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Learn how to plan for the financial stability of your organization, including tips from folks who have been doing this work for a long time.

What is a plan for financial sustainability?

Why should you complete a plan for financial sustainability?

When should you develop a plan for financial sustainability?

How do you plan for financial sustainability?

Tips from the field

Sometimes, it seems like community work has a high price tag, and no one wants to foot the bill. There is so much change we want to see happen, but our finances are in such a sorry state that we're just trying to maintain what we've done so far. Staff is underpaid, overworked, and burning out; necessary programs are dropped or scaled back because there's no money; and closing the organization's doors is a constant fear in the back of everyone's mind. This goes on for years for many nonprofit groups; for others, the doors really do slam shut.

Sound familiar? Our question in this section is, how can this be avoided? Or, if this is the reality your group is faced with, how can it be changed?

Earning money - and as staff of nonprofit organizations, we do earn every grant dollar or other bit of funding we obtain - isn't a mystical process. It's not something that can only be understood by a chosen few. It's a process almost anyone can do. And with enough time and effort, it's a process that can be richly rewarding.

However, it's something that can't done well haphazardly. "If we need it, it will come," isn't a safe philosophy for members of community groups to live by. Many groups will say, "This is really important. Let's do it, and worry about the money later." Later, unfortunately, ends up meaning headaches and frustration, and being in the red.

In this section, we'll look at the basics of planning for the financial sustainability of your organization. We'll discuss what it means, why do it, and how to do it. Finally, we'll close the section with some tips from the field from folks who have been doing this work for a long time.

What is a plan for financial sustainability?

So what do we mean by a plan for financial sustainability? Simply put, such a plan is a tool used to help the organization or initiative - and more importantly, its goals - thrive. And allow it to continue thriving over the long term.

Although it might seem otherwise, a plan for financial sustainability is not just about getting money. Now, part of your plan might well be to raise some dollars. In fact, it probably will be an important part. You may raise money through donations, grants, user fees, or all of the above, to name a few examples.

But that's not the whole story. A financial sustainability plan will also include other types of resources you might obtain, such as in-kind support, volunteer staff, or shared resources from other organizations. It may even include convincing another organization to take on a project you started.

A simple rule to go by: If it helps keep your organization or its work going, and if it's something you would have had to pay for if it hadn't been a donation, then developing it fully will be part of your financial sustainability plan.

Like any other type of plan, a plan for financial sustainability includes objectives, strategies, and action steps to get and keep these resources. All of this should be made very concrete as part of your plan.
For example, a partial list of what your plan will probably include:

A list of all items and needs of the project

The amount required to sustain each item

Current resources

Required resources

Potential matching and funding organizations or individuals, and

Amount that will be requested from each organization, individual or funding source

How it will be requested (and by whom, and when)

Your plan will also look at all of these things on a long and short term basis. That is, it will help you to consider your finances for six months from now, but it will also ask you to consider where you would like your organization to be in, say, six years.

Before we move on, a last important note here is what your financial sustainability plan is not. It's not the reason you are in business - it's not why you get up in the morning. If you had wanted your focus to be money, you would have gone into banking or something similar.

Planning for financial sustainability, then, is just one part of your overall plan for institutionalization. It lets you concentrate on your real purpose, whether that purpose is helping children live healthier lives or helping adults on their spiritual path. It allows you to "do more mission," in the words of author Peter Brinckerhoff.

So, while it's important to take care of the money, don't allow yourself to get so caught up in it that you forget what you are really trying to do.

Why should you complete a plan for financial sustainability?

One thing a plan for financial sustainability will take, if done right, is time. It's a long process. At least in the short term, it will take quite a bit of effort on the part of project staff. What are the advantages of taking that time and effort when you already feel overwhelmed?

By developing such a plan, your finances should become more secure, which means:

An increased focus on your real work. You can do more of what you set out to do, because your focus can be on the mission, not just on day-to-day survival.

Becoming more competitive in your field. For example, more money allows you to hire more and better staff, which, again, allows you to do more to obtain your mission.

Easier transitions. A plan can assist your organization in successful transition when current funding is depleted or dries up.

Following guidelines. Sometimes, you don't have a choice. For example, some funders require the development of a plan for financial sustainability as a condition of their grants. By having a plan already developed, you start a step ahead.

When should you develop a plan for financial sustainability?

The short answer is: it's never too early to start planning. If you need money, and you plan to be around for the long haul, you should do this from the start. Planning should take place as soon as the project begins.

Even if your organization has been around for a while and is going strong, it still makes sense to periodically dust off your plan and make sure it is still viable. Such a "check-up" might occur on a yearly basis.

On the other hand, if your organization isn't where you want it to be financially and the organization doesn't appear to be headed in the right direction, it might be time for a complete overhaul.

How do you plan for financial sustainability?

Every organization is unique, and each will have its own way of doing things. Planning for financial sustainability is certainly no different. For most groups, however, a process like the following can be very helpful. Try it on for size, and modify it to fit your own needs.

