In 2021 and for the foreseeable future, the third sector in the UK isn’t going to resemble its former self. With the fallout from the pandemic set to continue for some time, demand for charities’ services will remain high.
However, the pandemic has impacted on how charities can fund and deliver support. This is a challenging time for the sector – in this commentary we look at how organisations working for wider societal good, have been impacted and what challenges they will face for years to come.
It is easy to see through analysis the multiple impacts that the COVID-19 pandemic has had on charities sector.
Many charities have seen their revenue streams adversely impacted due to the inability to host events of any scale. Fundraising events reliant on physical interactions such as coffee mornings and local sports events or large events such as the Kilt Walk and the Edinburgh marathon have been the worst affected.
Another stream of revenue for charities is donations. As the economy has slowed down people have been reluctant to spend and have instead moved their focus to saving with subsequent knock-on impacts on people’s willingness to donate. Of particular concern is the reduction of donations to medical research. Charities in this space took only 7% of all donations in 2020 compared to their normal taking of 12%. This reduction is due to many funders shifting their focus to the NHS/COVID-19 related charities.
With the loss of fundraising income charities have had to put more reliance on grants. This is a far more uncertain method of generating revenues and can result in significant efforts being expended for little or no return.
The situation is further exacerbated with changes in government policy. Government funding to charities in England and Wales has shifted from being mostly grants to overwhelmingly being more restrictive contracts over the last 15 years (see https://data.ncvo.org.uk/).
Bringing these factors together is creating the perfect storm for organisations who rely on third party support to deliver vital services.
Whilst charity income has been reduced, the pandemic and its economic and social impacts has led to an increase in demand for charity services (see DEMOS). This combination has seen not only volunteer and staff resources stretched, but in certain cases users have not been able to receive the levels of support required. In the most extreme cases, COVID-19 measures and restrictions have hampered the basic delivery of certain charity’s mission with some organisations having to suspend their activities.
Looking forward commentators have highlighted three areas where demand for services is expected to grow:
Poverty and homelessness
Mental health and well being
Charities however have adapted. 92% of charities that responded to a Centre of People, Work, and Organisational Practice (CPWOP) barometer survey reported increasing their online delivery. This shows the impressive resilience of the sector as before the pandemic there was concern the sector had a lack of digital skills. However digital isn’t always an option for many charities, their offering may have to be delivered face to face or the location of their services may have been forced to close e.g. schools.
Charities need to re-start their fundraising activity. Whilst restrictions may allow events to re-commence people are still wary of attending large scale events. Research done by IPOS Mori found that two-thirds (67%) of Britons say they feel uncomfortable going to large public gathering. Reductions in funding could necessitate the development of alternate delivery models.
The long-term impacts of the pandemic will become clearer in the coming years, but charities are bracing themselves for increased demand for their services. This may require organisations to move focus to alternate areas of need or to re-invent how they deliver services effectively and efficiently. We expect to see mergers in the sector as organisations look to maximise their impact and reach.
Charities in the UK have a remarkable record but if they are to continue this work, keeping pace with changing needs, new technologies and a shifting global landscape, their organisational models will need to undergo transformation. This could see conflicts between the realities of running complex organisations, delivering services to vulnerable groups and the public’s perception of how charity organisations should be run.