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£100mn Budget pledge for charities & community organisations

Melanie May | 15 March 2023 | News

Jeremy Hunt, Chancellor of the Exchequer, official portrait
Jeremy Hunt, Chancellor of the Exchequer, official portrait

Today’s Spring Budget includes a pledge on £100mn for frontline charities and community groups, to help them support vulnerable people. Here are the details, as well as the response from the sector.

Most of the money (around three-quarters) will be delivered during 2023/24 as grants for frontline charities and community organisations in England most impacted by increased demand for support from vulnerable people, and increased delivery costs. 

Approximately a quarter of the £100mn will be used to fund measures over the next two years to increase the energy efficiency and sustainability of voluntary, community and social enterprise (VCSE) organisations, again in England. This, DCMS says, could include new boilers, heat pumps and insulation allowing them to deliver more efficient services for vulnerable individuals. 

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Culture Secretary Lucy Frazer said:

“Charities carry out incredible work supporting vulnerable people and it is vital they can continue to deliver specialist help and advice for those most in need.

“This package will mean charities can support organisations whose services are in demand and provide assistance at this challenging time while also providing funding for energy efficiency measures to reduce their future operating costs.”

The money is in addition to £20 million of funding from the Government’s Dormant Assets Scheme announced earlier this month. Further details of both aspects of the funding announced today, including eligibility criteria and delivery mechanism, will be announced in due course. 

Charity Tax Group has shared a handy list of Budget measures that may be of interest to charities:

Sector response

The news was welcomed by Charities Aid Foundation as a step in the right direction, with Chief Executive Neil Heslop, commenting:

“Half of all charities say they are currently worried about their future, so we welcome the Chancellor’s announcement of £100m for local charities supporting families and communities through the cost-of-living crisis, especially as government support for their energy bills tapers off.

 

“Charities around the country continue to face rising costs, higher demand for their help and falling donations, so this recognition of their work is a step in the right direction. We look forward to hearing more about how this extra money will be targeted to those most in need.”

NCVO Chief Executive Sarah Vibert also welcomed the news. It showed, she said, that the sector’s campaigning had been heard, although more Government action is needed to tackle today’s issues. She commented:

“As a sector, we have been campaigning relentlessly to highlight the impact on people and communities where charities and volunteers are struggling to meet rising need. Today we have been heard.  This demonstrates the power of the voluntary sector’s collective voice.

 

“We are delighted the Chancellor recognises the vital role charities play in supporting communities and is committing crucial funding for charities. It will help ensure people and communities most impacted by the cost of living crisis get the support they need from voluntary organisations.

 

“We are grateful to the Civil Society Minister and our DCMS and Treasury colleagues for their work in championing the value of our voluntary sector across Whitehall. We are awaiting the full details of this funding but look forward to working closely with government to ensure it reaches organisations that need it most, quickly and fairly.

 

“It is also essential that we work to find long term solutions to the current crisis. We called for increased support for organisations to increase their energy efficiency and welcome that has been included in the new charity funding.

 

“We must continue to encourage government to develop long term solutions to issues in the energy market, the funding of government contracts and local government services. Tackling these issues is essential if the chancellor is to achieve economic growth and prosperity, and create a fairer, more equal society.”

Commenting on the funding in relation to social impact investment, Stephen Muers, Big Society Capital Chief Executive, said that while the Chancellor was right to recognise the sector’s work, the scrapping of Social Investment Tax Relief was a significant step back:

“Today’s Budget from the Chancellor was right to acknowledge the outstanding work of the third sector and the £100 million given to the Department for Culture, Media and Sport to support them will have a positive impact across the country.

 

“It is good news in particular to see improvements to the Community Investment Tax Relief scheme, which has continued potential to get capital to underserved areas and generate positive impact in those areas. However, the scrapping of Social Investment Tax Relief is a significant step back, and creates an unequal playing field for social enterprises and charities. The government should be encouraging investment in organisations who are delivering social benefit in areas where the impact is most needed.

 

“Social investment channels sustainable capital to the people best placed to deliver in their communities, and in areas like housing, health and education can be a vital aid to the Government in a difficult funding landscape. After showing trust in social impact investment through the announcement of a second dormant assets allocation last week, the opportunity for more cost-effective and directly impactful service delivery through the form of outcomes contracts would be an important consideration moving forward.”

