Earlier this month, NCVO released their annual data snapshot of the charity sector, the UK Civil Society Almanac 2020. Although most of the data itself comes from the 2017/18 financial year, we can see some tell-tale signs about what the future may hold for charities post Covid-19 by analysing this data.
Firstly, there are slightly fewer charitable organisations operating in 2017/18 than 2016/17. This corresponds with a larger trend over recent years of a relatively stable number of charitable organisations rather than huge growth or decline.
The worrying part of these statistics is the changing composition of the sector. Micro and small groups (those with annual incomes under £10k and £100k respectively) are on a downward trend, with the sector nationally changing from 88% in 2000/01 to 81% in 2017/18. VAL’s own analysis of the Leicester and Leicestershire sector has shown this to be true locally as well; in 2004 87% of groups were micro or small, compared to 77.5% in 2018.
Micro and small groups form the backbone of what we refer to as grassroots community groups, they are community centres and halls, youth clubs, scouting organisations, faith groups and sport clubs.
Why does this matter? Well, it has major implications for our communities. Micro and small groups form the backbone of what we refer to as grassroots community groups, they are community centres and halls, youth clubs, scouting organisations, faith groups and sport clubs. They are often organisations that the general public do not really think of as charities, they are simply part of the fabric of the community. These organisations, though small, have a large impact on people’s daily lives; so it’s vital that we understand why the number of these organisations is declining.
One explanation offered by NCVO is the result of organisations moving up an income bracket, either through gaining more funding or their funding increasing in line with inflation. If this is so, we should be able to see a corresponding increase in organisations in the next income band. However, for Leicester and Leicestershire the number of micro groups decreased by 118 between 2015 and 2018 while the number of small organisations increased by only 17. What is particularly concerning is this drop in numbers occurred two years before the impact of coronavirus and a potential economic downturn. We can expect any downward trend to be exacerbated by funding pools drying up and possible local authority cuts.
For Leicester and Leicestershire the number of micro groups decreased by 118 between 2015 and 2018 while the number of small organisations increased by only 17… We can expect any downward trend to be exacerbated by funding pools drying up and possible local authority cuts.
The Civil Society Almanac can enlighten us too on the effect that economic downturns have on the income of the charity sector. Nationally in 2008/09 during the great recession, the income of the sector fell by 4% on the previous year; our Leicestershire analysis shows a larger decrease of 5.2%. It took 6 years for the income of the sector to regain the same levels as 2007/08.
Opinion is currently divided as to whether COVID-19 will have a lasting economic effect or we are in line for a ‘v-shaped recovery’, but in light of the dire straits a number of English councils find themselves in it looks like the charitable sector is in for a rocky number of years regardless of how the rest of the economy recovers. Additionally, the general public are the major funders of the charitable sector, giving £25.4bn compared to £15.7bn from government. Social distancing restrictions, redundancies and less disposable income in the next few years due to the current crisis could see this level of income fall substantially.
This has the potential of creating a perfect storm for the charity sector, whereby income from all sources is squeezed while demand for services is increased, particularly in the area of unemployment support.
Being left to their own devices after the current pandemic and subsequent economic turmoil will not sit well with a majority of charity leaders, particularly when our services were never more needed than during the pandemic.
Being left to their own devices after the current pandemic and subsequent economic turmoil will not sit well with a majority of charity leaders, particularly when our services were never more needed than during the pandemic. Many will argue that if it wasn’t for the work of local community groups and their volunteers then many vulnerable people will have been left isolated and without basic necessities. VAL’s COVID-19 survey suggests that 51% of charities remained open during the pandemic, 64% did not use the government furlough scheme, and 52% expected a financial impact or faced an uncertain financial future post-crisis.
Our voluntary, community and social enterprises did what they do best during this crisis: they endured – they did not close, they adapted.
Our voluntary, community and social enterprises did what they do best during this crisis: they endured – they did not close, they adapted. Charities changed their priorities and objectives quickly to cope with lockdown restrictions, they responded – they utilised everything at their disposal from volunteers to resources to ensure help was received where it was needed.
The coming economic fallout will affect all areas of the country in one way or another, but after responding to the call for help, surely more can be done to protect the vital community based charities that so many have depended on. This choice lies with central and local government and funding organisations. Do they hold back funding and cut services, or do they all they can to preserve the organisations at the heart of our communities?
To again use a phrase that has been used far too often in the last four years: the future is uncertain.