Sector Challenges


Rather than provide an analysis across the whole spectrum of the not-for-profit sector which would be voluminous, the content below is limited to a headline synopsis that relates primarily to the social housing sector only.


The social housing sector is caught in the “tripple whammy” of:

> Acute strategic and operational challenges from a new political regime combined with uncertainty of reassigned regulation

> Virtual withdrawal of Government capital subsidy and diminution of revenue subsidy such as capping of housing benefit and decreases in local housing allowances

> Lender perception of the sector being financed by “soft loans” from the bi-lateral funding markets with resulting lender initiatives to refinance on considerably more onerous terms.


A number of social housing organisations are finding that their:

> Group structures are either inadequate or inappropriate, particularily those that have recently collapsed their Groups

> Operating processes require major ratioinalisation and not just because to the need to reduce costs

> Corporate cultures, from the Boardroom to the “shop floor” are in need of fundamental shift changes to cope with the demands of this second decade of the new century.


Abolition of regional planning targets and replacement by the “localism” agenda, combined with an acute diminution of state grant and private finance will require a major shift change in the strategies of social housing developers.


The temptation for social housing operators may be to cut back on maintenance expenditure to balance the books in lieu of significant income reductions caused by housing benefit capping. The experience of BP in the Gulf of Mexico should be a salutory lesson in giving in to that temptation; a different industry certainly but the principles are nevertheless pertinent.  The demise of major national maintenance contractors creates another dilemma for major social housing operators as to decisions of whether to operate maintenance activity on an in-house or outsourced basis.  


The devolvement of regulation to be more customer inclusive presents social housing organisations with a significant challenge in genuinely making customers part of the decision making and operational review process.


This area in particular faces the most numerous challenges such as:

> How to cut costs and make make efficiency gains year on year across the organisation, yet concomitantly improve customer service and satisfaction year on year. truly not just “a quart out of a pint pot” but with the additional challenge of inproving the quality of the liquid coming out of the pint pot !

> Contending with seemingly unbeneficial but yet onerous accounting changes that appear to be no more than “accounting gymnastics” as they affect neither cashflows nor lending covenants but only provide additional income for accountants and auditors

> Strengthening ineffective internal controls and internal audit that went unnoticed or were tolerated  in the benign environments of the last century but may clearly be impotent to cope with the demands of the current environment and its acute challenges and risks

> Modernising a “tick box” Risk Management process that has no evidence of providing even a single example of being effective nor providing any evidence of avoiding risks but instead, numerous examples of where it has not prevented corporate problems and failures !

> Upgrading IT infrastructure and software to meet the demands of the current challenges


PROSPA and its members are ideally suited to solving the unique challenges never before faced by the not-for profit sector because of the upfront or subsequent nature of of cross-functional serverices that offer multi-dimensional solutions.

Contact Ron Mendes for a no obligation discussion. M: 07970 784482 or