Gloomy winter ahead for charity sector

As new restrictions are announced by government in preparation for a second wave of Covid-19, over half of charities warn demand for their services may outstrip their ability to deliver - suggesting many people will be left without access to vital services they came to rely on during the previous lockdown.

In June, PBE estimated the sector was facing a £10.1bn funding gap. Since then, almost half (47%) of the UK’s charities have revised down their financial forecasts over the last two months in anticipation of a tough winter ahead, according to the latest Covid Charity Tracker published today by Pro Bono Economics, in partnership with the Institute of Fundraising and the Charity Finance Group.

Nearly all (94%) charities say that Covid-19 has posed a financial challenge, with drops in earned income, public donations, and money associated with fundraising activity like lotteries and auctions proving especially problematic. More than half of the survey respondents say public donations have fallen, with one-in-five reporting a drop in such income of more than 25%. However, funding from public sector contracts, trusts and foundations has broadly held up to date.

The overall drop in charity income has forced organisations to make cuts to the frontline support they offer. More than one-in-four say they have already made redundancies, and one-in-five expect to make cuts once the government’s Job Retention Scheme is withdrawn. Among those reducing their headcount, 59% say that service delivery functions such as helplines, events and training are bearing the brunt. Fundraising capacity is also being cut, with 19% of those who are shedding jobs saying that fundraising teams are most likely to be affected.