Covid-19 and charities: the thorny path to recovery
Covid-19 has led to a deep recession. Its effects will last a long time. However, some areas will be worse affected than others.
Ulster University’s Economic Policy Centre (UUEPC) has produced a series of papers about how the pandemic has affected the Northern Ireland economy.
The third report was published last month and suggested recovery might take 10 to 13 years, hitting jobs harder than the last recession from 2008. The economic fallout from the financial crisis affected GDP more than employment numbers (although wage stagnancy has been a persistent issue for longer than a decade).
UUEPC estimates that by mid-June the NI benefit claimant count was over 63,000, a level not seen since the peak of the last recession, and that another 60,000 people could yet move into unemployment leading to a rate of 13%.
The policy unit points out that sectors like retail, hospitality, and arts and entertainment face particularly tough times.
The uneven impact was illustrated in a recent article by BBC NI Economics and Business Editor John Campbell, who said recent job announcements – some positive, some negative – tells a “tale of two economies”.
Like most efforts to carve a narrative out of economic numbers, that is a simplification (albeit a good one). The bad news is the underlying cause of this fork in the road. Digitally tradeable goods and services can survive or even thrive in the new normal. Those parts of the economy that rely on people physically meeting each other are in trouble.
Community and voluntary organisations, sometimes through working habit but often through necessity, often fall into the latter.
The UUEPC series of reports has not taken a specific look at Covid-19 and the third sector. However, other signs are not encouraging.
This week NICVA released the top ten findings from its August Covid-19 Impact Survey.
Broadly speaking, these findings split into two themes: effects on provision of services, and organisational/financial security.
The major findings relating to services included:
- 73% of organisations indicated that services/activities had been stopped due to the Covid- 19 crisis
- Over a quarter (25.3%) said they were delivering only a quarter or less of their normal services or activities, and over a third (35.5%) said the loss of their services was affecting over 100 service users a week
- Over two fifths (42.3%) said up to a quarter of their services were new services developed in response to the Covid-19
- Over a fifth (21.6%) said between a quarter and half of their services were new, Covid-19 related services, such as prescription runs, food deliveries and mental health support
- Over half (50.4%) said that between 76-100% of their volunteers had been unable to volunteer because of Covid-19
- Over 60% said they expected their capacity to deliver services to reduce, with over a quarter saying they expected a reduction in capacity of between 25-75%
Unfortunately, a reduction in services does not mean a reduction in demand. Covid-19 has led to a surge in need.
The above issues have several causes. Physical distancing measures has made some services difficult or impossible to provide. Some volunteers will have stepped back from their roles because of the pandemic. Covid-19 will have created new channels of demand, meaning pre-existing services may have to be lower priority.
And there are the financial impacts of the pandemic.
Pressures caused by physical distancing, needs arising directly from Covid-19, and so on, will wax and wane but generally reduce over the longer-term.
Finances are different. The effects until now are only the start.
Per NICVA’s latest findings:
- 66.8% of organisations indicated that they had lost funding/income
- More than one in six organisations (18.3%) have lost 75% or more of their normal income while more than quarter (26%) have lost between a quarter and half of their income
- The top 3 most pressing issues facing organisation were “sustaining our organisation and activities”, “finance/cash flow” and “changing our services to meet emerging needs”
- Nearly a third (31%) of organisations said they expected their income to fall by between 51-75% in the next 6 months, while 4.3% said that their organization may not survive
This paints a frightening picture. Without significant action, the future looks bleak. The question, therefore, is what action is possible.
Thorny paths to recovery
Research published last month from Durham University and the Community Foundation in North East England found that charities’ confidence about future income has collapsed.
The Third Sector Trends Covid-19 Impact Survey was based on responses from organisations in England and Wales in late June and early July.
Report author Professor Tony Chapman, director of research at St Chad’s College, Durham, said: “At the moment, leaders of third sector organisations are feeling pretty nervous about the future – and with good reason.”
There is pessimism about the ability to raise funds from all directions. Income from the private sector, income from trading, income from trusts and foundations, and income from local authorities are all expected to suffer, according to the research.
On top of that, given the wider economic woes predicted across the UK – such as the spike in unemployment predicated by UUEPC – there must be concerns that individual donations will slump too.
Northern Ireland is not England or Wales but obviously it shares much in common and, crucially, will be relying on the same institution for statutory support.
The Northern Ireland Executive has too many ongoing budgetary pressures to stump up game-changing amounts for community and voluntary organisations here.
Stormont is completely different from Westminster in that it has little or no fiscal or monetary flexibility. The UK government can increase its own budget by borrowing or even printing money. It is within the gift of Westminster to significantly compensate for pressures caused by other funding streams running low or drying up entirely.
It seems unlikely the current Tory government would naturally be inclined to take such an approach. Convincing arguments will be required.
The aim for all community and voluntary organisations, and the third sector in general, is to minimise the effects of the pandemic on operations.
All pathways to a more positive economy are fraught with obstacles. The best hope comes from statutory support. It is within the gift of government – even one walking its own policy minefield – to provide huge financial support to keep charity services afloat.
The trick, therefore, is convincing Westminster that this is a priority, that the benefits outweigh the costs, and that maintaining the vital services offered across the breadth of the third sector is something the public will value.
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