Charity Tax Group Chair Richard Bray said the support was welcome but that more was needed – including where tax is concerned:

“Charities are doing a tremendous amount to support society, particularly at the local level, in these challenging times. The announcement of £100 million of support for charities and community organisations is welcome, although this is targeted support for certain organisations in England. It is also encouraging to see £10 million of grant funding towards addressing mental health and suicide prevention.  But charities throughout the UK are facing a perfect storm of diminishing donations, increasing operating costs and – as the Chancellor recognised – rising demand for their services. Wider support is urgently needed to sustain charities in this challenging environment. It is disappointing that more direct support was not included in the Budget. This was a lost opportunity.  CTG believes that the tax system needs positive change to support charities.”

The Social Market Foundation (SMF) said that in a report to be published next month, it will suggest new policies that build on today’s announcement, with Gideon Salutin, SMF Researcher commenting:

“The Government’s announcement of an additional £120 million for the charity sector is a step in the right direction. These organisations fill many gaps in government services, particularly in isolated communities. By committing to new funding, the Chancellor has acknowledged the vital benefits charities provide for Britain’s economy and society.

 

“However, not all charities are alike – while some bigger charities have done relatively well through the challenges of the past few years, small charities, which constitute 80% of the UK’s voluntary sector, face particular difficulties. Over the past fifteen years, they have lost 27% of their collective income. The Chancellor should therefore be targeting new funds to small and local charities who are most in need, and establishing a long term commitment to deliver funds to small charities every year.”

Matt Whittaker, CEO of Pro Bono Economics, said that while the Chancellor was keen to emphasise optimism in his Budget speech, it would be more accurate to say that the OBR has delivered cause for reduced pessimism, adding:

“While the outlook for the UK economy is less bleak than the one set out last autumn, it remains the case that household incomes have not yet reached the end of what is set to be the sharpest two-year drop on record. Inflation is falling, but continues to outstrip earnings growth for the moment. Rising unemployment and increased borrowing costs will mean household budgets will continue to come under significant strain in the months to come.

 

“While demand swells, charities inevitably have to cope with falling income as people have less to give and government funds are stretched. Based on today’s OBR figures, we estimate charity income will decline by £800 million in real terms by the end of 2023/24. The Chancellor’s announcement of £100 million for civil society organisations across England, alongside the funding boost to suicide prevention charities and leisure centres, is a very welcome step to plug part of the funding shortfall. To deliver the best bang for its buck and ensure that money has long-term impact, the government should prioritise investment in the charity sector’s skills, infrastructure, adoption of technology and energy efficiency. Investment in these areas is key to strengthening civil society and the role it plays in boosting our economy.

 

“At the heart of the plan for tackling anaemic growth laid out by the government today were new approaches for increasing the supply of labour. Charities and community organisations play a unique role in the ecosystem of support available to those outside of the workforce. There is a clear imperative for policymakers to explore the evidenced solutions to this challenge provided by the voluntary sector, which is also a major employer of older workers, women and people with disabilities.”

Locality Chief Executive, Tony Armstrong was also pleased the sector’s campaigning had been listened to, saying:

“We are delighted by the Chancellor’s announcement of £100m of support for community organisations and charities. The community sector’s call for targeted support to deal with the cost-of-living crisis has been listened to in Westminster and we are grateful for the commitment of the Civil Society Minister in making this happen.

 

“This support will help alleviate the growing pressure on many frontline community organisations – the very organisations who are providing food banks, warm hubs, mental health and welfare support to those worst hit by the cost-of-living crisis. Many of these organisations have been struggling to survive, creaking under the weight of growing demand and soaring bills.

 

“We look forward to working with the Government to ensure this vital funding reaches the people and places who need it most.  It is crucial that arrangements are put in place as quickly as possible with a straightforward and simple process for organisations to access support.”

Ndidi Okezie, CEO of UK Youth, welcomed the funding but emphasised that in the face of the cost-of-living crisis, the Government needs to ensure young people and the youth work sector are a major focus of support, saying:

“It is absolutely vital for our country that young people and the youth sector are a major focus of support in this and future Budget announcements. Young people continue to face a series of immense challenges that cannot be forgotten – the lingering effects of the pandemic and the cost-of-living crisis are having a profound impact on their education, mental wellbeing, their financial security, access to affordable, secure housing and their hope for the future.

 

 

“We know youth work is a vital untapped solution to supporting young people through those challenges, our research has shown beyond doubt that increasing investment in this area will save our country billions every year. We urge the Government to boldly seize the opportunity to invest sustainable funding into quality youth work that reaches all young people.”

 

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