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 Pro Bono Economics (PBE).
The analysis draws on Pro Bono Economic’s latest weekly charity tracker survey, covering 261 civil society organisations across the UK. 88% 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%) say they have had to significantly reduce their activity in response.
Many charities have sought additional funding, with half saying they have applied for emergency support from non-government sources and more than one-in-three (37%) applying for a share of the £900 million of support earmarked for the sector by the government. However, PBE points out that with these sources not available to all, one-in-ten (12%) of charities say they expect to cease operating altogether before the start of December.
Simultaneously, there has been a sharp increase in demand for the services of many charities with the survey showing that 72% 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, meaning that the estimated £6.7 billion income hit is generating an overall funding ‘gap’ of some £10.1 billion.
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%) in this group have already reduced their activity in a significant way, with 45% saying they have grown more pessimistic about their situation over the past week, and that one-in-eight (13%) expecting to go out of business within six months.
Matt Whittaker, Chief Executive of Pro Bono Economics, commented:
“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.”
Roberta Fusco, Director Policy and Communications, CFG on behalf of a coalition of charities coming together in the #NeverMoreNeeded campaign, also commented, saying:
“The figures are highly concerning and are broadly in line with emerging findings from our joint survey of charities with the IoF, NCVO and PWC, full details of which we hope to release next week.
“As we look towards planning for post Covid-19 recovery and the impending economic crisis, it’s essential to the nation’s economic and social recovery that government invest in and use civil society expertise, knowledge and networks to help rebuild. The work of charities is never more needed to support people and communities hardest hit by Covid-19.
“Recent research shows that the original projected loss of income to the sector of £4.3bn to May 2020 was largely correct and that set against the government’s response to date of £750m, the gap is ever widening and impact on beneficiaries felt ever more keenly precisely at a time when charities are needed the most and have the vital services that people need.”
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