However, before you get started on your plan, it's important to think about what you really need and want in terms of financial sustainability. Ask yourself, "Because our initial grant was for $100,000, do we need to have another $100,000 for next year?" Think creatively about what you have done and will do. Just because the program ran last year, is it worth doing again next year? Should your organization or group continue to do it, or should you try and get a different agency to take on a program?

Also, think about what taking money or earning money in different ways will say about your organization. Funding in and of itself does not guarantee success or failure - poor groups may flourish, and rich ones may falter. The way funding decisions are carried out, however, can make very different organizations. For example, if your group has a high membership fee, will those who can't afford to pay it find your group elitist? If your group has a lot of money and a beautiful facility, will some of the people you are trying to help feel uncomfortable using your services?

The lesson here? Think broadly about your funding needs from the start. With that in mind, let's look at a step-by-step method for how to develop a financial sustainability plan.

Decide who will develop the plan

If you have developed a financial sustainability committee, as suggested in the previous section, these are the folks to do the work. If you don't have such a committee in place, you might consider forming one, or at least a temporary working group. Board members are often key members of this type of committee. Developing a plan is easier, more enjoyable, and more effective with shared leadership.

Let everyone know what you are doing

Let staff, Board members, and your funders know what's going on. There are two reasons for this. First, they might have some excellent suggestions your working group wouldn't have considered. If so, your plan will be even more effective than it would have otherwise.

Second, it helps build an atmosphere of trust and mutual respect. There aren't unanswered questions, rumors in the office, or feelings of being "left out of the loop." Open communication is a very important part of any organization. Especially where money is concerned, people get antsy. Putting your cards on the table can take care of problems before they occur.

Conduct an internal audit
That is, find out what resources and expenses your organization has right now. You can't decide where you are going if you don't know where you are now. You need to know:

How much money you currently have

How much money you expect to have in the coming year, two years, etc.

Where it is from

What you do with it - how much money goes to programs, staff, etc.

How much debt you have

You probably already have this information in your annual budget. If so, now is the time to dust it off. Make sure that all of the information is correct, and that everyone working on your financial sustainability plan understands it. If you have money coming in but haven't taken the time to write out a budget, now is the time to do so. If your project or initiative doesn't yet have any funding, of course, you can simply go on to the next step.

Determine how much money you need

This is really very similar to doing an internal audit, and you will probably use a lot of the same information. The difference is this step really asks you to think about what can be cut from what you are doing; if you absolutely needed to tighten your belt, what could you afford to lose? What would a bare-bones budget look like?

This step breaks down into two parts: listing what you are currently doing that is essential to your mission, and then looking at what each of these things costs, as well as at your general organization costs.

What you are currently doing
Make a list of what your group is doing now that is:

Essential to your mission

Something that your organization should be doing

The first of these points is more obvious, although there may be some disagreement as to what is essential to the mission. For example, if your group is trying to reduce teen pregnancy, is an after-school club (to keeps busy during "unsupervised" time between three and six) essential?

Decisions on what is essential will mean different things to different groups - there's not a set formula for making them. Because of this, an idea of what is necessary should be made as a group, with everyone working on the plan giving their input. It should also be clear to members that even if something a group is doing is decided to be "non-essential" to the mission, that doesn't mean it will necessarily be cut. What you are doing is trying to get an absolute base cost for your group's work.

The second of these two points - are these activities your group should be doing - is an important step that's often forgotten by community groups. Some of your activities may be very important to reaching your goals. At the same time, however, maybe they are activities that should really be done by someone else.

For example, if your group is a coalition trying to revitalize the neighborhood you live in, an important part of your project will probably be to develop a job training program to make neighborhood residents more "marketable" to employers. However, should coalition staff itself run such a program? It might make more sense, for example, for the coalition to partner with the local community college or a "jobs for young adults" program who already have a structure for this training, as well as a lot of experience in doing it.

Before you make your list of "essentials," then, be sure you have pared it what really is the minimum. You can always add to what you are doing, as money becomes available, but this list will give you something to start from.

What each of these things costs

Now, figure out how much it costs to continue doing these activities. Consider both programmatic and staff costs as you figure out this base amount. Again, this part will be very similar to your annual budget.

Along with program costs, there are also expenses that are independent of programs you are doing. Costs such as office rental, utilities, and the organization's newsletter are three examples of bills that need to be paid that are not necessarily associated with any one of your programs. Be sure to add these in as well.

Decide how much money you want

This step is the opposite of step four. There, we suggested you figure a bottom dollar amount you could live with. Now, we ask you to go to the opposite extreme, and come up with a top dollar amount you would like to have.

In short, this is where you get to dream. Think about your long-term goals - what do you really want to do? If money weren't a problem, what would you like to see happen?

In this step, you will want to go outside of your planning group to get ideas. Talk with other staff members and clients for their ideas of where they would like the group to go - what they would like to see occur. The group as a whole, or members of the coordinating council, might make initial recommendations on which of these ideas are worth pursuing.

