1 in 5 charities cut back services due to finance & workforce pressures
Melanie May | 21 August 2024 | News
New research from Pro Bono Economics and Nottingham Trent University’s VCSE Data and Insights National Observatory shows that 1 in 5 charities have cut back on the number or scope of services they offer. This is due to a combination of rising costs, recruitment difficulties, and lack of skills.
The report, Treatment for the charity sector’s unhealthy status quo, draws on data from the quarterly VCSE Sector Barometer and warns that financial instability, skills gaps and rising demand are affecting charities’ ability to support people most in need.
Those reducing services include mental health charities that have ended one-to-one counselling services in favour of less-specialised group support, and a poverty-prevention charity which has had to ‘ration’ its services to those with the highest needs.
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Demand for services expected to increase this Autumn
At the same time, 70% of charities expect demand for their services to increase over the Autumn, with 1 in 3 anticipating being overwhelmed and unable to meet it all.
The report says that the charity sector’s ‘flawed funding model’ pre-dates the pandemic and cost of living crisis and is having consequences now, requiring fundamental change. In the months ahead, a third (32%) of charities said they expect their finances to deteriorate while a further 35% expect them to stagnate.
Recruitment challenges & the skills shortage are contributing factors
Recruitment difficulties and the charity sector skills crisis are also contributing factors in charities cutting services. 4 in 10 (40%) charities report struggling with recruitment, and 57% of vacancies in the sector are now defined as hard to fill. According to the report, charities’ spending on training and development of its staff has fallen by 25% since 2011 and charities are now three times less likely to invest in leadership development than the wider economy.
Over one-third (35%) of charities with recruitment challenges have had employees working increased hours. In some cases, this has meant managers getting drawn into day-to-day coordination and being pulled away from strategic decision-making and organisational capacity-building. This, the report says, is affecting organisations’ ability to deliver meaningful change.
An opportunity for new Skills England body
The report calls on the government to support charities to overcome these challenges, highlighting an opportunity to use Skills England, a new body that launched last month to tackle skills shortages. The authors recommend that Skills England’s remit should be expanded to ensure that it also examines and improves the training available to charities, and encourages skilled volunteering from businesses to both improve private and social sector skills levels.
Dr Jansev Jemal, Director of Research and Policy at Pro Bono Economics, said:
“As the pandemic and cost of living crisis have retreated, the charity sector has reached its new normal. Unfortunately, this new normal is an unhealthy one. Too many organisations in the charity sector are held back by the sector’s poor financial model, on a never-stopping treadmill of demand, without the right people and skills to meet the increasing needs of the people they serve. Charities’ unsteady foundations mean cuts to help for people across the country, with services appearing and disappearing despite need because the money and resources can’t be relied upon.
“The new government’s long-term programme of reform could deliver some slowing of demand for charities’ services. But investment is needed now in the sector’s capacity to fundraise and adopt technology. The new Skills England body should support charities as well as businesses to plug their skills gaps.”
Prof Daniel King, Director of the National VCSE Data and Insights Observatory, said:
“The insight provided by the most recent waves of the Barometer paints a worrying picture of the state of the sector’s health. It’s clear that organisations of all sizes are facing challenges on multiple fronts. These combined factors compound the difficulties they face and make their ‘new normal’ very tough indeed. They are continuing to do the very best they can under trying conditions and will always step up to play their vital role when they are most needed. For many, the key question is how long can this be sustained?”
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About Melanie May
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 thepurplepim.com.