Part One - Charity Sector in Crisis - The Problem
Hello and Happy New Year!
To start the New Year, I have decided to write a few blogs in the UK charity sector. When I say charity sector, I am referring to non-profit organisations, ministries and agencies that offer social programmes. I have a few reasons for wanting to write on this topic. Firstly, I have a deep passion for the charity sector as I worked in the sector for the majority of my live. Secondly, I am very concerned about the current state of the sector due to the following;
Their shortcomings in making up for lost revenue due to varying factors, but mainly government cuts;
Their inefficiencies in being able to restructure their organisations to adjust to the changing financial circumstances;
And their shortcomings in being able to build new strategies and marking technique for their organisations
I will be writing 3 blogs. Blog 1 (this one) will be on the current state of the charity sector. Blog 2 will be on what the challenges faced by the charity and third sector organisations and Blog 3 will cover what the future looks like and offer some practical solutions. Although the first blog here might paint a rather bleak picture, be sure to check out the next few blogs which will offer a much brighter picture for the future.
The COVID pandemic has had a profound effect on the charity sector. They have been met with increased demand, increased funding pressures and more difficulties in raising funds due to the cost of living crisis (Charity Commission, 2021). A study done by the Charity Commission shows that 90% of charities in the UK reported a negative effect from COVID, whether that be through finances, staff numbers, staff morale or service delivery. 60% of charities saw a loss of incomes and a third said they experience a shortage of volunteers (Charity Commission, 2021).
Adding to this, an article in the Civil Society notes that government funding for charities is at a 15 year all time low (Civil Society, 2022). According to the NCVO’s 2022 Civil Society Almanac shows that for the first time in 20 years, most of the charity sector income comes from public donation. The government supplied merely 26% of the sectors income (£15.4bn) – this marks the lowest proportion of the sectors income from the government since 2005. NCVO suggest this decline is due to cuts in local government income, falling from £9.4bn in 2007 to £6.9bn in 2020.
Highlighting the effects of these cuts, an article in the Guardian (2020) notes the complete lack of funding in the sector and how many charities now face bankruptcy. However, it is worth saying that some projects and fields receive more funding due to their demand and need. Some organisations have been able to absorb the reductions in incoming funds and have a higher level of financial resilience (Charity Commission, 2021). However, overall, the sector is very fragile when it comes to financial resilience and therefore many organisations will and have been suffering huge losses, including having to close much needed programmes and services.
As the stats above show, the financial picture in its current form is not sustainable and cannot support the third sector in the long run. The most recent Autumn Statement has stated that local government councils are able to raise their council tax by 5% each year, in essence to cover government shortfalls. This is a prime example of the domino effect these financial strains are going to have on society. The hard truth is that we need to start building new financial foundations which will be more robust and resilient in sustaining charity organisations. Private sector businesses do it all of the time, and it’s now time for the third sector to follow suit.
Summary
This first blog has shown that charity organisations are in crisis and are struggling to meet the demand of the community and the services needed. In short the charity companies are under financed, under resourced, and under performing which had putt the entire sector and along with families and people into crisis. In my next blog, I will be discussing challenges and barriers that effect the charity sector.
References
Charity Commission, 2021 – What New Research Tells us About the Impact of COVID 19 on Charities - https://charitycommission.blog.gov.uk/2021/10/28/what-new-research-tells-us-about-the-impact-of-covid-19-on-charities/
Civil Society, 2022 – Government Funding for Charities at 15 year low - https://www.civilsociety.co.uk/news/government-funding-for-charities-at-15-year-low.html
NCVO Civil Society Almanac 2022 - https://www.ncvo.org.uk/news-and-insights/news-index/uk-civil-society-almanac-2022/#/
The Guardian, 2020 – ‘A Devastating Loss of Funds’: UK Charities Count the Cost of COVID - https://www.theguardian.com/society/2020/nov/12/devastating-loss-funds-uk-charities-count-cost-covid