Also, even if your organization didn't add any new work or programs, chances are there are still things you would like to find money for - a copier, a full-time administrative assistant, a computer. Be sure to add these items for the organization to your wish list as well.

Next, make those dreams more concrete. What it will take (in terms of resources) to accomplish these goals? Will you need more staff, and/or better trained staff? A new building? Write down a list of what you would need over what period to make your vision happen. Then, next to each item, write down an estimate of what that would cost. Break the list down into first year costs, second year, etc. You might want to write this down over a five year period of time, or even longer.

Compare the amounts set out in the previous three steps

How far are you from your goals? On an annual basis, how much money will you need in the next five years to reach all of the goals you have set out?

Now, look at the information in front of you and decide how much funding it may make sense to go after at this point.

If your organization already has all of the money it needs (or is very close) this step might be very easy. You might set objectives to earn every dollar that you came up with a use for in your ideal situation.

On the other hand, however, if there is a huge gap between how much money you have and the ideal amount, you may want to make choices, so that all of your time isn't spent doing fundraising. In this case, you might look at which goals it makes most sense for you to pursue right now.

From these choices, you can set specific funding objectives, both short and long term. For example, a short term objective might be increased funding next year for two more positions; more long-term funding goals might include the development of an endowment, or buying (instead of renting) office space.

Consider the available possibilities

Brainstorm available funding possibilities.
What are different ways to obtain resources that make sense to your organization?

Leveraging shared positions and resources

Becoming a line item in an existing budget

Incorporating activities and services in organizations with a similar mission

Applying for grants

Using existing personnel resources

Soliciting in-kind support

Fundraisers

Using third-party funding

Developing a fee-for-service structure

Acquiring tax revenues

Securing endowments and giving arrangements

Establishing membership fees and dues

Developing a business plan

Creating a for-profit corporation to help pay for the nonprofit side

Have programs be "picked up" by other organizations

Another way to look at it: Finding funding from partners
Most of the possibilities listed above are things your organization can do on its own to try and raise money. However, most community groups work with other community agencies to reach common goals. And different groups have different resources available that might be shared. A good bet, then, is to work with other groups in your community to see how things can best get done, and what resources they can obtain for your group.

For example, if you are doing a violence prevention program, the police department may be able to get money your group is not eligible for directly. However, they might share those resources with you to get the job done. The local school district may have money available for substance abuse prevention programs, and so on.

What possibilities exist in your community?

Decide which funding possibilities you will follow up on
Now, consider which of these possibilities make the most sense for your organization. Questions that might help shape your decision include:

What will be easiest for us to do?

What possibilities hold the highest likelihood of success?

What would we enjoy doing?

How would any of these funding strategies change what we do?

What is most in keeping with our mission?

Strategize how to get what you want

Who will you need to work with to implement your funding strategies? What would make them want to help you? What can you do for them?

Sometimes, we'll complain that everyone just wants to know, "What's in it for me?" Those of us working in the nonprofit sector often have the idea that there shouldn't need to be anything in it for them - that donors should simply give from the goodness of their hearts.

When you think about it, though, that attitude might be a little naive. All of us have reasons for the things that we do, or we simply wouldn't do them. Those reasons may be simple - to make us feel better, to avoid negative consequences, or just out of habit. But however simple they might be, those reasons do exist. When planning for financial sustainability, we can't afford to expect potential donors to be any different. Many want recognition; others want to spread their values or interests in the community; other might simply want to feel good about what they are doing.

Find out what potential donors want and how you can give it to them. For example, foundations often say they are most upset to receive applications from people who have clearly not read their guidelines. Knowing this, you can be sure to follow granters' guidelines to the letter.

By knowing what potential donors want, you will have a better idea of know what you will ask for, know how to ask for it, and understand what you can offer in return. See Tool #2 at the end of this section for ideas of what potential donors might want and how your group can give it to them.

Develop a timeline

The timeline should indicate the various actions to be taken, when they should occur, and who should do them.

Develop a draft of your plan
This draft should incorporate all of the information you have compiled so far, including:

Your current financial situation, including you annual budget

Your long and short term financial goals

The broad strategies you will use to carry out those goals

The timeline with specific actions

A one page "executive summary" at the beginning of the document summarizing your work

An executive summary is used for many types of business plans. It serves as a "cheat sheet" for anyone who is reviewing what you have done, and gets the facts out front so people don't get lost in the detail. It should be simple and concise.

Incorporate feedback on your plan
Document in hand, you're ready to get some opinions on what you have done. Key groups to have review the plan include:

Staff members

Board members

Clients

Key community leaders

Current funders

Representatives from all of these groups can comment on the plan and make suggestions for improvement. Getting feedback at this point can be very helpful for at least two reasons. First, suggestions may be made that will make you plan stronger than it would have been otherwise. For example, something you have suggested might be impossible, and one of the reviewers might pick that out; or reviewers may have suggestions to build on your ideas.

