Charities already spread too thinly before Covid-19 crisis, research warns
Melanie May | 19 May 2020 | News
Charities were already spreading themselves too thinly before the pandemic, according to research by New Philanthropy Capital.
NPC conducted 300 interviews with charities of all sizes between November 2019 and January 2020 for its State of the Sector 2020: Where we stood as the crisis hit report, and delves deeper into the issues covered in its earlier State of the Sector 2020: The condition of charities before the COVID-19 crisis.
It asked charities how much of nine key activities they expect to do more or less of in the future, from delivering public service contracts, and funding or doing research, to delivering services or products and building community capacity, and compared this with the answers given in NPC’s 2017 State of the Sector survey.
Charities said they were doing more of everything NPC had asked about in 2017, and compared to 2017, again expected to be doing even more of everything in future, particularly building community capacity, which rose from 46% expecting an increase in 2017 to 55% in 2020. Just over half also expect to be delivering more services or products (52%), while 39% expect to be funding or doing more research, and 42% to be doing more public facing campaigns.
This is despite overall funding for the sector remaining relatively static, with revenue growing just 2% across the sector in the last year that NPC has data for.
The report states:
“It is hard to square this modest overall increase in sector income with the ubiquity of charities telling us that they expect to do substantially more and that they are not planning on scaling anything back.
“This suggests that, even before coronavirus, charities were spreading themselves ever thinner across a broadening number of working areas. We cannot quantify the risk this now poses, but it is logical that already over-extended charities will be hit the hardest by a sudden explosion of demand and a reduction of funds.”
NPC also found that austerity and cuts had caused the majority of charities, 69%, to change their strategy or operations in the last three years. This was most common among major charities, with 80% reporting they had done so. 71% of large charities reported the same, followed by small and medium charities at 61%. This could be, the report suggests, because larger charities are more likely to have government contracts.
And, while more charities are also delivering public service contracts, at 54% overall, and with a big increase in small and medium sized charities doing so, 59% are subsiding these contracts with income from other areas such as public fundraising. The most likely to cross subsidise were large charities, at 66%, but 61% of small and medium charities also said they had cross subsided.
The report comments:
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“It is striking to see so many small and medium charities doing this, when we can fairly assume they have the least resources to fill the gaps left by a contract that does not offer full cost recovery. The financial strain imposed on some charities by the current crisis makes this extra worrying.”
In full, the report looks at the sector’s commercial relationship with the state, public trust, and lobbying and campaigning; at data and digital skills in the sector, and how they are used to improve work done by charities; and at how charities are operating, who they serve and who works for them. NPC hopes it will help funders, philanthropists and policymakers to better identify where charities are vulnerable both to the impacts of coronavirus and to the potential economic hardship we are heading into.
Other key findings:
- 77% thought their funders understood the pressures they face but only 47% thought they offered appropriate core funding, while 45% of charities thought their funders collaborated well with other funders.
- Charity boards are spending less time discussing the structure of their organisation than in 2017. Fewer charities reported discussing changing governance structures (54% in 2020 vs 59% in 2017), whether or not to continue with their charitable status (10% vs 15%), or merging with another organisation (25% vs 34%).
- 89% see digital technology as important to them for achieving their mission. However, charities’ confidence in making the best use of digital technology has declined by 11 percentage points since 2017, to 59% from 70%.
- 91% of charities thought user involvement in the design or deliveries of services was important for achieving their mission, and 71% said users had direct involvement in the development of their strategy. However, when asked to name their greatest strength for achieving their mission, service users came 11th out of all the answers given.
- Four in five charities (78%) say that they think their current staff are not fully representative of the population they serve, rising to 88% among major charities.
- There was widespread agreement that public trust in the sector has fallen, with only 5% of the charities surveyed believing that public trust had not dipped in the last few years, down from 10% in 2017. While the largest proportion, 45%, felt falling public trust would have no consequences. 23% thought it would result in reduced fundraising income.
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.