Ulster Bank and CO3 3rd Sector Index, Q3 2016
Third sector organisations currently see austerity as an even bigger threat than Brexit, the latest Ulster Bank & CO3 3rd Sector Index reveals today (Monday October 3rd, 2016).
The survey of leaders of bodies such as social enterprises and charities shows that austerity (75 percent) is seen as the biggest risk to the future operation of their organisations, with Brexit the second most commonly identified major risk.
However, Brexit is still a significant concern for Northern Ireland’s third sector. 80 percent of respondents believe it will have a negative impact on their organisation, with only one percent believing that it will have positive implications.
Indeed third sector leaders’ outlook for the economy has deteriorated since the Referendum result, with 58 percent believing the Northern Ireland economy will worsen in the next 12 months, compare to 37 percent who said so in the previous quarter.
The cash flow position of organisations has also deteriorated since the vote; 31 percent saying that their cash flow position has weakened, compared to 24 percent in the last survey.
Furthermore, the vast majority (86 percent) believe local politicians are not giving sufficient attention to the potential implications of Brexit for the sector. And 65 percent are concerned about the long-term implications of the UK’s decision to the leave the EU for their organisation’s sustainability.
Other than austerity and changes to EU funding, pension issues were cited as the biggest threat to third sector organisations. Of those organisations that have pension funds, a quarter are in deficit, according to respondents. Over 20 percent see pension issues as a threat to their organisation.
Despite the challenging environment, two-thirds (65 percent) of third sector leaders said that their organisation has seen an increase in demand for its services in the last quarter, and almost one quarter (22 percent) said that it had increased headcount.
Ulster Bank Chief Economist, NI, Richard Ramsey, says: “Third sector leaders see austerity as the biggest threat to their organisation, and there are indeed considerable risks. But some of the data suggests that many third sector organisations are actually continuing to adapt well to the current funding environment, and in some respects there are actually real opportunities, as government seeks to outsource services.”
“But the survey raises the wider point that austerity is not over; indeed far from it. While the Chancellor may go down the route of increasing infrastructure spending in the Autumn Statement, there is unlikely to be much of a change in direction when it comes to the UK government’s austerity policy. The Chancellor faces a choice of maintaining the rate of austerity or easing the pace and implementing it over a longer timeframe,” he continues.
“Overall, the third sector in Northern Ireland doesn’t have its challenges to seek, with austerity, Brexit, and the onset of the pension crisis, which will only intensify as falling bond yields make pension provision much more expensive. This environment makes it all the more important for the sector as a whole to continue to adapt and to find new streams of revenue,” Mr Ramsey adds.
Nora Smith, chief executive of CO3, says: “Brexit has played a central role in deepening the levels of concern and uncertainty for members on the sustainability of their services and indeed their organisations. Therefore, we want to ensure that the particular implications of Brexit on the Third Sector, are listened to and central to any negotiations. To date that has not been the case.”
She adds: “Our members’ work is focused on changing lives, in some cases saving lives on a daily basis. The results certainly highlight the importance of investing in our sector to ensure that vital services are not lost. The level of demand for their services continues to rise against a backdrop of uncertainty and funding cuts.”
