Cinderella charities feel the pinch

CHARITIES which raise funds for alcoholism, drug addiction, unfashionable illnesses and social problems are losing out to the superstar names of the voluntary world.

A report to be published tomorrow reveals that middle-range charities, such as Alcohol Concern and the Parkinson's Disease Society, are struggling to secure the donations they need to continue their vital work. Charities in this category, with a turnover of pounds 1m to pounds 10m, saw their incomes drop by an average of 15 per cent between 1994 and 1997, according to the National Council for Voluntary Organisations (NCVO).

In contrast, heavyweight charities such as the Imperial Cancer Research Fund have held their own in the past five years, boosting their income by 7 per cent. Small grassroots charities, with incomes of less than pounds 1m, have managed to remain stable over the same period, too.

According to the NCVO's "1998 Almanac", the middle sector is feeling the pinch because of increased competition and a lack of resources to support fundraising campaigns. The problems faced by Alcohol Concern are typical.

"Like most charities of our size we have had an awful lot of ups and downs recently. We have a high profile and yet a relatively low income," explained spokesman Mark Bennett. "The trouble is we get so little in the way of popular public support; we are just not attractive in that way. So the real problem is getting our core funding met.

"Our management costs have always been met by a grant from the Department of Health, but that source of funding is being squeezed. It becomes increasingly difficult if you are not a vast organisation."

Alcohol Concern has survived only by improving its skills in writing funding bids, said Mr Bennett - skills which have recently secured a crucial pounds 280,000 Lottery grant.

"We have had to some extent to educate the funding authorities themselves about our need to cover core costs, rather than just finance individual projects."

Even a larger charity such as Help the Aged, with an annual income of pounds 55.5m, suffers. "The problem with many of the medium-sized charities is that we don't have money to invest," said spokeswoman Christine Cryne.

"For us it is all about creativity and thinking ahead about the kind of events that might attract people. A lot of charities like us, in the middle ground, are very unsexy otherwise."

Les Hems, head of research at the NCVO, agrees. "Charities dealing with the elderly or with children requiring extra care and who offer contracted services are vulnerable," he said.

"They expanded rapidly in the early 1990s when contracting out was popular but they face more competition now. A housing association which provides accommodation may now also be able to provide the social care services. When that happens, these charities typically don't have an alternative."

He said many charities may have to merge to survive. "Charities have been very reluctant to merge. We're encouraging them to consider alliances. Reducing structure costs has got to be the way forward."

The increased level of aggressive and targeted fundraising has also left many charities struggling to maintain their incomes, according to the NCVO report. Unlike charities such as the British Red Cross Society, smaller charities are unable to launch high-profile campaigns or draw heavily on fundraising as a means of increasing income.

It is a point endorsed by the Family Planning Association, a charity which promotes sexual health. "It's a constant struggle for a charity our size to sustain its income," said FPA spokeswoman Anne Weyman.

The Government's policy of reducing core grants caused medium-sized charities great difficulty, she said. "That's of considerable concern to charities like us who find it harder to go out and shake boxes. Every year your costs go up."

Figures published at the end of the month by the Charities Aid Foundation will show that local authority grants for charities dropped from pounds 597m in 1995/96 to pounds 450m last year - the first drop in more than a decade.

"We have reduced our core costs, but there comes a point where you must have a certain level of staff or you can't run an organisation. If you're a chief executive of a medium-sized charity you worry about money all the time," said Ms Weyman.

She said fundraising among charities had become more professional: "There has been a tremendous sharpening up of charities in the past 10 to 20 years. But most medium-sized charities don't have resources or longer- term planning to deal with ups and downs. Big charities have substantial amounts while small ones are often quite flexible and have good relations with their local communities."

The FPA is looking to target its members more effectively. "You have to look at materials and expertise and sell products and services in a more businesslike way," said Ms Weyman. "We're on the receiving end of what happens to other people's budgets. If local health or education authorities have cuts, that will affect us because they will not be able to buy so many of our materials."

In contrast, the National Deaf Children's Society has seen its annual income increase from pounds 1.3m six years ago to an estimated pounds 3m last year. The increase followed the appointment of Susan Daniels as the first deaf chief executive of a charity. "She drew up a plan for the future and brought a lot of ambition," said Mark Astarita, head of fundraising. "We're more focused now on who we target and on raising awareness. We are fairly entrepreneurial. If you don't ask then you don't get anything."

The NDCS is now Britain's largest provider of charity parachute jumps - with more than 2,000 people leaping out of planes on its behalf - and one of the largest for cycle fundraising trips, including journeys this year to Cuba and Jordan. But it still finds it difficult to compete with big-name charities. "We can't compete with their large legacies and huge databases, so we have to look for niches," said Mr Astarita.