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Growing divide as sector’s ongoing challenges impact smaller charities more

Volunteers at a foodbank sorting plastic bags of food. Photo: Joel Muniz, Unsplash.com
Photo: Joel Muniz on Unsplash.com

While recovery from recent crises is slow for all sizes of charity, smaller ones are struggling more, a study by Pro Bono Economics (PBE) and Nottingham Trent University’s National VCSE Data and Insights Observatory has found.

A quarterly survey, the fourth edition of the VCSE Sector Barometer identifies an emerging divide between the experiences of small and large charities.

Compared with the first Barometer survey in November 2022, the proportion of small charities reporting improved finances has fallen slightly to 24%, while that of medium and large charities has grown to 31% and 29% respectively.


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Volunteer recruitment issues

Difficulties recruiting volunteers are compounding financial challenges for small charities, with six in 10 (59%) of those surveyed saying that this is their main concern, compared with 26% of medium charities and 15% of large charities.

High demand for services

Demand for charity services remains high across the sector. 76% of large charities reported an increase in demand over the previous three months, with 78% of medium charities and exactly half of small charities reporting the same.

Over the past year, the combination of these challenges has taken its toll on the workforce in charities of all sizes.

Staff burnout

30% of charities said there had been an increase in staff reporting burnout, or exhaustion, in relation to their work over the past year. In addition, 26% said reports of low wellbeing were on the rise, while a quarter had seen an increase in sickness absence.

More positive story for larger charities

Despite this, more than half (53%) of large charities now expect to meet demand, up from 44% in November 2022.

The report says this is likely because the largest charities have increased their capacity to meet the demand challenge by expanding their workforce in recent months. PBE analysis of Bank of England data found charities have employed more people every quarter since the end of 2021, while the latest data shows the sector’s workforce grew by over 5% in the year to the third quarter of 2023, far outstripping the 2.8% growth in the private sector.

To try and alleviate some of the pressures on staff, the Barometer found that 86% of charities reported offering flexible working opportunities in the last year, while six in 10 offered access to mental health support and 27% provided financial wellbeing awareness.

Matt Whittaker, CEO of Pro Bono Economics, said:

“The UK’s voluntary sector has supported millions in need through the pandemic and the subsequent squeeze on living standards, sitting at the heart of the country’s efforts to navigate the multiple crises of recent years.


“Vital though this stepping up has been, this survey demonstrates the extent to which it has taken its toll on organisations’ finances, their capacity and the wellbeing of their workforce.


“While there is some good news, with a slight pick-up in optimism and some early signs of sectoral recovery, the overall position remains extremely challenging. And the pressure is being especially felt among small charities, with widespread concerns of dwindling volunteer numbers and precarious finances.


“With small charities forming the backbone of the UK’s social sector, it is important that policymakers, funders and firms recognise both the challenges at play and the benefits of stepping in to provide support and partnership for this crucial part of the country’s civil society.”

Prof Daniel King, Director of the National VCSE Data and Insights Observatory, said:

“At the heart of charitable organisations are the people, and their wellbeing is of utmost importance. However, our research has brought to light the ongoing challenges faced by charities.


“It is clear that there is a pressing need to provide charities with information and guidance on how to promote the wellbeing of both their staff and volunteers.


“For the sector to not only survive but also thrive, it is imperative to make the wellbeing of staff and volunteers a fundamental pillar of the sector’s sustainability.”

The museum sector

A separate study of 701 museums, the Annual Museums Survey, shows that income growth in this sector is stalling while costs are rising. However, it also shows that while volunteer hours are still 16% down on pre-pandemic levels, the number of people volunteering with museums has increased by 11% year on year. The number of hours contributed by these volunteers has also shifted positively from the previous year’s reduction of 37%.