Over half of local charities are not optimistic about remaining financially afloat over the next five years, while almost three quarters have seen a decrease or stagnation in their income, according to a report published today.

Localgiving, the membership and support network for local charities and community groups, surveyed 538 local voluntary sector organisations across the UK before compiling the Local Charity & Community Group Sustainability Report.

It found that despite 80 per cent of respondents being optimistic that they will remain financially afloat over the next 12 months, only 47 per cent said this was the case over the next five years. Another 73 per cent of respondents expected their annual income to either decrease or remain stagnant over the coming financial year.

When asked what their most pressing issue was over the next 12 months, 59 per cent said that this was generating income and achieving financial sustainability. While a further 53 per cent of those surveyed said they know of at least one other local charity which has been forced to closed in the last year due to financial reasons.

Of those surveyed, 75 per cent reported an increase in demand for services over the last year, with just 3 per cent reporting a decrease.

The report was conducted by a digital survey which was sent by email to 4,885 local charities and community groups, with 538 groups responding.

Other findings from the report reveal that 83 per cent of the groups surveyed do not have specialist fundraisers, while 86 per cent do not employ specialist marketing staff.

The report also revealed that only 10 per cent of the charities surveyed felt they were appreciated by central government. This is despite 83 per cent of those surveyed feeling that their local community appreciated the work of local charities, while 37 per cent felt it was appreciated by the general public.

Regional variations

The report also found significant regional variations within the sector, which reflect wider economic and social issues. It found that 33 per cent of London-based groups cited the rising cost of rent as a present financial concern, compared to just 8 per cent of groups in the South West of England.

Over 53 per cent of groups in the Midlands expressed concern over a lack of sufficient reserves, compared to 33 per cent of groups in the South East of England. However, the survey respondents were heavily weighted to the South of England, with only 6 per cent coming from groups operating within Scotland, Wales and Northern Ireland.

Stephen Mallinson, chief executive of Localgiving, said: “A rapid increase in demand for services, coupled with an inability to access sufficient funding with which to build reserves has left many local groups with fears over their survival. The sector is lacking in both time and resources, leaving charities unable to invest in alternative income sources, training and volunteer recruitment. Without significant targeted intervention, fewer and fewer organisations will be able to continue their valuable work, weakening communities and leaving huge numbers of vulnerable beneficiaries at risk.

“It is vital that strategies are put in place to help better support the sector and address its core issues. Government, industry, philanthropists and the general public can and should all play a part. This means sustained commitment to training, funding and volunteering that outlasts ephemera like annual budgets.”

Recommendations

Localgiving’s report also offered recommendations for the sector. This included an urgent need to “diversify income streams for local groups”. It said that local voluntary groups must explore new financial models and emerging funding channels, such as corporate partnerships, public donations, individual fundraisers, and earned income.

Other recommendations included the development of strong sector partnerships, and the bringing in of skilled volunteers with specialist knowledge into the sector.

The release of the report coincides with Localgiving's matchfunding Grow Your Tenner campaign which runs from today until the match fund is fully allocated, or 18 November. It offers local groups taking part the oppurtunity to accessup to £10,000 of match funding.