Also, by allowing those who will be involved in implementing the plan the chance to modify it, it becomes theirs. Generally speaking, people are more willing to work on something that they created or at least believe in.

When asking folks to look at the plan, however, be sure to explain what the numbers mean. Misunderstanding financial information can lead to frustration and anger among people who are looking at it. For example, if a staff member earns $22,000 a year and sees that the annual budget is $500,000, (s)he may become very unhappy with his /her salary is (s)he doesn't understand where the rest of that money goes. Likewise, a program coordinator may be very angry about proposed cuts in her program if she doesn't have a full understanding of why they are necessary. On the flip side of the coin, if your organization carries a lot of debt, members may be led to think you are at the verge of financial collapse, and that they should be dusting off their résumés, even if that isn't the case.

The lesson here? Make sure those who are reading your plan have a full understanding of what it means. After everyone has had the opportunity to comment on the draft, the original working group can incorporate the suggestions as they see fit.

Implement your plan

With the revised plan in front of you, it's time to go do the work that has been decided on!

Monitor and evaluate your progress

When pieces of your plan have been implemented, however, you're still not done. As long as you are still in business, there is evaluation to do, monitoring of your progress, and tweaking or flat out changing things so everything works better.

Remember: planning never stops. It is ongoing, changes with the organization, and will need to be constantly revisited. This is true for all of our work in the nonprofit field. Earning money is no different.

Tips from the field
Financial sustainability is an uphill battle, and the challenge to get to the top can be one of the biggest frustrations we face in our work. Below, we have gathered a list of tips from people who have been through this process.

It always helps to network, to keep informed about what's going on, and to develop connections with others.

It helps to have someone in your organization who will take on the task of scouting and tracking those opportunities that might be available to you.

If you can possibly afford it, you might consider hiring someone to do the work of writing grants for you. This can be worth the expense if your grant-writer is good, and especially if he or she is willing to work at least partly on commission. One next best alternative: find a sympathetic local professional with background both in grant-writing and in your content area to review your proposal for form and content; follow his or her advice.

You can often find some other like-minded tax-exempt group or organization to make a formal grant application for you, if tax-exemption is needed and you are not tax-exempt yourself. That same group, often called a lead agency, may also manage grant funds received.

If you do enter a similar arrangement, be sure and work out the relationship beforehand. Everyone's roles and responsibilities should be made very clear, as should what advantages both groups will receive from the arrangement.

Successful fund-raising also depends upon your being in the right place at the right time, over and above the actual merits of you proposal. And funding deadlines are often short. These are even more reasons to stay connected with possible funding sources, and to have ideas and action plans developed so that you can be ready to move quickly when the right opportunity comes your way.

Get to know your local politicians (legislators) well enough so that they return your calls, and make sure that they and other politicians understand your issue and its importance.

Diversify your funding, so you aren't completely dependent on any one form of support.

Continuity is important. Stick to your mission, keep doing what you're doing. It's helpful to have consistent people, consistently going out doing the same consistent thing. People know what you're all about, and it helps create the local base of support discussed in the last bullet point.

Some of these tips have been adapted from The Spirit of Coalition Building.

In Summary

Developing a plan for financial sustainability, as with any plan, takes a lot of work to be done right. It's intricately linked with the idea of institutionalizing your organization and its programs as a whole. By creating an effective financial plan, members of your organization will be able to do more to make your vision a reality and have your mission accomplished.

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Section 1. Developing a Plan for Financial Sustainability

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Learn how to plan for the financial stability of your organization, including tips from folks who have been doing this work for a long time. What is a plan for financial sustainability? Why should you complete a plan for financial sustainability? When should you develop a plan for financial sustainability?

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Why We Need to Think Differently About Sustainability: Leyla Acaroglu at TEDxMelbourne

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Sustainability in Banking and Capital Markets

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beyondBanking: banking on global sustainability

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beyondBanking: banking on global sustainability is a program developed by the Financial Markets Division of the IDB's Structured and Corporate Finance Department that seeks to promote sustainable environmental, social and corporate governance principles among Latin American and Caribbean financial intermediaries through financial and technical cooperation.

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Interesting interview with Ann Pettifor, aired on ABC's The Business on 30 October 2013.

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Growth in the UK services sector slowed to a three-month low in September amid suggestions that the recovery may be "losing its legs".

The closely-watched purchasing managers' index (PMI) from Markit/CIPS fell to 58.7 from 60.5 in August.

A figure above 50 still indicates expansion, but Markit chief economist Chris Williamson said the slowdown eased pressure to raise interest rates.

He said it "adds to the case for rates to remain on hold until next year".

Also, a composite PMI survey for the whole of the private sector dropped from 59.7 to 58.1, its lowest level in six months.

Mr Williamson said the data pointed to official figures showing that gross domestic product growth in the three months to September would be 0.8%, slightly lower than the 0.9% reached in the second quarter.

