CAF warns one in six charities could face closure in 2013

10 Dec 2012 News

Charities are under more pressure as a result of the economic climate, according to a recent poll, with almost half of respondents saying that they dipped into their reserves last year and one in six believing they may face closure in 2013.

John Low, chief executive, CAF

Charities are under more pressure as a result of the economic climate, according to a recent poll, with almost half of respondents saying that they dipped into their reserves last year and one in six believing they may face closure in 2013.

The Charities Aid Foundation (CAF) commissioned the poll of 252 senior charity sector workers with 49 per cent of respondents reporting that they had used reserves to cover income shortfalls. Just over a quarter of respondents say that they have already cut frontline services and 25 per cent have made staff cuts.

Looking ahead, 17 per cent said that they may face closure in the next 12 months and 45 per cent of charities believe that they will have to scale back their work in the next year. Some 90 per cent think generating more income will be the biggest challenge.

Respondents blame the current state of the economy for the gloomy outlook with 81 per cent believing that the current economic climate is causing the sector to be in "crisis". Some 85 per cent are “concerned for the future of UK charities” while 68 per cent believe the economic downturn has already affected the services that their charity provides. Meanwhile 35 per cent said that they could see the economic situation improving in 2013.

John Low (pictured), chief executive of CAF said: “Times are tough and people have less money to donate to charities. This combined with significant public spending cuts and increased demand for charity services, is having a shocking effect on many charities, calling into question their very viability.”

Last month CAF and NCVO launched a new campaign – Back Britain’s Charities – after NCVO’s annual UK Giving Report found that there had been a £2.3bn fall in individual giving.

The campaign is calling on individuals, government and businesses to do more to support charities and has so far attracted 1,314 pledges of support.

Government response

A Cabinet Office spokesman said: “We know it is a very challenging environment for charities, especially for those previously dependent on taxpayer funding, but the sector cannot be immune from cuts.

“The government is committed to strengthening the sector through programmes such as the £10m Investment and Contract Readiness fund and the £65m Advice Services Transition Fund.

“Furthermore, we have introduced new ways for the sector to finance itself through Big Society Capital, capitalised with £600m, giving charities access to affordable loans and investment to grow, so they can do more.”

 

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