UK Charities facing £10.1 billion funding gap over the next six months

UK charities are facing a £10.1 billion funding gap over the next six months as a result of COVID 19, with incomes expected to drop by £6.7 billion at the same time as demand for their support rises by the equivalent of £3.4 billion, according to new analysis from charity Pro Bono Economics (PBE).

The analysis draws on PBE’s latest weekly charity tracker survey, covering 261 civil society organisations across the UK. Nine-in-ten (88 per cent) of those responding say they expect Covid-19 to reduce their income over the coming six months relative to pre-crisis plans, and well over half (59 per cent) say they have had to “significantly” reduce their activity in response.

Many charities have sought additional funding, with half (50 per cent) saying they’ve applied for emergency support from non-government sources and more than one-in-three (37 per cent) applying for a share of the £900 million of support earmarked for the sector by the government. But PBE points out that such sources are not available to all, noting that one-in-ten (12 per cent) of charities say they “expect” to cease operating altogether before the start of December.

The anticipated income hit sits alongside a sharp increase in demand for the services of many charities. The PBE survey shows that 72 per cent expect demand to rise over the next six months in response to the crisis

To meet this surge in demand, PBE estimates that the sector would require an additional £3.4 billion of resource. The estimated £6.7 billion income hit is therefore generating an overall funding ‘gap’ of some £10.1 billion the charity says – resulting in unmet need for help across the country.

PBE says that small charities, with incomes of less than £500,000 a year, are especially exposed to the income squeeze. Its survey suggests that close to two-in-three (63 per cent) organisations in this group have already reduced their activity in a significant way, approaching half (45 per cent) say they’ve grown more pessimistic about their situation over the past week, and that one-in-eight (13 per cent) expect to go out of business within six months.  

Matt Whittaker, Chief Executive of Pro Bono Economics, commented:

“Charities and other civil society organisations play a vital role in the day-to-day lives of many millions of us – and even more so at times of crisis. That contribution is too often taken for granted, leaving the sector subject to chronic policy neglect. If we don’t funnel more resource to charities in the coming weeks, it’s clear that many will struggle to survive.

“The fact that one-in-ten charities expect to go under in the next six months is on its own a shocking enough statistic. But once we add in the significant constraints being faced by many of those organisations that do survive, we’re looking at a huge hit to the overall capacity of the sector – with implications for all of us.

“The significant scale of the support being provided by government is of course very welcome – as is the generous help being provided by the public in the form of donations and volunteering – but it’s not enough. Charities’ incomes are under great strain at precisely the same time that demand for their assistance is rising, generating a £10.1 billion funding gap that translates into huge unmet demand.”

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