In the ‘Charity Sector Developments’ report, published in May 2021 by Grant Thornton, the number one issue facing the sector was income and financial sustainability.
It stated that, ‘with many major charities facing insufficient income and reserves to achieve their strategic objectives and maintain operations, many were having to reduce their forecasted income and cancel or re-invent their flagship fundraising events to account for social-distancing requirements and the uncertainty that coronavirus has created’.
When income is dramatically dropping, what comes under the spotlight is not just where fundraising can be improved, but where overheads can be reduced, and for many charities their vehicle fleet is an area of huge expense, often being recognised as the ‘leaky bucket’ that holds the potential for significant savings.
“Operating a vehicle fleet, however large or small, is an expensive undertaking,” said Mary Dopson-Taylor, Grosvenor Leasing’s customer services director.
“When reviewing the cost base, the best starting point is to look at the types of cars and vans you operate, because small changes to vehicle policies can lead to very important long-term savings.
“This is particularly relevant at the moment with the shift to electric vehicles, and we are working with many organisations, one of which is The Salvation Army Trading company, to move them to a greener and more cost-effective ULEV and EV fleet.
“In advising on choice lists and vehicle selection, our experts will look at how a charity’s vehicles are used, how frequently and in what locations, as well as looking at everything from taxation to servicing and charging infrastructure.
“Maintenance is another key area, and we still find many organisations paying for, and managing, servicing, maintenance and repairs themselves.
“Yet, its rare for a charity to employ someone with vehicle maintenance expertise making it very difficult for them to know if the invoices coming in from garages for work carried out are fair, or whether the work was required in the first place.
“To give a flavour of the potential savings that our maintenance management team could achieve, we often ask organisations to send us a selection of recent invoices and we will highlight where there has been overspend which, when multiplied across an entire fleet, can turn into a very vast sum of money.
“There are other areas too, such as fuel, accidents, short term rentals and even challenging whether vehicles are needed in the first place – particularly with more people working from home.
“A complete, independent review by our specialist fleet management teams can often reveal some quick wins through to long-term savings, all of which are very achievable and will ensure the charity’s important work can continue but at a lower cost base.”
Another example of where a vehicle fleet can be a ‘source’ of funds is through a sale and leaseback.
Operating a fleet of 120 vans and 30 cars, the Salvation Army Trading company had historically bought its vehicles outright. However, in 2020 it was looking to future-proof its fleet with improved efficiencies, better budgeting and professional fleet management – and move to greener vehicles as part of a zero-emission future.
To achieve this, the Management Board decided to convert the fleet to contract hire through a sale and leaseback, and, following a strategic review, chose Grosvenor Leasing.
Chris Bentley, the Salvation Army Trading Company’s fleet manager explained, “Grosvenor Leasing quickly valued our vehicles based on their age and mileage as well as providing us with contract hire rentals to lease each vehicle back to us.
“This gave us a cash injection, which is always beneficial in supporting the important work we do, but more importantly it improved our overall fleet funding and management solution in one transaction.
“With no disruption to our drivers we began benefiting from fixed monthly costs, a removal of risk, less administration and access to a range of additional fleet management solutions.”
Grant Thornton’s Charity Sector Developments report goes on to talk about the importance of finding trustworthy suppliers, when a charity’s reputation is so important to public trust and overall success.
It describes a need to ensure that outsourced service suppliers are managed well, contractual arrangements are fit for purpose, and that the outsourced supplier adheres to the key policies of the charity.
Mary Dopson-Taylor agrees. “Through an outsourced contract hire or fleet management solution, a charity is placing a lot of trust in a very major supplying partner.
“With sensitive driver data being held on fleet management systems, data protection policies, IT security and accredited working practices need to be in place, and this is something we take very seriously at Grosvenor.
“However, I also believe charities wish to work with companies that have a social conscience, and across the entire Grosvenor Group we are very proactive in donating to, and actively supporting, a wide range of local and national causes.
“We recently won the award for Northamptonshire’s best big business, which now proudly sits alongside many of our national fleet awards, and in the acceptance speech I said that we were a family. I think this comes across to all of the customers we work with, because although we are the UK’s largest privately-owned contract hire and fleet management specialist, we also have a very strong focus on important causes outside of work – whether its making Christmas donations, or something more simple like filling a van full of food that we’re delivering to a charity for reducing food poverty.”