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Charities face £12.4bn shortfall in income for year

Charities face £12.4bn shortfall in income for year

Charities face a £12.4bn shortfall in income for the year due to impact of coronavirus, according to the Chartered Institute of Fundraising (IoF) and Charity Finance Group (CFG).

Following a previous impact survey conducted in March 2020, just as lockdown
was beginning, the new survey carried out by IoF, CFG, and NCVO, and supported by PwC found that respondents were expecting a reduction of 24% to their total income for the year, which would mean a £12.4bn loss of income if the average was applied to the sector as a whole.

It also found that during lockdown (between 23 March – 12 May 2020):

  • Charities received 29% less income than they had budgeted for
  • 84% of charities reported a decrease or a significant decrease in their total income
  • 92% of charities reported a fall in trading income during the lockdown with just 5% reporting that income from trading had increased
  • 20% reported that that their voluntary income had increased or significantly
    increased during lockdown
  • 15% of charities reported an increase or a significant increase in their total income

The performance of income sources varied widely with respondents reporting on average that trading income was 72% lower than expected, and voluntary income 14% lower. However, income from grants from trusts and foundations was 29% higher than expected, and income from government in the form of grants and contracts was 51% higher than expected.

When looking at the year ahead, charities:

  • Expect to see their total income significantly reduced, with their total income on average 24% lower than previously forecasted
  • Are planning on an average fall of 57% on trading income
  • Have revised their voluntary income for the year down by an average 42%

In total, 91% of the charities that responded are forecasting a drop in their budgeted income with 56% believing it will decrease and 35% expecting a significant decrease.

Peter Lewis, Chief Executive of the Chartered Institute of Fundraising, said:

“This new research shows that the impact of coronavirus is going to have a hugely significant impact on charity finances for the year ahead. With social distancing remaining in place for the foreseeable future, and an exceptionally difficult time ahead for the wider economy, the fact that the charities who responded to the survey are planning for a loss of almost a quarter of their total income is extremely worrying.

The government urgently needs to review and enhance its emergency support for charities, with a further bespoke package of support, an extension to the Job Retention Scheme that specifically supporting those charitable activities which are still unable to take place, or both.”

Caron Bradshaw, Chief Executive at the Charity Finance Group, also commented:

“Charities are telling us that they are planning for a substantial decline to their incomes for the year ahead, at a time when the need for their services has never been more acute. We calculate that drop to be in the region of £12bn. These survey results are strongly indicative of the scale of loss being suffered and is consistent with what our members and other data points are also telling us.

“I cannot stress enough however, that this isn’t about the survival of the institution of charity or individual charities, but the devastating impact that this will have on those who rely on the services charities provide. From providing food to the most disadvantaged in our society, to supporting people through cancer, if charities are not there to meet the need, someone will have to pick up that work or that need will go unmet. It’s not about us it’s about them. Failing to invest in us now will be false economy and will let those most marginalised and disadvantaged shoulder the greatest fall out from this crisis.”

 

Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via www.thepurplepim.com.

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