Local, small charities face ‘bleak future’

MOST of us would have donated to a charity in our time. Emptying out the cupboards and heading to the nearest charity shop is something familiar within our society. Rather than the throw away society we hear so much about, there is the ‘this could be put to good use’ element of society.

In 2020, one could not fail to have noticed the slow disappearance of charity shops from our High Streets. Once described as blight on the High Street, they became the go to shops for students and fashionistas looking for something different. The rise of up cycling has meant that no so much of the ‘good stuff’ has found its way to those shops. Whole industries have sprung up and made a large profit on people’s unwanted items.

The High Street was also full of young people in parker coats and bobble hats thrusting clipboards into one’s face asking for your details so that they could send you ways in which you could help their charity. These were usually the big guns such as UNICEF or Oxfam or Water Aid. They too have albeit vanished as Coivd-19 took a hold on the country and unleashed its devastating effects on businesses and the general public. Jobs lost, businesses closed over night, money too tight to mention.

Today, Saturday (Oct 31) it is the smaller charities that face dying a slow death amid decreasing donations and limited grants. The arena for accessing our money has become even more competitive and the smaller players will find it hard to get a slice of what is available experts fear.

The cancellation of all participation events since March has seen overall donations to non-NHS charities drop by 46% on a leading fundraising site. However, analysis by the BBC has found that smaller charities – without the reserve levels of their larger counterparts – are at far greater risk of having to cease operating entirely.

The leader of the Charities Aid Foundation (CAF) said the declining income from collection tins, charity shops and community events such as fetes and raffles had already hit the incomes of smaller operations by “hundreds of millions of pounds”.

Even though he said overall giving in 2020 was up by £800m compared to 2019 – the majority of those funds were absorbed by NHS charities. Meanwhile, a poll carried out among 580 charity bosses in April found only a third had enough funds to meet running costs for the next three months.

Since then, many have been able to access part of a £750m support package released by the government for the not-for-profit sector – or some of a further £300m released by philanthropic bodies. However, many of the grants, charity leaders say, cover just six months of operational costs. The Small Charities Coalition says parts of the sector face a “slow death”, the true scale of which will not be realised until early next year when that grant funding runs out. Public polling also suggests particular types of charity are at greater risk.

Results from YouGov show the nature of giving has shifted since March towards hospitals and NHS charities and away from those dealing with homelessness, disability and animal welfare. According to the Charitybase database, there are some 147,599 charities registered in the UK to have filed accounts in the past three years. Of those – 112,323 are considered small or micro under the definition set by the National Council for Voluntary Organisations (NCVO).
Some 59,000 are considered small. That is, they have an annual income of between £10,000 and £100,000 a year. Some 53,100 are considered “micro” – with an annual turnover of less than £10,000.

According to their latest accounts, charities in the UK had a combined annual income of £78.8bn. They spent a total of £80.9bn. Some may have used savings from previous years. Despite making up 76% of the charities, we know the size of – small and micro organisations had a combined total income of £2.3bn, which is just 3% of the total income.

Table of charities by local authority, includes number of volunteers and income.

Why are so many struggling?

Conversely, it might seem, overall donations to charity went up in 2020 – according to the CAF’s yearly UK Giving report. It estimated that, between January and June 2020, the public donated a total of £5.4bn to charity – £800m more than for the same period in 2019. But the CAF says that, with donations shifting towards NHS charities, others have suffered “unprecedented losses” – particularly those at the smaller end of the scale with limited reserves to keep them going.
“Medical research charities are among the hardest hit by this shift, losing out on an estimated £174m in the first six months of 2020,” a CAF spokeswoman said. “Other causes that are normally among the most popular also experienced large drops in donations including animal charities and those supporting children and young people.”

The loss of small and large participation events since the end of March has left those smaller charities without the means to make up for the losses.
Data from Virgin Money Giving, one of the largest fundraising sites in the UK, shows overall that donations to non-NHS charities were down 46% between March and July compared to the same five-month period in 2019.
Charities sitting outside the top 50 largest in the UK saw donation levels dropping by a fifth (20%) on the platform during the same six-month period, compared to the year before, the data shows.
Many smaller charities were helped by the ‘2.6 challenge’ in April, which encouraged fundraisers to take part in virtual activities.

However, Virgin Money’s chief executive Jo Barnett said the virtual events “failed to plug the gap” left by the loss of events such as the London Marathon and – at a smaller level – challenges such as abseils, skydives and cycle rides. BBC analysis of a sample of more than 1,600 fundraising pages on Virgin Money Giving showed the average amount raised on each page dropped from a high of £657 a month in February to a low of £236 in June.

What do the charities say?

The Charities Aid Foundation (CAF) has been carrying out polls among charity bosses since the pandemic was declared. A poll of 270 charity chief executives in March found that 54% believed their charities would cease to operate “within a year” and 37% said “less than six months”.

When polled again in July following the release of the government’s £750m support package, 9% of 307 charity bosses said they were at risk of permanent closure because of the crisis.
Some 50% said they were operating again but at a reduced capacity. The Small Charities Coalition (SCC) has carried out separate polling since March.

