Understanding Financial Sustainability for Small Voluntary Organisations – Insights from Ampacc

Clare Gilhooly
Home-School-Community Programme Manager at John Lyon’s Charity
As a funder, John Lyon’s Charity are committed to understanding the needs and challenges faced by organisations supporting children and young people in our Beneficial Area.
The precarious financial situation of many small grassroots organisations, especially since the Covid-19 pandemic and the ongoing Cost-of-Living crisis, has been a growing concern for us. We’ve witnessed many of these essential small groups constantly struggling to survive, often without a clear understanding of the full costs involved in running their services. This financial instability threatens the continuity of the vital support they provide to young people.
In response, John Lyon’s Charity has taken proactive steps to help voluntary organisations better understand and manage their finances. In 2023, 35 locally-based voluntary organisations were supported, via the Young People’s Foundations (YPFs), to engage with Ampacc – a unique financial sustainability tool – and go through the online support process. As part of our Home-School-Community Strategy, we provided the funding for 25 locally-based voluntary organisations, and the remaining 10 were funded via Brent’s NCIL (Neighbourhood Community Infrastructure Levy) through the Young Brent Foundation.
What is Ampacc?
Developed by Clear Thinking Consultancy, Ampacc is a tool that enables small voluntary organisations to adopt universally-recognised full cost recovery principles. This helps groups accurately calculate the full costs of delivering their services, including both direct expenses like staff, travel and materials, and a proportionate share of overheads such as office rent, IT, and insurance.
By understanding these costs, organisations can make more informed financial decisions, ensuring their services are sustainable over the long term. Ampacc has been implemented with small voluntary organisations for over six years, and its impact is clear: it helps charities articulate their financial needs more effectively to funders – like John Lyon’s Charity – and allows for better resource allocation and long-term stability.
Insights into a Thriving Small Charity Sector – Webinar
On 17th October, Clear Thinking Consultancy (CTC) will be hosting an online webinar with funders and their funded partners focused on Ampacc, with the aim of exploring and sharing insights on how to support a more robust and sustainable small charity sector – one that is truly thriving and, therefore, is best placed to support its communities to thrive too.
The session will feature Clare Gilhooly, Home-School-Community Programme Manager at John Lyon’s Charity, alongside CTC Director Kita Ikoku and Donna John from IGNITE Youth. In this session, they will talk about about Ampacc’s findings from carrying out financial analysis and support for voluntary groups to implement full cost recovery during the past twelve months, and what this tells us about the support needs for the wider small charity sector.
These workshops offer a valuable opportunity for participants to explore the challenges facing small charities today and discover actionable solutions to help them thrive. We encourage everyone to join via the link below and contribute to building a stronger voluntary sector equipped to support its communities.
Key Findings from the Ampacc Programme

Kita Ikoku
Director at Clear Thinking Consultancy
1. Most of the workforce is in insecure or unpaid employment
At the start of the process, participating organisations tell us how many and what types of workers they engage to deliver services. Through this we learned that only 16% of the workforce is on PAYE with most of them paid on a sessional basis or working in a voluntary capacity (58%).
For many organisations this is because they do not have the long-term secure funding that would give them the confidence they need to commit to increasing their payroll, or the structures in place to meet their increased responsibilities as an employer. This also accounted for many founders invoicing their organisation as a contractor.

2. Levels of reserves aren’t getting any better for micro and small voluntary organisations
Various pieces of research during the pandemic made clear that reserves amongst smaller voluntary organisations were low. Out of those that we worked with, over 60% were micro and small (up to income of £100k) and out of those, 60% of them had fewer than a month of running costs in reserves. We saw several examples of founders who were not taking a consistent income out of fear that, to do so, would leave the organisation in financial difficulties.
It is widely considered that a minimum of three months’ running costs put aside in a separate bank account (and not used as ongoing support for cash-flow) is the minimum necessary for an organisation to be able to function well and respond to unforeseen events.
The table below shows the level of reserves held by each of the 35 groups that were supported.

3. The sector is struggling to find, develop and retain talent
Anecdotally, it became clear early on that the sector has lost lots of its time and capacity to HR issues especially recruitment. We learned that participating organisations were putting out recruitment posts two or even three times without success and had lost staff due to not being able to increase its salaries in line with cost of living increases. We noted that only 1 in 4 participating organisations have an intern – this accounts for 8% of all workers, reducing to 2% if we omit figures relating to one outlier organisation (who strategically support a higher number of interns as part of their core work).
Training budgets were nominal and low – commonly equating to £50 per person or £500 – £1,000 in total. Many participating organisations did not have a training budget at all and, whilst they made good use of the free training and resources available from their local YPF, did not feel able to respond to specific and specialist support needs within their workforce.
4. Space matters
Where space is made available for little or no rent, usually from the local authority, this makes a significant difference to the total amount of overheads and, therefore, the costs of the charity. In places where space was at a premium and particularly with music and sports development charities, where specialist equipment and/or extensive space was needed to deliver services, this inflated associated costs for these small charities, making it challenging for them to demonstrate value for money and to keep their costs competitive.
5. The sector is paying too much to meet their governance and operating obligations
There are some costs that charities cannot avoid paying and, in some areas, these organisations are committing a significant proportion of their expenditure on them. Costs like insurance, IT and auditors/independent examiners are essential and, where high, they can impact heavily on a charity that is not apportioning their overheads against their project costs correctly. We also noted high costs for some participating organisations for office equipment whereas others had been able to benefit from accessing these at little or at no cost through existing business relationships or their local YPF.
All these expenses affect an organisation’s overheads and, therefore, their service costs. Where an organisation is being funded less than it costs them to deliver their services they are creating and compounding a deficit, which is overstretching the workforce and impacting on service quality.
Moving Forward – Conclusion by John Lyon’s Charity
This initiative has not only helped these organisations better understand and manage their costs but also provided valuable insights into the state of the small charity sector, which underscores the importance of doing more to help these essential groups thrive.
We strongly encourage all organisations applying for funding to invest time in fully understanding the true costs of delivering their services and to use tools like Ampacc to clearly communicate those costs to funders.
We also would like to call on funders, within their funding application processes, to make provision for applicants to share the consideration they have given to implementing full cost recovery and covering their overheads so that funders can be confident of resourcing the services that they are funding fully.
As we continue to work with Clear Thinking Consultancy and roll out the Ampacc programme to a further 40 organisations this year, we remain committed to strengthening the small charity sector. The insights we gain from this process will shape how we support these vital organisations in the future, ensuring they are equipped to thrive and continue their essential work within their communities.
To find out more about Ampacc, organisations should contact their local YPF or with Clear Thinking Consultancy directly.