Communities and the economic downturn

Although the overall impact of the economic recession on the community sector in New Zealand is still unclear, we have noticed a wide range of conflicting reports on what is happening.

Some data and historical evidence indicates that the community sector may fare better than the private sector, as people and organisations continue to support ‘good work’ or focus on ‘what really matters’, rather than luxury items or frivolous things. 

However, in reality many philanthropic trusts, corporates, and local and central government have less money to distribute due to lower returns on investments. Although all investment income is reduced, trusts and foundations with heavy exposure to international financial markets are more seriously affected.

Signals are mixed. Already in New Zealand, we have seen some trusts announce suspensions of their grant programmes, while others have confirmed, that despite investment losses, they will continue to make grants at lesser or similar levels to previous years. With government spending also under the spotlight, this could put extra pressure on organisations that rely on multiple funding streams to deliver core services.

In February 2009, Philanthropy NZ and the Funding Information Servcei surveyed more than 200 non-government funders in an effort to understand the impact on trusts and foundations.  The results suggest 50.8% of philanthropic funders expect their support to decrease in the short term (2009), while 43.4% expect it to remain the same. 47% say they may make fewer grants, while 33% say they may make the same number of grants but of a lower value.

Apart from potential changes in the amount of money available to some community groups, non-profits are now seeing an increase in demand for their services (especially those working with vulnerable communities). Other groups might see a downturn in participation, as people’s priorities shift due to changes in personal situations – financial or otherwise. (The same may be true for personal donations.) Then again, people may volunteer and give more during these hard times to help those in distress – this is the beneficial action we need as a country to help get us through the bad times.  For those who lose paid jobs, volunteering will offer an opportunity to keep connected with their communities and maintain their skills or learn new ones, while also making an important contribution.

Adversity could lead to positive outcomes as communities band together, and agencies co-operate and collaborate more or actively share resources to get more ‘bang for their buck’.  Those individuals, businesses and corporate supporters who can’t afford to give money, may offer time or other resources in order to continue to support services and causes they believe in.

» Compare a NZ article suggesting tough times ahead for community groups with one emphasising the importance of relationships and a UK article stating the recession has not stifled the public’s giving spirit

» Read one of many updates on the economic market in NZ – the ANZ Market Focus: Key Macro Themes for 2009 

Volunteering Mid-North hosted a facilitated forum in Kaikohe in February for local community leaders. Ideas identified during the event included working more collaboratively, using networking more effectively to address issues at a local level, and a possible 'brains trust' to provide support to local groups that lack necessary infrastructure. 

Specific concerns related to the possibility that rural volunteers may struggle to continue if petrol costs rise and are not reimbursed.

See the notes below or contact Volunteering Mid-North for further details about local issues, ideas and initiatives.

In an effort to identify what may happen in New Zealand, and what can be done to lessen any negative impacts (and maximise positive ones), Philanthropy NZ, the NZ Federation of Voluntary Welfare organisations and the OCVS invited a selection of community and voluntary sector representatives, and the government agencies working with them, to attend an Impact on Communities: Managing the Downturn Together workshop in Wellington on 25 February 2009.

Around 60 people attended the workshop, which helped to build a greater understanding around what is happening with the credit crunch and economic downturn; discussed the impacts for non-profit organisations from a social and economic perspective; and explored strategies to manage finite resources.

Leading economist, Suzanne Snively of PricewaterhouseCoopers gave an overview of economic changes as they affect the community and volutnary sector - identifying impacts and options.  This was followed by a panel discussion about the recession's impacts on communities and how to manage the effects of the downturn together. The panel featured Jeff Sanders (Relationship Services), Donna Matahaere (Arai te Uru), Geraldine Clifford (Taeaomanino Trust), Jenny Gill (ASB Community Trust) Heather Newell (Foresee Communications) and Derek Gill (Future Makers).

Seven themes reverberated throughout the day:

• the need to find ways of doing things differently and understanding the impact of the downturn on the sector over the next 10 years
• the need to understand the downturn’s impact on iwi/Māori organisations and how those organisations can remain true to their kaupapa
• the importance of developing speedy, action driven collaborations, within and across sectors, including balancing autonomy with working more closely together
• engagement in establishing community priorities and widening the understanding of ‘infrastructure’ to include social infrastructure (social capital)
• maintaining the quality and training of the non-profit sector workforce, including opportunities for collaboration between non-profits
• develop and publish more and better evidence of the effectiveness of the sector, building on work such as Statistics New Zealand’s Non-profit Satellite Account and the Value Added for Voluntary Agencies research
• the need to maximise funding opportunities and diversify revenue streams.

Notes and presentations from the panelists and workshop discussions are below to inform the wider sector.

At a series of workshops and lectures, the Centre for Social Innovation invited Geoff Mulgan and a number of other social innovators to lead discussions about how the public, private and community sectors can come together in the name of social innovation. Social innovation is the design and i mplementation of better ways of meeting social needs.

One of the key themes of the series was that innovation emerges most frequently at the boundaries of traditional sectors and groups.

The Centre creates

• a space for innovation, where Government, business and community partners can come together to focus on some of our most pressing social needs, and
• a home where social innovators can collaborate, share and find support.

It’s a do-tank, not a think-tank.

This meeting was a follow up to The Recession and our Communities seminar held on 30 June 2009.  The meeting was a chance to share knowledge and ideas, explore new ways of working together and plan next steps.

This half-hour programme on National Radio explored how the recession is affecting the not-for-profit sector.

Compiled by Sue Ingram, it features interviews and comments from:

• Jennifer Gill, ASB Community Trust
• Colleen Tuuta, TSB Community Trust
• John Prendagast, Southland Community Trust
• Tina Reid, NZFVWO
• Dave Henderson, ANGOA
• Derek Gill, Victoria University
• Heather Newell, Forsee Communications (on fundraising)
• Suzanne Snively, Price Waterhouse Coopers
• Geoff Barry, Surf Life Saving
• Gerald Boot, Age Concern Wellington
• Janet Bagshaw, Women's Refuge
• Clare Teale - Wellington Citizen's Advice Bureau
• The Hon Paula Bennett, Minister for Social Development and Employment
• Keith Manch and Anne Carter, Department of Internal Affairs
• Robyn Scott, Philanthropy NZ.

You are welcome to share your thoughts or notes from similar events via this website.  Please e-mail your information to ocvs@msd.govt.nz.

Are you working differently, collaborating more or considering a merger because of the recession? 

Please send us a brief e-mail ( ocvs@msd.govt.nz ) about what you are doing, or let us know of specific barriers or impediments you are facing as you try to collaborate or co-operate with others in the community sector.

Can you share lessons so that others may benefit from your experiences?

The Wellington event was similar to one held by the Association of Charitable Foundations in the United Kingdom in late 2008. 

» Read notes from the NCVO summit in the UK, including findings and presentations from November 2008

» Read about the UK’s proposed action plan of support and some UK initiatives

» See the ‘Recession Challenge’ laid out by Volunteering England

» Read Real Help for Communities: Volunteers, charities and social enterprises - Office of the Third Sector, Cabinet Office, United Kingdom.
This publication outlines the UK Government's action plan for £42.5 million of support for the third sector during the global economic downturn.
» Download this report from the UK Office of the Third Sector.

We've created a separate page to list practical guidance that may help your community organisation meet the challenges of working differently through the recession.

If you know of other useful tools or links, please e-mail us details so we can share them with others: ocvs@msd.govt.nz.