three-quarters were small, volunteer-run organisations with no employees.

Nearly half of respondents said they thought that banks should offer specific accounts for nonprofit organisations, rather than offering them business bank accounts which provide less relevant services.

KANE notes that many small CSOs operate with cash and no bank account – 7% of respondents to the survey said that they had tried to open an account but had been unable to do so.

In total, 32% of CSOs thought that the pricing of banking services was ‘very unreasonable’; 38% thought it was ‘quite unreasonable’, 14% said ‘neither reasonable nor unreasonable’, 13% said ‘quite reasonable’ and 2% said ‘very reasonable’.

Despite cost concerns, the majority of organisations (57%) said they were happy with the service they received from their bank.

Smaller organisations and those with no paid staff were more likely to say the cost of banking was unreasonable, and less likely to be satisfied with the service received.

Respondents also raised concerns including complaints about the complexity and bureaucracy involved with using bank services. They also noted that branches were not always conveniently located and could have inconvenient opening hours, especially for a volunteer who is in employment.

KANE says that the country’s Ministry of Finance will consider these results as it assesses the need to change legislation in this area, and the Ministry of Justice will also consider it as part of an NGO strategy which it is currently preparing.

There are longstanding concerns about CSOs being able to access appropriate banking services – or being denied banking services by risk-averse banks – across Europe and beyond.

In the UK for example, charity regulators wrote to the country’s largest banks in November to request “urgent action” to stop charities being given poor service or denied accounts, as Fundraising Europe reported. In August, Fundraising Europe noted a new publication designed to support the financial and civil society sectors in working together to find solutions to.

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This is according to the Feiten & Cijfers 2022 report from Goede Doelen Nederland, which is based on data from 190 of the organisation’s 241 members.

The report shows total spending of €2.83bn, an increase of €315m, while total income rose 11% to €3.23bn.

Growth was particularly strong among larger charities, defined in the survey as those with more than €20m income, with income up 12% and spending up by 15% compared to 2021.

Income at mid-sized charities (€5m-€20m income) rose by 5%, and spending by 8%. Sub-€5m organisations grew their income by 4%, but cut expenditure by 6%.

The most significant income increases were experienced in educational charities (31%), although it should be noted that there were only two such charities (one mid-sized and one small) in the study.

Other sectors experiencing significant income growth were arts & culture (19%), international aid & human rights (16%), and health (9%).

Aid & human rights charities increased their spending by nearly a fifth (19%) in 2022, while health charity spending rose by 17%.

Arts & culture was the only area with decreased spending (-7%), while the only area with decreased income was animal charities (-4%).

Income streams remained similar to 2021, with private individuals contributing 52% of income to medium and small charities, and 29% of income of large charities. Grants were the biggest source of income for large charities, accounting for 41% of revenues. Across the sector, donor and member numbers were broadly stable, while volunteer numbers rose by 2% – although that figure is based on data from just 92 of the charities in the report.

The report is created by Goede Doelen Nederland in order to provide transparency and clarity around the sector.

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The letter, from Helen Stephenson (Charity Commission for England and Wales), Maureen Mallon (Office of the Scottish Charity Regulator) and Frances McCandless (Charity Commission for Northern Ireland), says that charities are “on the frontline of the current cost-of-living crisis”, and that the challenges they face are being “heightened by avoidable frustrations” created by banks.

The three chief executives say there is “little more” that they can do to improve the situation, without the banks’ support.

The concerns listed in the letter are accounts being closed or suspended suddenly for long periods of time; a reduction in bespoke services for charities; poor customer service, administrative delays; and online banking services which do not match the way charities operate.

The regulators says that they are supportive of efforts by industry body UK Finance to find solutions, but express concern that this work will not be enough, saying that banks “need to do far more”.

Specifically, the letter suggests that banking providers simplify the process for setting up a charity bank account, and ensure staff have a better understanding of charities and how they are governed.

The letter concludes:

“Working with charities is key to acting as a responsible business within our society, and the best way that banks can do so is by streamlining services to help charities operate in a way that does not create serious governance issues for them.

“As accomplished professionals in financial services, you will know well about operating in a regulated environment. It’s now time for banks to support charities to do the same.”

There are long-running concerns about access to bank accounts for civil society organisations (CSOs) across the world. In August, Fundraising Europe highlighted a new resource from the European Center for Not-for-Profit Law, suggesting steps which can be taken both by CSOs, as well as by banks and regulators, to resolve the issue.

