Our challenging financial position
Message from Age Scotland's Chief Executive, Katherine Crawford and Chair, Stuart Purdy.
Age Scotland is facing serious financial pressures which is predominantly due to a significant drop in income from gifts in Wills. Over the course of this financial year notifications of these gifts in Wills has been unexpectedly slow and has resulted in a fraction of the amount we would usually expect to receive.
This is a major source of income for Age Scotland. Historically, it has made a reliable and significant contribution to our finances, supporting large parts of the charity and the services we deliver for older people.
There does not appear to be any logical reason as to why this has changed so quickly and drastically over the last six months compared to previous years. But we know we are not the only charity experiencing this right now.
Charities across the country have been facing a very tough time generating income. Flat rates of funding, oversubscribed grant pots and sustained rises in operating costs makes it harder to meet the demand for services and creates a very fragile environment for too many charitable organisations.
We have been monitoring the situation with gift in Will income closely since the Autumn and initiated a range of cost saving measures and financial prudence, building on those we have already undertaken over the last two to three years. Our aim has been to ensure the focus of our expenditure was invested to meet the growing demand from older people for our services.
Age Scotland has a diverse mix of income streams, from individual donations, corporate partnerships, grant funding, and social enterprise activities, but year on year gifts in Wills makes up the majority of the income we receive which has no restriction in how we can spend it. Most of this money is used in the delivery of the free services we offer and operational costs of running a national charity.
When taken together with the reduction or conclusion of some grant funding by the end of this financial year, the absorption of rising costs, and the planned gradual draw down of our reserves we have been using to grow front-line services for older people and invest in our income generation activities, we have reached a critical period where we lack sufficient cash to sustain our current levels of expenditure in the short and medium term.
Put simply, we now face a financial shortfall of more than £2m for the next financial year.
We cannot control gift in Will income, but it has been consistent for many years. As a result, we believed the likelihood of such a drop off was improbable but identified it as a risk in our financial planning. That risk has been realised in a manner starker than we could have imagined.
The income generation and fundraising activities we can control are performing ahead of our targets but cannot make up for such a swift and extensive loss of unrestricted income.
We now have no other option but to undertake a drastic cut in expenditure and work through proposals to restructure the charity. This means a large number of valuable colleagues will have their roles placed at risk of redundancy. A period of consultation with staff whose roles are impacted will begin soon.
This is devastating.
Demand for our services and support is growing, and the positive impact we have had on the lives of older people engaging with us has been increasing year on year.
But in order to adapt to this significant drop in income and put the charity in a sustainable financial position for the future so that it can continue to deliver some of what older people rely on us for, we have no alternative course of action than to consider proposals which reduce expenditure.
This will have a huge impact on the scale of the services we can offer. Under our proposals, some will reduce and many will stop completely.
Our plan is to protect as much of our information, advice, and friendship services as possible, offer direct support for community groups through grant funding and continue with the work funded by our valuable partnerships.
The most immediate concern we have is for colleagues who have given so much to improving the lives of older people and face this considerable insecurity about their future. We will support them and their wellbeing in every way practical as we undertake the restructuring process.
If you feel that you can help and contribute financially to the vital services Age Scotland offers to so many older people who rely on us across the country, please get in touch with us at fundraising@agescotland.org.uk
