Most voluntary organisations, their treasurers and trustees will not experience melt down as the market turbulence continues, but the longer term will be challenging.

Business support, individual donations, grants from charitable trusts, local and Welsh Assembly Government funding could all decline as the long term effects kick in over the next few years.

This pressure on income will come, just at the moment when the demands on voluntary organisations will grow.  Many charities, including advice and voluntary agencies, are already experiencing increased demand for their services, but expect their income to drop.

But few Welsh organisations are likely to be affected by the collapse of the banking system in Iceland, and most will be protected from the Financial Services Compensation Scheme, which guarantees £50,000 in each bank account, and applies to most charities.

Only charities with more than 50 staff or £6.5m turnover or more than £3.26m balance sheet will not be covered in the scheme.  Trustees and treasurers will not be personally liable for the loss of funds, as long as they have acted with the same level of prudence which they would use in the management of their own affairs, and continue to review their investments from time to time.

However, some concern has been expressed that local authorities who have £60m in Icelandic Banks may have to cut their expenditure to balance any losses, and may seek to reduce their support to voluntary organisations.

Graham Benfield, OBE, Chief Executive of Wales Council for Voluntary Action, says: ‘Our basic message is don’t panic – your funds are almost certainly covered, if placed with a UK institution, and you won’t be personally liable for unforeseen losses, but times will get harder, and demands on the sector will grow.

‘It will, therefore, be vitally important that public support in all forms to the sector is maintained, to ensure that the increased demands can be met, and that authorities do not try to pass on their losses to the sector.

‘The medium term effect will be to create greater demand for the services the sector provides as people lose their jobs, become depressed, or lose their homes.  The longer term effect could, however, be more positive with a greater sense of mutuality – it’s only the building societies who chose to leave the third sector and join the private sector, who have run into difficulties – and community.

‘A return to stronger community values and an understanding that well being doesn’t just depend on materialism or spending money may ultimately lead to a better society, built upon more sustainable premises, and consuming less of the world’s resources. 

‘Community involvement, neighbourliness, self help, and volunteering are timeless and priceless, and don’t depend on markets.’

If your organisation has funds in Icelandic Banks, contact WCVA’s Helpdesk on 0800 2888 329 or help@wcva.org.uk,  to ensure you are included if there is a rescue package.

Further information from the Financial Services Compensation Scheme (FSC) on 020 7892 7300, enquiries@fscs.org.uk or visit www.fscs.org.uk, and the Charity Commission on 0845 3000 218 or visit www.charity-commission.gov.uk/news/ice.asp.

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