In March, 34% of 580 charity bosses said they would have to make redundancies “within three months”. A quarter of those polled (25%) reported having to shut all services “immediately”.

In April, 33% of a poll of 795 charity bosses found 67% did not have the funds to meet running costs for the next six months.

In September, a poll of 164 charity bosses found just over 50% had not received government support. Meanwhile, 70% said they had seen a serious drop in income because of the pandemic and 68% said demand for their services had increased.

Are some charities being hit harder than others are?

The Charities Aid Foundation, Virgin Money Giving and the Small Charities Commission all say that charities not considered to be dealing directly with the Covid-19 response are being hit the hardest.

The shared data unit was given access to a YouGov study of just over 1,100 people carried out between March and May. The study asked participants a range of questions about how much they donated to charity and to which type of cause to which they gave.

• In March 26% of charitable donations went to medical research. That dropped to 21% in May – while the average amount given to research also dropped from £20 to £15.

• Meanwhile, hospitals and hospices saw the biggest increase in giving, up from 22% of respondents to 29%. The average amount given declined from £22.50 to £18.50 though.

• Charities concerning disabilities, homelessness and animal welfare saw the biggest percentage point drops over the first three months of the pandemic.

What the experts say:

Neil Heslop, chief executive, Charities Aid Foundation (CAF).

The CAF provides services and assistance to UK and international charities and their donors. It produces the yearly UK Giving report, which estimates the overall amount given to charities by the public.
He said: “The sector as a whole has been hit and the fundamental paradox they face is one of spiralling demand amidst a time of collapsing income.
“The British people have responded with extraordinary generosity. The totality of giving was over and above what we would normally expect in the year through to June.
“I think Captain Tom was a great example. His very personal response was in response to a massive, overwhelming media campaign in the early days of the pandemic.
“The message of protect the NHS spawned a huge reaction and Captain Tom very much brought the British public with him in raising awareness of the value of the charities that complement the work of the NHS.

“That translated into NHS charities and hospitals themselves seeing a huge upsurge in support and that’s been wonderful to see.

“The challenge has really been for many other charities, especially the smaller ones that do not have much by way of reserves, that saw their normal fundraising drives completely shut down.

“They now find themselves at risk of shutting down because of all those sponsored runs and walks that were cancelled, the collection tins that bring in spare change at the rail station, all those small amounts of money collected at spring fetes for so many good, local causes that add up to hundreds of millions of pounds.

“The lost revenues from charity shops is unlikely to be replaced and for many shops, that means upwards of £25,000 a month that is gone from their budget.

“It’s important to remember that even small charities that rely on an army of volunteers to deliver their services all still have to pay the rent and the electric bill at the end of the month and those funds just aren’t there right now.

“What has been challenging is that some stalwarts have, including some of our biggest charities such as Cancer Research UK, conversely had a drop in fundraising and are stepping back operations.

“The sector as a whole is under massive pressure. Some of those charities do not have the cash reserves or resilience to ride out the storm.

“It’s worth remembering that smaller and mid-sized charities are the vast majority of the 200,000 plus across the UK and they are the backbone of so many communities.

“There is a very significant danger that the landscape changed and has changed forever as a result of the pandemic.

“It’s obviously critical that the population continues with that generosity, but also important that the government provides transitional support by increasing Gift Aid.

“The government has provided £750 million.

“That’s a significant amount of support and they have partnered with various organisations, including the CAF, to deliver that.
“We are making a case for further and continued support in a variety of forms.
“The nature of the change to the charity sector is genuinely enormous. Without all of us putting our shoulder to the wheel, there is a risk that, over the next year or two, our sector will be changed permanently and that would be a tragedy.”

Rita Chadha, chief executive of the Small Charities Coalition.

The Small Charities Commission provides information, advice and support to around 14,000 small charities across the UK.

She said: “With smaller charities being the focus of the emergency funds they have got some access to that money.

“But nearly all of the funding is a six-month emergency grant.

“Most of the grants came out at the beginning of June. Now there is a fear about the long term because there is just not that certainty.

“In the run up to the next financial year we anticipate people will be asking us: ‘how do we let people go?’ and ‘how do we wind down a charity?’”

“The real pinch point will be next year when these charities officially start closing.

“It’s a slow death.

“Many of our charities are already having to decrease their operations already. They are telling us they have to turn people away when demand for them is increasing.

“A domestic abuse charity I spoke to was having two referrals a day. They are now having 20.

“Their programmes and activities tend to last for two years. If they take in someone, today they do not know whether they will be able to see them through the whole programme.

“Services are changing. People are finding things they have used for years and years are disappearing overnight.

“The government feels like it has to tackle covid entirely on its own – when all the resources at a local level are locked in charities. If you are not allowing them to amplify their services, it will cost more money further down the road.

“Something like increasing Gift Aid to 30%, that’s a nominal cost to the Exchequer, but would make a big difference to a small charity.”

Jo Barnet, executive director of Virgin Money Giving said:
“Covid-19 has had a huge impact on every part of our lives and the charity sector is no different. While we have seen amazing innovation from fundraisers and incredible amounts of giving taking place, there is still a huge void for many of our nation’s charities.