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Directed by Stephen Gyllenhaal, the documentary film challenges longstanding preconceptions about how the charity sector is resourced, and features actor and founder of Crowdrise Ed Norton, among others. It is inspired by the work of Dan Pallotta, who has led the charge in redefining how charity sector finances are thought about – particularly overhead costs.

Pallotta argues that charities are often praised for minimizing their expenses, but that this approach can hinder their overall impact. As such, he urges a shift in mindset to recognize and reward charities for their goals and achievements, even if it means greater spend, with the film invites viewers to reconsider how we approach effecting change on a global scale.

Speaking ahead of the screening, Áine Myler, CEO of Charities Institute Ireland, commented:

“Charities play an indispensable role in our community and economy. According to a recent report by the Charities Regulator, 1 in 8 adults in Ireland are employed in the sector (281,000), and one in five Irish adults (648,000) volunteer in some capacity, including 46,000 charity trustees. It’s evident that the effective, efficient operation of these services, in compliance with all relevant laws and regulations, is to the advantage of everyone involved.

“Regrettably, misunderstandings about the functioning of charities, combined with insufficient funding and misguided criticisms of overhead costs, have led to a situation where many charities are underinvesting in essential areas. We believe it is now vital to unite and discuss how we can shift this narrative.

“We are thrilled to convene this gathering to deliberate and discuss this critical issue, collaborating to do what we excel at – addressing complex social problems and aiding those in need.”

Almost 200 people attended the screening, which was followed by a panel discussion with experts from both the business and nonprofit sectors. The panellists offered their insights and views on the film and the broader charitable sector, encouraging attendees to consider how the film’s message could help transform the narrative for Irish charities.

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And CSOs themselves can take steps to ensure they are not impacted by so-called ‘derisking’ by banks, says a new publication by the European Center for Not-for-Profit Law (ECNL). The publication provides several possible solutions to what it calls the “trend of financial institutions terminating or restricting business relationships to avoid rather than manage risk… known as derisking”.

The new publication says that addressing the problem is “a shared responsibility between financial institutions and state bodies”, but that this process should also involve civil society itself, as part of multi-stakeholder dialogue.

ECNL says that there are “already some existing efforts that show hopeful signs of progress” in terms of improved stakeholder relationships, citing initiatives in Bulgaria, Cyprus, Kosovo, Macedonia and the Netherlands. It gives examples of how this works in action, such as stakeholder seminars, working groups, meetings and newsletter content.

In particular, ECNL says that financial services providers must dedicate more resources to understanding the needs of CSOs, as well as communicating better with CSO clients about their approach to risk. It gives ABN AMRO in the Netherlands as a good example of providing the sector with relevant information on this topic, through a page on its website.

The publication also notes that the Dutch Bank Regulator last year “changed its vision from rules-based to risk-based”, following pressure from both CSOs and banks, and suggests that other regulators could consider similar reforms.

CSO measures

The publication suggests that, to ensure unimpeded access to financial services, CSOs need to investigate the financial institution’s requirements and due diligence process and prepare relevant information when they first start using its services.

In addition, CSOs should provide annual updates to the bank about their work, as well as immediate notifications of larger changes in operations, such as new projects in risky countries.

They also must make sure to have proper documentation to “support and justify” every transaction, ECNL says.

A previous ECNL resource provided a more comprehensive guide for CSOs on understanding financial institutions’ attitudes to risk.

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This is according to a new report which also shows that the sector’s public funding has dropped significantly over the past decade, with nonprofits increasingly creating their own income.

The Third Sector Barometer is published by Plataforma de ONG de Acción Social, a national organisation which supports the country’s nonprofit sector. The Barómetro is based on a survey of 703 nonprofits across Spain.

Total income for the sector in 2021 was €17.4bn, up from €15.8bn in 2020. Back in 2010, it was slightly higher at €17.5bn, before it dropped to just €14.5bn in 2013. Those figures are not adjusted for inflation.

The report says that around a fifth of the sector’s total income goes to three major NGOs: Cáritas, the Red Cross and ONCE (the Spanish National Organisation of Blind People).

Income sources change

In 2010, 60% of the sector’s income was from public funding, 18% came from private giving (individuals, private foundations and businesses) and 22% from income generated directly by organisations’ operations.

At this time, the vast majority of nonprofits (93%) received private funding – by 2021, that figure dropped to 73%.

For 2021, public funding is 47% of total sector income. Private giving has increased slightly to 22% of the total, while generated income has grown to 31% of the total.

