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Charities face £10bn funding gap over the next six months due to Covid-19

10 Jun 2020 News

The charity sector faces a £10.1bn funding shortfall over the next six months as a result of Covid-19, according to analysis from economists.

Pro Bono Economics (PBE) expects sector-wide income to drop by £6.7bn at the same time as demand for services rises by the equivalent of £3.4bn.

The analysis draws on PBE’s latest weekly charity tracker survey, covering 261 civil society organisations across the UK.

Sector bodies previously estimated that charities would miss out on at least £4.3bn of income over the 12 weeks commencing in mid-March.

Nine in ten respondents, 88%, said that they expect Covid-19 to reduce their income over the coming six months relative to pre-crisis plans, and well over half, 59%, reported that they have had to “significantly” reduce their activity in response.

The predicted income hit is expected to coincide with a sharp increase in demand for the services of many charities. The PBE survey shows that 72% expect demand to rise over the next six months.

'Taken for granted' 

Matt Whittaker, chief executive of Pro Bono Economics, said: “Charities and other civil society organisations play a vital role in the day-to-day lives of many millions of us – and even more so at times of crisis. 

“That contribution is too often taken for granted, leaving the sector subject to chronic policy neglect. If we don’t funnel more resource to charities in the coming weeks, it’s clear that many will struggle to survive.”

Many charities have sought additional funding, with half stating that they have applied for emergency support from non-government sources and more than one in three applying for a share of the support earmarked for the sector by the government. 

These sources are not available to all, and 12% of charities say they “expect” to cease operating altogether before the start of December.

PBE reports that small charities, with incomes of less than £500,000 a year, are especially at risk. Its survey suggests that 63% of small charities have already reduced their activity in a significant way.

Whittaker added: “The fact that one in 10 charities expect to go under in the next six months is on its own a shocking enough statistic. But once we add in the significant constraints being faced by many of those organisations that do survive, we’re looking at a huge hit to the overall capacity of the sector – with implications for all of us.

“The significant scale of the support being provided by government is of course very welcome – as is the generous help being provided by the public in the form of donations and volunteering – but it’s not enough.

“Charities’ incomes are under great strain at precisely the same time that demand for their assistance is rising, generating a £10.1bn funding gap that translates into huge unmet demand.”

'The gap is ever widening'

Roberta Fusco, director of policy and communications at CFG spoke on behalf of a coalition of charities coming together in the #NeverMoreNeeded campaign, which includes CFG, IoF, ACEVO, DSC and the CRA.
Fusco said: “The figures from the Pro Bono Economics Research are highly concerning and are broadly in line with emerging findings from our joint survey of charities with the IoF, NCVO and PWC, full details of which we hope to release next week. As we look towards  planning for post Covid-19 recovery and the impending economic crisis, it's essential to the nation's economic and social recovery that government invest in and use civil society expertise, knowledge and networks to help rebuild. 
“The work of charities is never more needed to support people and communities hardest hit by Covid-19.  Recent research shows that the original projected loss of income to the sector of £4.3bn to May 2020 was largely correct and that set against the government's response to date of £750m, the gap is ever widening and impact on beneficiaries felt ever more keenly precisely at at a time when charities are needed the most and have the vital services that people need.”

'The limitations of the government's response so far are increasingly clear'

Karl Wilding, chief executive of NCVO said: “This is broadly in line with other estimates. If social-distancing measures continue for a prolonged period, without CJRS [coronavirus job retention scheme], then like businesses, we will quickly find lots of organisations become unsustainable. There is a particular concern about those organisations hit by rising demand and falling income such as housing, social care, mental health and in communities affected by inequality or poverty.
“The limitations of the government's response so far are increasingly clear - the whole economy is suffering and of course, there is not endless money but there is more that could be unlocked without burdening taxpayers, such as dormant assets.”
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