He said: "September's PMI surveys suggest that the UK most likely enjoyed another spell of above-trend economic growth in the third quarter, but the recovery appears to be losing its legs.

"The slowdown is in line with Bank of England projections and, alongside record low pay growth, adds to the case for interest rates to remain on hold until next year, and at least until there are clear signs of wages and household incomes rising in real terms."

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Growth in the UK services sector slowed to a three-month low in September amid suggestions that the recovery may be "losing its legs". The closely-watched purchasing managers' index (PMI) from Markit/CIPS fell to 58.7 from 60.5 in August. A figure above 50 still indicates expansion, but Markit chief economist Chris Williamson said the slowdown eased pressure to raise interest rates.

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The UK's financial service sector is growing at its fastest rate since 2007, says the CBI business lobby group.

In the three months to September, 60% of firms reported greater profits.

The survey, which heard from 109 companies, found that financial services firms also added staff during the period.

It suggests these businesses have recovered from the crisis years of 2007-09, when many were forced to cut costs and jobs.

The CBI, which carried out the research with the consultancy firm PwC, expects the trend to continue in the coming months, with the majority of firms forecasting another period of rising volumes and profits.

The CBI is forecasting employment in financial and insurance activities to be just over over 1.15 million by the end of this year, 28,000 higher than the year before.

'New phase'

The biggest challenge that the firms expected in the coming year was competition.

Rain Newton-Smith, the CBI's director for economics, said: "The sector could be moving to a new phase in the recovery where firms are feeling more assured about the level of demand and are now shifting their gaze to competing for new customers and business,"

A separate report from the recruitment firm Astbury Marsden backed up the picture of an expanding financial services sector. It found financial sector firms in London created 3,470 new jobs in September, 46% more than for the same period last year.

Reflecting recent attempts to rein in the sector, many of the new roles were in compliance and regulation.

Astbury Marsden said firms were also hiring technology in response to regulatory demands for improvements to data protection systems: "The cyber-security jobs market has grown rapidly in recent months, and the banks are actively recruiting information security specialists to shore up their technology teams."

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The UK's financial service sector is growing at its fastest rate since 2007, says the CBI business lobby group. In the three months to September, 60% of firms reported greater profits. The survey, which heard from 109 companies, found that financial services firms also added staff during the period.

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Video

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Video

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The UK economy may be starting to recover, but the country's levels of debt still remain among the highest in the developed world.

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Loan Calculator - Work out your personal loan repayments and interest payments - Money Advice Service

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Use our Loan Calculator to discover the total cost of your loans. See how adjusting your monthly repayment amount impacts your interest payments, the total amount repayable and how long it will take to repay your borrowing in full.

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Quiz

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A study has found that around 70pc of British adults answered GCSE level personal finance questions incorrectly.

The questions covered everyday financial issues such as savings, tax, currency exchange and utilities.

Of the 2,000 British adults who participated in the survey by The Open University Business School, between 20 and 40 per cent said that their lack of financial knowledge stopped them from making informed financial decisions about mortgages, pensions, credit cards and loans.

With financial education set to become compulsory in schools across England from September this year, schoolchildren aged five to 16 will now learn how to manage their money on a daily basis and plan for future financial necessities.

How well do you know your finances? Take the quiz - based on a previous sample of questions from the all-party parliamentary group's enquiry report on financial education, to find out.

The Open University is offering a free 'Manage my Money' course on May 12. Find out more here.

* For ideas on making more money and spending less, go to telegraph.co.uk/newsletter

Follow @moneytelegraph

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Quiz: Can you pass the Personal Finance GCSE?

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A study has found that around 70pc of British adults answered GCSE level personal finance questions incorrectly. The questions covered everyday financial issues such as savings, tax, currency exchange and utilities.

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"How to grow your personal finance and spend less

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"How to grow your personal finance and spend less

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Some useful tips

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Latest news, expert advice and information on money. Pensions, property and more.

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How does this affect borrowing and spending?

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Government borrowing rose to £11.8bn in September, an increase of £1.6bn compared with a year earlier, according to the Office for National Statistics.

Economists were forecasting that borrowing would hold steady.

The latest figures are a set back for Chancellor George Osborne, who in March pledged to cut the budget deficit by more than 10% over the next 12 months.

Between April and September borrowing was £58bn, a rise of £5.4bn compared with the same period last year.

That is an increase of 10.3%. Last month's figures showed borrowing between April and August was 6% higher than a year earlier.
Analysis: Simon Jack, Business correspondent, BBC News
Plans to reduce the deficit are getting further off track. The government has so far borrowed 10% more this year than it did at the same time last year. It means the chancellor has no room for manoeuvre as he prepares his pre-election tax and spending plans, due to be announced in early December.

There were some bright spots for him - stamp duty is 25% up on the year - but income tax was flat, despite a record breaking fall in unemployment since last year, suggesting job growth has been in low-paid work. The deficit has come down a third since 2010, but the progress has stalled and this year is heading in the wrong direction.