During 2021, 49% of organisations recorded a surplus, while 28% broke even and 24% recorded a deficit in their annual account.

Spanish nonprofits are getting smaller, the Barómetro shows – in 2010, 29% of them had five or fewer staff. In 2021, it is 48%. The proportion having 50 or more staff has gone from 23% in 2010, to 12% in the latest year.

National significance

The Barómetro says that the sector has 528,220 workers, down from a peak of 644,979 in 2013.

The sector today accounts for 3% of all salaried workers in the country, and 80% of the sector’s workforce is female. Women make up 60% of nonprofit organisations’ governing bodies, compared with 33% of boards in the private sector.

Alongside the quantitative data, the report outlines three large-scale opportunities which the researchers see as critical to Spanish society. These are areas in which the third sector can contribute significantly, potentially by working in collaboration with other sectors.

The first is technology-based innovation to support independent living, regardless of an individual’s needs, health or age. The second is supporting the transition from a linear to a circular economy, which involves inclusive employment opportunities and moves away from carbon-intensive industry. The last is harnessing and channelling the goodwill and innovation of the population as a whole, in particular with relation to digital capabilities, in order to create a more resilient society.

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The ninth edition of the annual ‘Who finances civil society?’ report shows that charitable giving as a proportion of Swedes’ disposable income has dropped slightly, but that the long term trend is positive.

However, potential for a drop in donations, pressure on public sector budgets, and economic uncertainty all mean that nonprofits in the country must think strategically about their organisation’s purpose, and their finances.

The report contains five recommendations for civil society organisations:

1. Review their financial strategy: organisations should create as diverse a funding base as possible in order to deal with the changed economic reality of the next few years.
2. Decide which role they will play: charities should consider whether their primary role is to be a ‘voice’ (political and advocacy work), a ‘service’ (operating schools, care or other services) or a ‘community’ (based around common interests and/or membership), or to be more than one of these things. This will have an impact on organisational strategy and financial requirements.
3. Cooperate around finance: civil society should look at the unique opportunities it has to act across sector boundaries and create creative solutions to social challenges, using funding from multiple sources.
4. Create solidarity across civil society: while each individual nonprofit has its own priorities and pressures, they must all recognise the issues which affect civil society as a whole, and the environment in which they operate.
5. Keep an eye on the ‘mega trends’: even in times of crisis, it is important to continue to focus on the long term, and consider ‘mega trends’ which will change the world over the next few years.

Charlotte Rydh, general secretary at Giva Sverige, and EFA president, says:

“It is clear that civil society organisations will be facing a very different funding picture over the next few years. This will make it necessary to work more closely than ever with the public and private sectors to ensure that vital services can still be delivered, and also for individual organisations to have a clear strategy for what they seek to achieve, and how to secure the financial resources they need to make that possible.”

Separately, Giva Sverige has published the Q3 version of its regular report on donations trends in the country.

CAF’s research found that charities are running out of options to continue to meet the high demand for their services while experiencing falling income and rising operating costs themselves. Only half (49%) of the charities surveyed in November feel confident that they have the funds to meet current demand for their services, compared to 58% in October.

As a result, some charities are cutting back on services, with almost a quarter (24%) of those surveyed saying they have already done this and have no room to cut further.

51% of charities are also using their reserves to cover core costs. In comparison, a year ago CAF research found that two-fifths (40%) of charities were using their reserves to help them through.

Neil Heslop, chief executive of the Charities Aid Foundation, said:

“Charities are running out of options, forcing them to rely on their reserves and cut back on the services they provide. This research provides stark evidence about how the sector is responding to the triple threat of soaring demand, falling donations, and rising costs.

“Charities are at the heart of our communities and are carrying the weight of the worst effects of the cost-of-living crisis. The Government needs to recognise the critical role that charities are playing to care for those who are most vulnerable in our communities. As a start, these organisations should be placed first in the queue to receive additional support for energy bills from April.”

The research also found:

• Falling income: Declining income from fundraising is the primary concern for two-thirds (67%) of charities as households cut back to cover their own bills.
• Rising operating costs: Inflation is driving up running costs for charities. Nearly three-fifths (58%) of charities say their most pressing concern is increasing costs, such as energy.
• Soaring demand: Charities are having to do more with less as an increasing number of families rely on their services. In November, nearly two in three charities (63%) report that demand for their services has increased compared to this time last year, including a third (33%) who have seen demand grow significantly.

CAF has launched a cost-of-living resource hub with information for charities and funders to help them navigate the challenges.

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