2021 Year in Review: Public Sector and Not for Profit

In our 2020 Year in Review, we commented that COVID-19 restrictions would continue for some time into 2021 and “maybe even to Autumn” and that the sustainability challenges would remain. Our outlook was overly optimistic; with the threat from COVID-19, despite the amazing vaccination effort, continuing to weigh down on high street footfall which is critical to the general economy.

This week’s Scottish Budget has come when footfall is nearly 20% lower than pre-pandemic levels and below that of the rest of the UK. The Scottish Government has said that the budget focusses on delivering the new Programme for Government, reflecting the challenges facing households, communities and businesses as a result of the pandemic.

The Scottish Government’s COVID-19 spending to date has been gargantuan, £8.8bn in 2020/21 and another £4.9bn planned for 2021/22. This spending has primarily been directed at business support, health & social care funding and local government support.

The impact of the pandemic seen in AAB’s public and not for profit client base has been broad, from those battling every day to fund activities to those successfully applying for significant grants to support their critical works and growing substantially in the process.

Impact on fundraising and service delivery

We all started 2021 with a strict lockdown and restrictions on travel, creating significant challenges for charitable organisations. Financially, trading operations were forced to close, thereby cutting off vital sources of funding. Fundraising itself became compromised given the remote nature of it, leaving charities needing to seek support from one of the many grant opportunities available.

Charitable organisations are about making a difference, alleviating suffering, changing lives and transforming communities. However, on top of the financial constraints, we saw that lockdown made the “human touch” less likely. Charities adapted to remote delivery, to their credit, but the companionship aspect was inherently impaired.

At AAB we saw an increase in desire and necessity for support with many aspects, including business planning, skills training and virtual finance resource. Our Virtual Finance Function team has had a really busy year, helping public sector and not for profit organisations with monthly management accounts, year-end accounts and business plans. The support we offered was was needed following continued at-home working, staffing gaps and the necessity to keep a close eye on costs.

People resource pressures

As lockdown eased and trading operations re-opened, we saw some new challenges and innovation in the sector. Particularly in respect of adapting to delivery and people resource pressures. Staff retention became tougher but we saw some reimagining in the workforce and changing how services are delivered. Some organisations effectively used digital platforms to give front-line staff access to improved information to enable prioritised care.

Highs and lows of 2021

I don’t want to dwell on the lows of 2021, but it has been sobering to see the impact of the pandemic on the vulnerable, on relationships, on funding for many organisations and on the closed theatres across the land. Despite the vast support measures from the UK Government and Scottish Government it has been a hugely challenging year, with many organisations desperate for more support.

However, there are many positives we can take from this year. We’ve seen organisations adapt, change and thrive in the face of the lockdown challenges. Many have secured transformational funding to enable them to start new services and embed the change for the long-term, something that may have taken years to happen otherwise.

As a team we have seen and supported some really exciting projects with universities, economic development agencies and new public sector bodies. It has been fantastic to mobilise teams from across our service lines, coming together to deliver the projects.

Our mergers with Hardie Caldwell in Glasgow and Sagars in Leeds, both accountancy firms with around 100 years of working with public sector and not for profit organisations, has allowed us to provide increased support to existing clients, and build relationships with new organisations throughout the UK.

We’ve also had a chance to deliver seminars and workshops to charities, Registered Social Landlords and chambers of commerce, meeting loads of passionate and dedicated individuals, albeit remotely.

AAB’s Charitable Initiative

We endeavour to play our part through direct action; the Anderson Anderson & Brown Charitable Initiative (AABi) is the platform which facilitates all at AAB to invest in the communities in which we operate by seeking partnerships with charities and inviting applications for donations, grants and volunteer time. As with any other charitable initiative, our own fundraising opportunities have been reduced and this has had an impact on our operation, however throughout 2021 AABi has continued with its grant round funding process, donating over £10,400 to 13 charities in 2021.

Looking forward to 2022

On the whole, we are seeing organisations being cautiously positive about what 2022 holds, being ready to reap the benefits of their tight cost controls of 2021 and consequent strong reserves to start the year. There are many exciting projects due to start, having been planned during 2021 and with welcome government support.

Despite COVID variants giving rise to a return to some restrictions, there is optimism about trading operations and funding returning to full strength. There remain headwinds, particularly in respect of reduced grants available and high cost inflation. We are already seeing some postponed housing developments as a result of increased material costs and shortages, as detailed in AAB’s construction and property Year in Review, notwithstanding Scotland’s 110,000 affordable homes target.

The National Care Service will be further developed in 2022, a fundamental change to how social care and community care is intended to be delivered, with significant reform still being shaped. This year’s consultation brought some concern from local authorities and care organisations. It is a key priority of the Scottish Government and it will be interesting to see how it develops.

AAB’s public and not for profit sector team continues to grow rapidly and we are passionate about supporting organisations across the sectors. 2021 was different to expectations but we have enjoyed innovating our services to respond to the needs of our clients, supporting them each step of the way.

If you would like more information or guidance on issues relating to the public and not for profit sector, please contact Andy Shaw, Head of Public Sector & Not For Profit.

Find out more about AAB’s public sector and not for profit sector team here.