COVID-19 survey by major charity sector umbrella groups suggests the charity sector is heading towards a funding crisis without government intervention

A COVID-19 survey carried ou by the Institute of Fundraising, the National Council for Voluntary Organisations and the Charity Finance Group between 18 and 23 March has found that UK charities are expecting the coronavirus pandemic to cause an average decline of 48 per cent in fundraised income alongside a 43 per cent rise in demand for their services. Around 1,100 charities completed the survey. The responses tended to be from larger charities: 35 per cent of respondents had incomes of more than £1m and only 26 per cent had annual incomes of less than £100,000.

Key finding from the survey were:

o On average, the 337 charities that responded to the question about their fundraised income thought they would lose almost half of it (48%), while 375 charities estimated that their total overall income would fall by almost a third (31%) on average.
o Of 554 charities responding to the survey , 43% believed they would see a rise in the demand for services.
o 91% said their cash flows had been disrupted or were expected to be disrupted by the crisis.
o 62% said this would lead to reduced charitable activity.
o More than two in five (42%) said the pandemic would leave them in danger of being unable to cover payroll and 34% said their ability to pay bills and mortgage repayments would be reduced.
o To cope with the problem, 52% said they had cut their level of services and a further 12% said they planned to do so in the future, while 65% said they had taken steps to reduce costs as far as possible and 62% said they felt they needed to use reserves to keep going in the future.
o 59% of respondents had already cut back on implementing new initiatives or programmes as a result of the pandemic.
o 83% said the most important thing for their organisation’s resilience and sustainability over the coming three to six months was access to emergency grant funding, while 53% said they wanted a reduction of bills and liabilities such as VAT or rent.

Peter Lewis, chief executive of the Institute of Fundraising, renewed calls for government to support charities if they were to continue providing services.

Over the next 12 weeks, charities will lose £4bn in vital income that they would have received from the British public, at the same time as a 42 per cent surge in demand for their services,” he said. “They need urgent help to maintain and expand their services.

Caron Bradshaw, chief executive of the Charity Finance Group, said:

This situation is unprecedented in attacking every area of charity income while increasing demand and costs, and is rapidly burning through reserves.

“If the government doesn’t act now then the longer-term impact on the economy, society and social wellbeing will be devastating and almost impossible to recover from.

Karl Wilding, chief executive of the NCVO, said the figure reflected the stories the charity was hearing every day from its members.

Charities are faced with making incredibly difficult decisions about how to ensure their organisations can help now and still be there to make a difference once the crisis is over,” he said.

He added that because charities tried to be prudent and efficient, few had enough cash stored up to survive a prolonged downturn.

Further information is available on the Charity Finance Group and the Institute of Fundraising websites.