The fallout from Covid-19 will squeeze communities in a time of need

Over half of UK charities expect to cut back on services as a result of Covid-19.

New research suggests that 60,000 third sector jobs could vanish amid a £10bn funding gap, with larger organisations likely to be hit the worst.

A survey of 455 charities across the UK carried out this month by Pro Bono Economics, in partnership with the Institute of Fundraising (IoF) and the Charity Finance Group, found that 19% of charities have already made redundancies. It also found that 23% are explicitly planning cutbacks once the furlough scheme comes to an end.

An estimated 25,600 charity jobs have gone since the start of the pandemic, less than half of total redundancies anticipated in 2020.

Overall UK unemployment is expected to double in the run up to Christmas (and, one week later, Brexit) and if the losses among community and voluntary organisations come to pass it could lead to an enormous level of unmet need: 68% of charities expect demand for services to rise in the next six months, while 58% say they will have to reduce provision.

The upshot is this: the wellbeing of vulnerable people, especially those who rely on the efforts of charities, is at risk.

These problems were predictable as far back as March, when the scale of the coming pandemic and its consequences became clear.

Northern Irish community and voluntary organisations collectively have a lot in common with the third sector in the UK as a whole, albeit the two pictures are far from identical.

Regardless, the state of charities in the UK overall is likely to be the major driving force behind any government support packages, because Stormont has a stretched budget and – unlike Westminster – has little flexibility to dip into extra reserves.

And government will play a key role if a chasm between need and services is to be avoided.

Small vs large

Some interesting differences emerge between the experiences of smaller charities (those with an annual income of under £500k) compared with medium (£500k-£10m) and large organisations (£10m+).

First of all, smaller charities are expecting less of an impact on service delivery and, perhaps related, on income and job losses as a result of Covid-19.

While 54% of small charities say it is likely they will have to scale back delivery over the next six months, compared with pre-pandemic plans, this figure is 57% for medium-sized organisations and rises to 68% for large organisations.

A total of 23% of smaller organisations think they will return to normal levels of income within 12 months, compared with 18% of medium-sized and only 11% of large charities. Meanwhile, 18% of small orgs think that will take more than two years (or may never happen), compared with 27% of medium and a huge 40% of large charities.

Over two thirds of small orgs say they expect to keep all their staff in situ when furlough winds up, compared with 54% of medium and only 39% of large charities.

Respondents were asked what the single biggest negative impact of Covid-19 has been on their operation. By far the three most common responses were that physical distancing makes service delivery more difficult; that the pandemic makes fundraising harder; and that it makes planning for the future more uncertain.

The spread of answers was different amongst small organisations when compared with larger (meaning both medium and large) groups. A total of 45% of smaller charities identified the effects of physical distancing on service delivery as their biggest issue, compared with just 34% of larger orgs, while only 19% said planning for the future was the greatest concern, compared with 28% of larger orgs. The ratio of those who said the impact on fundraising was their prime concern was very similar – 30% of smaller charities and 31% of larger.

Per the report: “[T]he near- and medium-term outlook for charities looks very concerning. Most organisations expect to be reducing their headcount and delivering scaled-back activities, just at a time when many of the economic and social impacts of the Covid-19 crisis are likely to come to a head.

“Of course, charities are not alone in facing an uncertain future: 2021 is set to be a difficult year across the UK and beyond. But a country in need will want to turn once again to its charities and civil society organisations to help it navigate a path to recovery.

“The sector will undoubtedly stand up to the test, but it will in turn need the help of government, businesses and the wider public in order to do so.”

Consequences

Daniel Fluskey, Head of Policy and External Affairs at the IoF, said: “The findings from this research show just how challenging the situation is for charities across the UK. The stark figures on reduction of services and job losses are of real concern and will have a real impact for the people, families, and communities who rely on charities every day.

“At a time where so many people are struggling, we are seeing charities' ability to help them severely reduced, not just in the short-term, but over the months and years ahead.”

Before Covid-19, many organisations were extremely busy. Plenty would have liked to offer more services than they could already. There is not a huge amount of spare capacity in the third sector. Community and voluntary groups hardly tend to be idle organisations.

Caron Bradshaw, CEO of Charity Finance Group, said: “Charitable activities and organisations are the glue that keeps communities together and a bridge between the sectors. They want to play their part in the recovery but every day society is closer to losing huge capacity at the heart of our communities.

“The scale of job losses in the charity sector means less capacity to help people survive loss, hunger, unemployment.  Charities are vital to help society through the crisis of Covid and will be essential to the effort to rebuild as we go through a deep-rooted recession and a potential second wave.

“These results should ring an alarm bell for Government that without action there is worse to come.”

The unavoidable conclusion is that, in the coming months and perhaps years, there is a risk that urgent need in local communities will either not be met fully or not met at all.

However, it doesn’t have to be this way.

As Matt Whitaker, CEO of researchers Pro Bono Economics, says: “Navigating this period rests in part on getting more resources into the sector, from government, from existing funders and from members of the public. But it also rests on reversing the public policy neglect the sector has suffered from over many years.

“That’s particularly true if civil society is to play the pivotal role that it should do in the country’s recovery from the pandemic, helping to fulfil the Prime Minister’s pledge to ‘build back better'.”

Westminster has plenty on its plate, but needs to address these issues, and quickly.