pricewaterhousecoopers presentation to the helplines association 6 april 2011

The Helplines AssociationPlanning for change 6 April 2011

Who am I?

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Ian Oakley Smith – Specialist in charity turnaround• Chartered accountant and Licensed Insolvency Practitioner• Specialist in turnaround and restructuring for charities and other

not-for-profit entities• Worked with wide range of charities and social enterprises, typically

small to mid-sized charities experiencing some sort of financial difficulty

• Part of the PwC Charities Team• A member of the Committee of the ICAEW Charities and Voluntary

Sector Special Interest Group

AgendaPresentation

The changing environmentThe importance of planningResponding to changeAsking the tough questions

Discussion

Questions

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Key Messages

• The environment is changing like never before• Charities need to respond• There are both risks and opportunities• Planning and information are crucial• The success of the organisation may depend upon asking

the tough questions now

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Charities must embrace the need for leadership –how can you influence this?

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Wordle on Big Society from NCVO

The changing environment

The importance of planning

Risk touches every part of your organisationRisk assessment processes• Operational• Governance• Reputational and external• Environmental • Financial

(Charity Commission CC26 – Risk Management)

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More than ever before risk needs to be properly addressed

Charity Commission publicationsCC26 – Charities and Risk Management

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What is your risk appetite?

The importance of planning

Why do charities fail?

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Predictable income flows

Unreliable income

Need to track trends in income

Most vulnerable position

Most comfortable model

Need to understand reserves policy

Flexible cost base

Fixed cost commitments

The importance of planning

Why do charities fail?

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Predictable income flows

Unreliable income

Need to track trends in income

Most vulnerable position

Most comfortable model

Need to understand reserves policy

Flexible cost base

Fixed cost commitments

Actually, it is almost invariably....weak planning and financial

management

The importance of planning

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Strategy

Scenario planning/risk assessment

Reserves policy

Managementinformation Governance

The importance of planning

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Strategy

Scenario planning/risk assessment

Reserves policy

Managementinformation Governance

Important when things are going well – VITAL in a downturn

Responding to change

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Sigmoid CurveFrom Charles Handy “The Empty Raincoat”

Gro

wth

/ pe

rfor

man

ce

Time

It’s hard to make change when

things look on the up

It’s much easier from a burning

platform

Responding to change – what are the options?

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Plan ADiversify income

Plan BStreamline

Plan CFocus on core

Plan DCollaborate->close

Consider all possibilities to benefit your beneficiaries

Assess Risks

Evaluate Opportunities

Responding to change – assessing the options

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Time is critical – how long does your charity have?

StreamlineDiversify income

Focus on coreCollaborate

Merge

Avai

labi

lity

of

optio

ns

TimeClose

Milestones

Responding to change – assessing the options

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What are your charity’s core activities?

Core activities

Additional activity 1

Additional activity 2 etc

Fixed overhead

“Semi-fixed” costs

Discretionary costs

Asking the tough questionsWhy might your charity remain independent?

The right reasons?• To maximise fundraising

opportunities• The desire of one or more

individuals to create a lasting legacy

• To be more responsive to the needs of a local community

• The need to provide a specific service, perceived to be lacking previously

The wrong reasons?• If it costs too much to support

your beneficiaries• When you cannot take

advantage of opportunities• When survival becomes your

sole occupation• When you are less attractive to

funders• If your Trustees are in it solely

for egotistical reasons• If your strategy is influenced

by your key Senior Managers’ fear for their future or that of their employees

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• Approaching the question with an open mind• Understanding the true cost of activities and overheads• Researching the market for potential partners• Benchmarking against other charities• Reviewing all areas of their costs• Making the best use of professional advice• Challenging the status quo and being strategic

What should Trustees and Senior Managers be doing?

Be prepared to have open conversations

Discussion

• We want you to move into groups to discuss the following questions:

• What responses are open to helplines looking to secure their future?

• How can you influence your helpline’s future?

• What other types of organisation might your helpline collaborate or merge with?

• We will then feed back and discuss as a group

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Key Messages

• The environment is changing like never before• Charities need to respond• There are both risks and opportunities• Planning and information are crucial• The success of the organisation may depend upon asking

the tough questions now

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Charities must embrace the need for leadership –how can you influence this?

Contact

Ian Oakley-Smith, Director, PwCT - 0207 212 6023E - ian.oakley-smith@uk.pwc.com

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Thank You