Many charities across the UK are struggling to meet demand for their services, according to new research from Pro Bono Economics (NTU) and Nottingham Trent University’s VCSE Data and Insights National Observatory.
The report, ‘Treatment for the charity sector’s unhealthy status quo’, warns that the deep-rooted challenges of financial instability, skills gaps and rising demand are affecting charities’ ability to support people most in need.
Drawing on data from the largest quarterly survey of charities in the UK, the VCSE Sector Barometer, it finds that as many as 1 in 5 charities have been forced to cut back on the number or scope of services they offer as a result of rising costs. This includes mental health charities that have been forced to end one-to-one counselling services in favour of less-specialised group support, and a poverty-prevention charity which has had to ‘ration’ its services only to those with the highest needs.
This reduction in support comes as 70% of charities expect demand for their services to increase over the Autumn. 1 in 3 charities expect to be overwhelmed by that demand, and unable to meet it all.
Charities recently won praise from the new Secretary of State for Culture, Media and Sport for their response to riots and disruption across England. Many charity sector and community group leaders were at the forefront of the response to the riots, and will be essential to the long-term rebuilding and restoration of communities across the country. But the ‘unhealthy status quo’ the charity sector has reached might limit its ambitions to strengthen and increase resilience in communities as they recover.
Though the wider economy is showing some signs of improvement, the report points out that the charity sector’s flawed funding model pre-dates the pandemic and cost of living crisis and is having consequences now. Without fundamental change, many charities will be forced to continue confronting challenging financial situations. In the months ahead, a third (32%) of charities expecting their finances to deteriorate while a further 35% expect their finances to stagnate.
Recruitment difficulties and the charity sector skills crisis are also contributing to charity cuts. 4 in 10 (40%) charities report struggling with recruitment, and 57% of vacancies in the sector are now defined as hard to fill. Strained charity sector finances make this difficult to overcome. The report describes how charities’ spending on training and development of its staff has fallen by 25% since 2011. Charities are now three times less likely to invest in leadership development than the wider economy.
Without more investment in skills, many charities will be unable to adopt digital technology and innovations that could help them provide more effective services to more people. Over one-third (35%) of charities with recruitment challenges have had employees working increased hours. In some cases, this has meant managers getting drawn into day-to-day coordination and being pulled away from strategic decision-making and organisational capacity-building. This is affecting organisations’ ability to deliver meaningful change.
The report calls on the government to act to support charities to overcome these challenges. It highlights the opportunity the government has to utilise Skills England, a new body launched last month to tackle skills shortages. The authors recommend that Skills England’s remit should be expanded to ensure that it also examines and improves the training available to charities, and encourages skilled volunteering from businesses to both improve private and social sector skills levels.
Dr Jansev Jemal, Director of Research and Policy at Pro Bono Economics, said:
“As the pandemic and cost of living crisis have retreated, the charity sector has reached its new normal. Unfortunately, this new normal is an unhealthy one. Too many organisations in the charity sector are held back by the sector’s poor financial model, on a never-stopping treadmill of demand, without the right people and skills to meet the increasing needs of the people they serve. Charities’ unsteady foundations mean cuts to help for people across the country, with services appearing and disappearing despite need because the money and resources can’t be relied upon.
“The new government’s long-term programme of reform could deliver some slowing of demand for charities’ services. But investment is needed now in the sector’s capacity to fundraise and adopt technology. The new Skills England body should support charities as well as businesses to plug their skills gaps.”
Prof Daniel King, Director of the National VCSE Data and Insights Observatory, said:
“The insight provided by the most recent waves of the Barometer paints a worrying picture of the state of the sector’s health. It’s clear that organisations of all sizes are facing challenges on multiple fronts. These combined factors compound the difficulties they face and make their ‘new normal’ very tough indeed. They are continuing to do the very best they can under trying conditions and will always step up to play their vital role when they are most needed. For many, the key question is how long can this be sustained?”
Jennifer Riley, CEO of One25, said:
“More women in our city are turning to street sex work, and so demand for our services is growing. But the funding environment is a very challenging one; our sector is struggling and the external systems we connect with are stretched beyond any reasonable level. We have to work harder than ever to fundraise from the public and other fundraising sources to ensure we can continue to be there for the women who turn to us for help.”
Alix Lewer, CEO of Include.org, said: “Thanks to the hard work of our team, Our charity, Include.org has received incredible recognition and feedback, including awards such as Stars of Surrey, and The Reigate Business Awards and nationally, from the Royal College of Speech and Language Therapists. However, our staff are currently stretched to the limit behind the scenes, volunteering overtime to meet demand. This stretch occurs as the third sector does not have the same infrastructure available to them as the public sector, and risks being taken for granted – but the skills they offer need to be recognised. We have experienced the most challenging year in our history, with increasing pressures and dwindling funding opportunities.”