"We have seen stronger growth in receipts this month, but as today's figures show, the impact of the great recession is still being felt in our economy and the public finances," a Treasury spokesman said.

"At the same time, we have to recognise that the UK is not immune to the problems being experienced in Europe and other parts of the world economy."

Poor run

Economists say the borrowing situation will limit the government's options in the run-up to next year's election.

"The continued run of poor UK public borrowing figures looks set to severely hamper the chancellor's ability to announce giveaways to address his party's deficit in the national opinion polls before next year's general election," said Samuel Tombs, senior economist at Capital Economics.

"The chancellor will be forced to acknowledge in December's Autumn Statement that the fiscal consolidation is not going to plan, limiting his scope to announce pre-election sweeteners."

Weak income tax receipts are behind the rising dependence on borrowing, in the first half of the fiscal year receipts were up just 0.1% compared to the same period last year.

"Income tax receipts have been held back by weak earnings growth and the fact that much of the employment growth has been in low paid jobs or in self-employment," said Howard Archer, chief UK economist at IHS Global Insight.

The chancellor's move to increase the amount people can earn tax free is also depressing tax receipts.

The UK Personal Allowance - the amount you can earn in the UK before having to pay any tax - has risen during the current Parliament from £6,500 to its current level of £10,000. From next April, it is due to rise to £10,500.

Reacting to the borrowing figures, shadow chief secretary to the Treasury, Chris Leslie said: "These figures are a serious blow to George Osborne. Not only is he set to break his promise to balance the books by next year, but borrowing in the first half of this year is now 10% higher than the same period last year."

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Government borrowing rose to £11.8bn in September, an increase of £1.6bn compared with a year earlier, according to the Office for National Statistics. Economists were forecasting that borrowing would hold steady. The latest figures are a set back for Chancellor George Osborne, who in March pledged to cut the budget deficit by more than 10% over the next 12 months.

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A mother from Bedfordshire must repay thousands of pounds in falsely claimed benefits after her Facebook account revealed she was dating her landlord.

Jenna Priest, 29, of Bridge View, Shefford, admitted making false claims for housing benefit and failing to declare a change of circumstances.

Bedford Magistrates' Court heard she claimed to be a jobless single parent to obtain income and housing benefit.

She has been ordered to pay back £6,325 in benefits and fined £1,000.

Priest pleaded guilty to falsely claiming housing benefit from September 2013 and failing to declare her circumstances had changed in relation to the income support she was claiming.

'Excellent result'

An inquiry was launched by Central Bedfordshire Council when her Facebook profile revealed she was in a relationship with her landlord, and Priest was interviewed under caution.

She said she had met her landlord through an online dating site 18 months previously but denied they were a couple.

But she accepted the £120 a week she paid for two rooms in the four-bedroom house in Shefford was not a business arrangement as the pair's financial arrangements were not completely separate.

Maurice Jones, executive council member for corporate resources, said it was an "excellent result" for the revenue and benefits team which "uses all resources to catch people acting illegally".

Priest was also also ordered to pay a £100 victim surcharge and £732 in prosecution costs.

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A mother from Bedfordshire must repay thousands of pounds in falsely claimed benefits after her Facebook account revealed she was dating her landlord. Jenna Priest, 29, of Bridge View, Shefford, admitted making false claims for housing benefit and failing to declare a change of circumstances.

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How could this affect saving and borrowing

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Concern over interest rate rises could "curb" house buying intentions, the Halifax has said, as it reported slowing house price growth.

The lender, part of Lloyds Banking Group, said that annual growth in house prices slowed to 8.8% in October.

Prices were 0.4% lower in October than they were in September, it added, with the average home worth £186,135.

The lender suggested borrowers were concerned about the effect of any rate rise on monthly repayments.

Demand

In the three months to the end of October, prices were 0.8% higher than the previous quarter. However, the Halifax said that this was the slowest rise since December 2012. Its survey is based on its own mortgage lending.

The lender said that the economy was growing at a "healthy rate" and employment was rising. This, it said, should support housing demand over the coming months.

"While the chances of an imminent interest rate hike may have receded, a recent Halifax survey found that many borrowers are concerned about the impact a rise could have on their monthly mortgage repayments over the next 12 months," said Martin Ellis, housing economist at the Halifax.

"This concern is likely to curb buying intentions."

The Bank of England announced on Thursday that it had held UK interest rates at a record low of 0.5% for another month. They have been at this level since March 2009.

Rates were expected to rise early next year, but economists think this will be pushed back due to recent poor news.

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Slowing price rises should help first-time buyers. However, many still face a battle to raise large amounts for a deposit, while paying rent and seeing little return on savings.

Estate agents have suggested that some first-time buyers have decided to delay any house purchases, believing that the market may continue to cool.

Other house price surveys have also shown that the pace of price rises has slowed or reversed. However, there are still geographical differences, with some areas of southern England showing faster price increases.

