International Charity Financial Benchmarking Report 2022

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23rd February 2023

We are proud to introduce our fifth annual benchmarking report on international charities based in the UK. The sector and our associated reports over the last two years have been hugely impacted by the COVID-19 pandemic. As we transition from these unprecedented times, we note common themes to consider which are explored in this report.

The pandemic has forced most organisations to rethink and plan for the future. Whether it be the way of delivering services to stakeholders, or a hybrid approach to events and operations – essentially utilising lessons learnt over this period and applying them going forward.

As we move into the next strategic period for many international charities, new challenges present themselves to the sector as well as continued risks such as fraud and safeguarding. Following the floods in Pakistan and the Ukrainian humanitarian crisis, the risk of fraud for not only overseas charities, but charities in general, remains wide reaching and continues to increase in sophistication. We continue to urge trustees to revisit and continually monitor their policies and procedures to mitigate the risks of fraud, and ensure safe transfer of monies across borders.

Safeguarding remains a key area of focus of the Charity Commission and their guidance is continually updated to reflect the current climate and the importance of managing this risk. The impact of the pandemic will leave lasting effects on the sector, and with current budget cuts both from central government coupled with the cost of living crisis, balancing sufficient resource in this area delivering against your objectives is a challenge – no matter your size.

The Government departmental merger and overseas aid cuts have led to some charities seeing a substantial reduction in institutional funding, or at best significant delays to funding being made available.

These challenges are all amongst the general economic climate of rising inflation and difficulty in recruitment, balanced with growth and diversification. At the other end of the spectrum, some organisations have had a relatively successful year, with fundraising holding up well and even increasing in some cases. Continued guidance and updates from the Fundraising Regulator is important to consider, particularly as charities adapt their approach.

In addition, many have been able to successfully diversify and replace lost government funding with that from other providers.

The need for international charities and the work they undertake remains substantial. With many organisations having now achieved short-term survival throughout the pandemic, we are seeing a renewed focus and a huge discussion on reserves, more specifically risk-based reserve policies. Charities should ensure their policies are sophisticated and strategy driven to cover both key risks of the business and changes for the benefit of beneficiaries.

This report continues to consider a selection of the areas that we, in our experience, see as the most significant in achieving good financial governance for an international charity. These include risk, fundraising, reserves, and value for money.

We do hope the results of this report will be useful, along with helping to inform debate.

We also hope that our findings will help you to benchmark your own organisation against your peers, in addition to supporting the sector in adopting best practices for the future. As in previous years, we welcome feedback on our findings and on the contents of the report, as well as suggestions for future publications.

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