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Less than half of local charities confident of survival beyond five years

26 Apr 2018 News

Less than half of local charities are confident they will be able to survive beyond the next five years if cuts to local authorities and competition for grants and contracts continue, according to a report today. 

The Local Charity and Community Group Sustainability Report, published today by Localgiving, shows that the local charity sector is “in an increasingly precarious position”, due to increased competition for grants and contracts, savage cuts in spending, an inability to diversify income streams, and a growing demand for services. 

The 2017/18 iteration of the annually published report surveyed 686 local charities across the country, and found that just 47 per cent are “confident they will survive beyond five years” in the current financial climate. The overriding concern of survey respondents was, perhaps unsurprisingly, “generating income and achieving financial sustainability”, with over 56 per cent of respondents citing this as their greatest concern. 

Concerns about generating income are compounded for many local charities by the fact that 71 per cent of respondents don’t believe they have “the requisite skills to run a successful fundraising campaign”.

Nearly half of all local charities in the UK are reliant on contracts and grants as their primary source of income, yet 73 per cent of respondents see competition for limited grants as a primary income generation issue.

Over 75 per cent of respondents said they had seen an increase in demand for their services over the last year, while 85 per cent said they predicted a further increase over the coming year. Of that group just 14 per cent of respondents said they were sufficiently resourced to meet that demand. 

Smaller organisations feeling the squeeze

The situation for those local organisations making between £250,000 to £500,000 a year looks even bleaker, with 15 per cent of respondents in this group being “pessimistic about their ability to survive 12 months” compared with 8 per cent of overall local charities. 

For the charities in that income bracket, the biggest concerns were lack of access to unrestricted funding (71 per cent) and competition for grants and contracts (81 per cent).

The report also found that Brexit, and the uncertainty over how it will affect the different regions and devolved nations within the UK, were a big concern for local organisations. Just 2 per cent of survey respondents said Brexit would have a positive impact on the sector, while 24 per cent of respondents said it would have a negative impact. 

This was even more pronounced in Northern Ireland, where many local organisations near the country’s border with the Republic of Ireland have concerns about the effects a hard border might have on their beneficiaries and service delivery. Well over 60 per cent of all local charities in Northern Ireland believe that Brexit will have a negative consequence for the sector. 

Key recommendations

Localgiving has used the report to make nine wider recommendations for the sector. It said these “key actions can be taken to improve the current situation and safeguard the future of the sector”. 

The recommendations include recognising and launching “appropriate consultations” to “prepare local charities for potential increases in service demand”; expanding training programmes to help “stimulate a diversification of funding resources”; increasing local charities access to unrestricted funding streams and encouraging both inter and intra-sector collaboration. 

The report concludes: “The UK’s voluntary sector finds itself in an increasingly precarious position. Over the last few years local charities have experienced an ever growing demand for their services, fed largely by public sector cuts and the wider impact of austerity. 
Moreover, with Brexit consuming the vast majority of political energy, the chances of these issues being recognised, let alone resolved can, at times, seem slim.”

Chris Dormer, head of business development at Localgiving, said one of the few positives turned up by the report was the positive role that volunteering continues to play in helping the local charity sector in particular survive. 

Dormer said that Localgiving estimated that volunteering is currently worth anywhere between £7.5bn and £10bn a year for local charities. “That’s just based on quantifying the cost of people’s time at minimum wage and doesn’t take into account say a lawyer or accountant giving up their time pro bono”. 

The report can be downloaded and read for free

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