Alex Gosling, of online estate agent Housesimple.co.uk, said: "While it is too early to say if this is a pause or a plateau, the property market's fundamentals are strong and there's every chance that after the Christmas lull it will return to growth - albeit at a more sensible level than that seen this year."

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Concern over interest rate rises could "curb" house buying intentions, the Halifax says, as it reports slowing house price growth.

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How does this affect saving and borrowing?

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The Bank of England has held UK interest rates at a record low of 0.5% for another month.

It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent.

The Bank's Monetary Policy Committee has held rates at 0.5% since March 2009 in a bid to help economic recovery.

Rates were expected to rise early next year, but economists think this will be pushed back due to recent poor news.

This week, surveys indicated a slowdown in the UK services sector and construction industry.

The Chancellor, George Osborne, has also warned that the UK will not escape the slowdown in the eurozone.

However, on Thursday figures from the Office for National Statistics said industrial output rose more than expected in September, boosted by a major North Sea oil field coming back on stream and a rebound in car production.

The ONS said factory output rose 0.6% in September from August.

The return of production at the major Buzzard offshore field in the North Sea and at other installations was behind a 5.2% jump in extraction of crude oil and natural gas.

The Bank of England has said it wants to be sure growth is on a firmer footing, and that slack in the labour market is reducing, before it raises interest rates.

First rise?

Howard Archer, chief UK & European economist at IHS Global Insight, said it was no surprise rates were held.

"Indeed, it would now be a surprise if the Bank of England raised interest rates until well into 2015," he said.

"The likelihood of a near-term interest rate hike from the Bank of England has seemingly receded substantially recently."

Weak inflation, slow wage growth, and troubles in the eurozone have prompted some Bank officials to indicate that rates will not rise any time soon.

The Bank is due to publish new economic forecasts next week, which will be pored over by analysts looking for clues on when rates may rise.

A cut in the Bank's inflation and growth expectations could lead to economists pushing back forecasts for a rise until around mid-2015 at the earliest - which would be after the general election.

Alan Clarke, an economist at Scotiabank, said that if the Bank cut its inflation forecast, "then the market will probably conclude that the first rate hike is not likely until late 2015".

The British Chambers of Commerce said its members would be "relieved that an early rate rise appears to be off the agenda".

Chief economist David Kern said the near-term economic picture was one of slowdown. "Given this background, it is clear that keeping the economic recovery on track must remain a priority and risks of a steady slowdown must be countered.

"As well as providing clarity that interest rates will remain low well into 2015, the MPC must make renewed efforts to boost bank lending to growing businesses," Mr Kern said.

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The Bank of England has held UK interest rates at a record low of 0.5% for another month. It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent.

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How could this affect saving and borrowing?

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A cap on the amount that payday lenders can charge their customers has been announced by the City regulator.

Payday loan rates will be capped at 0.8% per day of the amount borrowed, said the Financial Conduct Authority (FCA).

In total, no one will have to pay back more than twice what they borrowed, and there will be a £15 cap on default charges.

The loan restrictions will start from January, the regulator said.

"For people who struggle to repay, we believe the new rules will put an end to spiralling payday debts," said FCA chief executive Martin Wheatley.

"For most of the borrowers who do pay back their loans on time, the cap on fees and charges represents substantial protections," he added.

The price cap plan - which includes both interest and fees - remains unchanged from proposals the regulator published in July.

'Tighter checks'

The confirmed measures will see:

Initial cap of 0.8% a day in interest charges. Someone who takes out a loan of £100 over 30 days, and pays back on time, will therefore pay no more than £24 in interest

A cap of £15 on the one-off default fee. Borrowers who fail to pay back on time can be charged a maximum of £15, plus a maximum of 0.8% a day in interest and fees

Total cost cap of 100%. If a borrower defaults, the interest on the debt will build up, but he or she will never have to pay back more than twice the amount they borrowed

Russell Hamblin-Boone, chief executive of the Consumer Finance Association, said the payday loans industry had already put in place higher standards of conduct.

"We've restricted, for example, extending loans, rolling over loans, [and] we've got tighter checks on people before we approve loans," he told BBC Radio Four's Today programme.

"This [cap], if you like, is the cherry on a rather heavily-iced cake," he said.

The £2.8bn industry was expected to shrink as a consequence of the cap, which could make people vulnerable to loan sharks, he added.

"We'll inevitably see fewer people getting fewer loans from fewer lenders," Mr Hamblin-Boone said. "The fact is, the demand is not going to go away. What we need to do is make sure we have an alternative, and that we're catching people, and that they're not going to illegal lenders."

Zoe Conway, Reporter, BBC Radio 4 Today: The view from Byker, Newcastle

In the High Street in Byker, there are pawn shops, and brightly coloured Money Shops and Cash Converters. It does not take long to meet someone struggling with debt.

Kevin, behind on a loan from a doorstep lender, says people have very few options. "I've actually been approached in the street," he says. "It was one of those 'legs broke if you don't pay' sort of things."

