Funding is the biggest challenge for charities and Not-for-Profit (also known as ‘For-Purpose’) organisations according to the IRD’s 2020 Not-for-Profits and Charities Landscape report. However, access to sustainable funding sources remains essential for the survival and growth of these organisations. Not-for-Profits (NfPs) use multiple tools and strategies to attract new and secure existing funding. Of these, the Statement of Service Performance (SSP) has a significant role to play in communicating an NfP’s impact – but what exactly needs to go into an SSP, and how can it be used to demonstrate value?
The future of funding
At BDO, our clients are coming up against myriad funding and revenue stream challenges, with general market uncertainty creating or exacerbating unstable pipelines.
Many NfPs that secured funding contracts during the COVID-19 pandemic are now seeing those contracts coming to an end, which means a revenue stream drying up. For-Purpose organisations that don’t receive government funding are often reliant on donations from the public and annual grant applications to stay afloat, and even those who have secured significant government contracts aren’t safe – a change of government, policy, or mind can result in funding cuts.
The current economic climate is also impacting a number of organisations that have trading operations which help derive revenue streams. Then there’s the risk of being over-reliant on regular giving programmes, which can quickly dry up during recessions and times of economic uncertainty.
This all reflects the general funding instability faced by the NfP sector. Organisations need to work harder than ever to secure and maintain their slice of the revenue pie. To help address this, we advise NfPs to carefully consider the following:
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Where do your revenue streams come from? How at risk are they?
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Are you over-reliant on one source of revenue? How can you diversify your revenue streams?
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What options are you considering when looking at future revenue streams? If you’re looking at corporate partnerships, you must be able to evidence the value and alignment of the partnership to corporations. Other areas to explore include developing sustainable strategies including crowdfunding campaigns, subscriptions, recurring donations, and building strong relationships with individual donors.
How the Statement of Service Performance can help
Reporting is a critical component of NfP governance, particularly since the introduction of Statement of Service Performance (SSP) requirements for Tier 1 and 2 charities. The good news is that SSPs can be a valuable tool in assisting NfPs to market themselves to prospective funders.
An SSP is a key component in telling an organisation’s story to stakeholders. Used well, it can build a compelling case for future support and funding. It’s not just about new funding sources either. The competition for rolling and evergreen contracts is fierce, and NfPs need to keep their investors and supporters engaged. To do this, organisations must be extremely clear about what their purpose is, what they’re trying to achieve, and how they’re delivering on their mission.
SSPs are mandatory and must contain performance-based information that clearly links to an organisation’s strategy and reason for being. However, there is flexibility around exactly how that information is presented and what else the SSP contains. Smaller organisations may opt for something simple, while others may take the opportunity to create more detailed reports that flesh out their stories. Given the valuable information presented in an SSP, funders are likely to be increasingly interested in this report when considering supporting an NfP.
Top tips for creating an SSP:
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Consider who your readers are when deciding what to report on and how to communicate your achievements.
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Think creatively. Illustrations, graphs, and stories can all help bring your statement to life.
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Consider using surveys or other measures to show the impact your achievements have on your community, rather than purely reporting facts and figures.
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Embrace it. We expect the level of focus and reliance on these reports to only increase over time.
Next steps
The SSP is an increasingly useful tool to help NfPs on their funding journey. For more information on this and other funding avenues you can explore, reach out to our Not-for-Profit team, or access BDO’s Statement of Service Performance toolkit here.