Most small and local charities that apply for grants from Lloyds Bank Foundation for England and Wales have less than three months of cash reserves.
The Foundation has been monitoring the impact of Covid-19 on grantees and applicants through regular contact with its regional managers. Last week it published a report, Charities Responding to Covid-19, which is based on conversations with over 300 charities and feedback from the development and grant making teams.
Foundation grant holders do have reserves. But for more than half of grant holders, these reserves are only enough to cover fewer than three months of operating costs.
Those with reserves that will last for 3-6 months, expect the prolonged impact on charities’ income alongside sustained pressures on demand to mean that they will draw down on these reserves in the medium to long-term.
Some charities have already taken significant financial hits. This is partially because fundraised income has fallen massively and trading income from events, shops, training and other social enterprise has “been lost overnight”, the report says.
It states that there have been a handful of cases in which the crisis has prompted local people to increase donations, but “for most the impact has been detrimental”.
“Public sector commissioners are responding in different ways – while some are building in new flexibility, others are threatening not to pay because services are now being delivered in different ways,” the report adds.
There are very few patterns to the response, with many examples of neighbouring local authorities taking very different approaches, according to the report. Many charities already top-up contract income with fundraised income to make up the shortfall.
Charities offering an increased range of support
Most charities have needed to adapt the way that they deliver services.
“Charities have had to rapidly adjust how they operate, turning services and support that were all about social contact into something online and remote. At the same time more people are seeking their help and their needs are multi-layered. This requires more resources, time, expertise and equipment,” the report states.
Some charities have also increased the range of support they are providing, with a minority of charities having to temporarily close services or closing to new clients.
The crisis has also had a significant impact on staff, many of whom are “stretched and under pressure” with charities losing staff and volunteers to sickness, caring responsibilities and self-isolation.
Some grantees have furloughed at least some staff even if the demand for their service is rising.
“Whilst there are lots of people wanting to volunteer out there that requires time, resources and expertise to manage. Stress levels among staff are increasing, particularly where they are continuing to provide face-to-face support but often without PPE,” the report says.