We are publishing today a report which brings together key research by others about the impact of Covid on charities up until the end of March 2021. The chart numbers and page numbers in the blog below refer to our report which can accessed here. This is the first of three reports, with the next being a more detailed analysis of nfpSynergy’s quantitative research on the impact of Covid over the last 12 months, and in June a report looking at interviews we have carried out with a range of charities and influencers on the impact of Covid.
The impact of Covid-19 is unevenly spread
It’s easy to imagine that all charities have been hard hit by Covid. But this isn’t the case. Some charities have grown both services and income. Those with government contracts may not have been impacted at all. While those with income from shops, or fundraising events, or anything that requires human contact, have tended to have been badly hit. Indeed, some may not survive at all.
The impact on income
Around 23% of charities say they saw an increase in income between 2019 and 2020 and 48% say they saw a decrease in income – with 6% saying the decrease was over 50% (chart 2 in our report) according to Pro Bono Economics’ (PBE) Covid Charity Tracker.
The total income lost to the sector is harder to assess as the most recent estimate we found is from mid 2020 which was that around £12 billion of income had been lost (page 4 in our report). The true figure may need to wait until accounts are published for the year 2020 – and of course the income loss may continue for more than one year. Projections for future income are equally gloomy, with the latest surveys suggesting 30% of respondents expect future income to be lower, and just 12% expect it to be higher (chart 13).
Many forms of fundraising badly hit – though direct appeals successful
There is conflicting evidence about exactly how fundraising has been impacted by the pandemic. Some of the impact is clear. Fundraising events and sponsorship have been badly hit (page 15). In contrast most of the evidence seems to be that direct appeals have done relatively well, with 21% of respondents to the PBE survey reporting an increase in income, and 16% a decrease (page 16). Compare that to events, where just 5% saw an increase and 28% saw a decrease.
While the commercial world has seen a big growth in internet sales, it is not clear if the charity world has seen a big increase in online giving (page 19). A CAF survey of charities found lots of charities saying that online giving was going to be more important, but less evidence that it had actually happened.
Charity shops badly hit
Charity shops have been particularly badly hit by the pandemic, being forced to close for periods, and even when open many of their volunteers being forced to shield. In the same survey from PBE (page 16) just 4% of respondents said charity shops had seen an increase in income, and 26% had seen decrease. In other words, those recording losses outnumbered gains by over 6:1.
Furlough extensively used by charities
While the sector was promised £750 million in direct government support, its distribution was delayed and much of it was pre-allocated to specific causes or sectors (page 7-8) or had conditions attached, limiting its overall value to the sector.
The furlough scheme was of greater use to charities, with a survey from PBE in June 2020 finding that 74% of large and medium size charities using the scheme and 38% of smaller charities (page 8). An estimated total of 33,000 charities were put on furlough with some organisations putting the majority of its staff on furlough (80% for the National Trust, and above half for Age UK, BHF, RSPB, and CRUK). Those with visitor attractions or shops that had to close were amongst the highest users.
Reserves being hit hard
Perhaps not surprisingly, charity reserves have been hit hard by the pandemic – indeed many would argue it’s for times like these that reserves are for. One survey from the VCSE consortium found around 45% of charities say they have eaten into their reserves (page 20), and 29% say they have just 3 months of reserves left, and 50% have six months of reserves left.
Demand has increased for many charities
Research from the VCSE consortium identifies a number of ways that the pandemic has impacted on charity services: direct demand increases (eg information about lung conditions), backlogs and build-ups due to social distancing (eg face to face services), crisis spillover effects (eg foodbanks and NHS operation delays) and shrinking supply (eg redirecting support to Covid specific activities). PBE found that 75% of charities expected demand to increase over the coming year in November 2020 and 59% expected it to increase in the coming quarter in January 2021 (page 24). Equally important is that 93% of charities say more of their services have moved online (page 27).
Increases in public trust have possibly passed charities by
During the pandemic there were several surveys of public trust. And they don’t all agree. The nfpSynergy data suggests that trust in many public institutions rose in 2020 but not for charities (page 30). In contrast CAF have calculated a yearly average for its trust statistics which indicated that trust in charities rose in 2020. Edelman’s data sits somewhere between the two – indicating a large spike in March 2020, especially for government, but then a significant decrease for media, business, NGOs and government (page 30-31).
Volunteering decreased during the pandemic
Most of the data suggests that the levels of volunteering have decreased during the pandemic. Our data suggests that percentage who say they have volunteered in the previous 3 months has dropped since 2012 from an average of 22% to 16% (page 34). Data from VCSE saw 35% of charities saying their number of volunteers had decreased since March 2020 (vs 20% increased) and 40% said their numbers of volunteer hours had decreased (vs 27%), with the balance in both cases saying stayed the same (chart 24). Charities also report a change in the demographics in volunteering with older age groups volunteering less and younger age groups volunteering more (page 35).
Small charities hit disproportionately hard
There is a theme in the report that small charities have been hit disproportionately hard by the pandemic. They have been:
More likely to see their income hit (page 21)
Less likely to be able to use the furlough scheme (page 8)
More likely to forecast a significant reduction in their ability to meet their objectives (page 37)
More likely to be impacted on service delivery by the requirements of social distancing (page 26)
Less likely to be able to move their services online (page 27)
Charities will do less and deliver less in the coming year
Perhaps the most sobering of the statistics in the report is that charities will do less as a result of the pandemic. 90% of respondents to a PBE survey thought they would do less in the coming year as a result of the pandemic (page 37) and 41% said it would have a ‘large’ negative impact on their ability to meet their objectives. Similarly, around 75% of respondents to the VCSE survey said they thought the pandemic would impact on their ability to deliver.
For all the people and places that depend on charities it is this reduction on charities’ ability to deliver currently and going forward that is the most sobering. Charities doing less should be of great concern to everybody who cares about charities and realises just how important charities are to the wellbeing of society and its citizens.
Many thanks Joe Saxton and Sarah Eberhardt. Great research as alwys and really helpful, cheers Daryl
A very good read and sobering to reflect upon charities doing less especially since they have become the safety net for vulnerable people following local authority and government cuts.
Thanks for this, as for all your research and your openness to share the results. It makes sense that there is a mixed picture, but warning signs too. In many of the small and medium sized charities we work with (Pilotlight this is, providing pro bono support), we have also seen evidence of rising demand and declining income - something we call the scissors effect. And in terms of the organisational pressures that come from this, that’s indeed exactly how it can feel to charity leaders...