There is concern in this community that if it gets harder for people to access payday loans, the loan sharks will take over. That is certainly the view at the Byker Moneywise Credit Union. They offer payday loans at much lower rates but few people locally know about them and, admits manager Christine Callaghan, the Union is not big enough to meet the demand for short-term loans.

At The Big Grill, the owner, John, is making bacon sandwiches. He is worried that people may have to resort to stealing to make ends meet. "They'll turn to crime to get what they want especially for their kids," he says.

It is a view shared by resident Alison who thinks the government needs to step in to give people more options and better places to turn to.

Responsible lending

Mr Wheatley, of the FCA, said that the regulator's research had shown that 70,000 people who were able to secure a payday loan now would not be able to do so under the new, stricter rules. They represent about 7% of current borrowers.

However, he disputed the industry's view that many of these people would be driven into the arms of illegal loan sharks. He said most would do without getting a loan, some would turn to their families or employers for help, and only 2% would go to loan sharks.

He added that he wanted to see a responsible, mature industry for short-term loans.

Gillian Guy, chief executive of Citizens Advice, said: "People who are in a position to borrow need a responsible short-term credit market. A vital part of this is greater choice. High Street banks should seize the opportunity to meet demand and offer their customers a better alternative to payday loans.

"The FCA should monitor the cap, including whether it is set at the right level, to make sure it is working for consumers. They must also keep a close eye on whether lenders are sticking to the rules."

Earlier this year, the government legislated to require the FCA to introduce a cap on the cost of payday loans. Chancellor George Osborne said the decision would "make sure some of the absolutely outrageous fees and unacceptable practices are dealt with".

Meanwhile, Cathy Jamieson, Labour's shadow financial secretary to the Treasury, said she was glad that action was being taken.

"However, we believe these changes will need to be regularly monitored to ensure they are effective. That is why we want to see a review by the end of 2015 - much earlier than is currently being recommended by the FCA," she said.

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A cap on the amount that payday lenders can charge their customers has been announced by the City regulator. Payday loan rates will be capped at 0.8% per day of the amount borrowed, said the Financial Conduct Authority (FCA).

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How does this affect saving and borrowing?

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Growth in average pay for UK workers overtook inflation for the first time in five years, according to data from the Office for National Statistics.

Wages excluding bonuses rose by 1.3% in the year to September, beating the 1.2% Consumer Prices Index inflation rate.

Including bonuses, earnings rose by 1% from a year earlier, the ONS said.

The ONS also said that UK unemployment in the July-to-September period was down 115,000 on the previous quarter, cutting the total to 1.96 million.

Pay has lagged inflation since the global financial crisis, but in recent months earnings have been rising just as the pace of price growth slows.

The government said it showed that the recovery was feeding through to household budgets, but unions said it would be years before earnings returned to pre-crisis levels.

IHS Global Insight's chief UK economist, Howard Archer, said the news on pay would be a relief for consumers.

But he added: "This is still really more to do with low inflation than markedly improving earnings. However, earnings growth did take a much-needed decent step in the right direction in September."

Martin Beck, senior economic adviser to the EY Item Club, said: "The surprise rise in pay growth may be in part stemming from signs that the productivity of the workforce is improving.

"While GDP grew by 0.7% in Q3, hours worked rose by only 0.1%. This left the quarterly rise in output per hour at 0.6%, the best performance since the middle of 2011."

The deputy governor of the Bank of England said he expected real earnings to continue outpacing inflation well into next year.

Delivering the Bank's latest inflation report, he said that the inflation rate could fall below 1% next year, while earnings growth would run at around 3%.

'No room for complacency'

The number of people claiming Jobseeker's Allowance was 931,700 in October, 20,400 down on September, and the 24th consecutive monthly cut.

The ONS said employment rose by 112,000 in the latest quarter to 30.7 million, the highest since records began in 1971.

Around 14.7% of workers, or 4.5 million, are self-employed, down by 88,000 on the quarter but up by 279,000 on a year ago, while the number of part-time workers wanting a full-time job remained at about 1.3 million.

Employment Minister Esther McVey said: "Record numbers of people in work means more people with the security of a regular wage who are better able to support themselves and their families.

"With the vast majority of the rise in employment over the last year being full-time, it's clear that thanks to the government's long-term economic plan, we are helping businesses to create the jobs that people need."

But Stephen Timms, the shadow employment minister, said there was "no room for complacency". He told the BBC: "Youth and long-term unemployment remain a serious problem, so there is a lot more do."

And Paul Kenny, general secretary of the GMB union, said: "Many of the new jobs are precarious and badly paid while the real value of take-home pay for the rest of the workforce is 13% below pre-recession levels."

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Growth in average pay for UK workers overtook inflation for the first time in five years, according to data from the Office for National Statistics. Wages excluding bonuses rose by 1.3% in the year to September, beating the 1.2% Consumer Prices Index inflation rate.