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One in ten charities at risk of closure within six months due to coronavirus 

15 May 2020 News

One in ten charities said it is likely that they would stop operating due to the financial impact of the coronavirus pandemic, a survey has found. 

This week’s survey by Pro Bono Economics (PBE) found that 3% of respondents consider it “very likely” that their charity will no longer be operating in six months’ time, while 7% rated it as “likely”. Three quarters said they were confident the organisation would still exist. 

Smaller charities were more fearful of closure. 16% of those with an income of under £500,000 said it was likely they would close over the next six months, compared to 3% of large charities. 

Charity leaders have been warning for some time that the sudden loss of income due to stopping fundraising and trading activity would see charity closures. The government has said it cannot save every charity. 

PBE is doing a weekly survey of charities to track changes. This week 406 responded. 

Most expect negative impact 

Most charities expect the crisis to have a negative impact on their activity and almost all are taking some kind of action to respond to the challenge. 

Some 90% said they expected Covid-19 to have a negative impact on their ability to meet their charity objectives over the next six months, with nearly half saying they expected it to be a “large” negative. 7% said they thought it would have a positive impact. 

In response 60% said they had furloughed staff and 56% have reduced their activity. 

Just one in five have sought government support. When asked to rate the sufficiency of the government’s financial support for civil society in the face of Covid-19 (where 1 = entirely insufficient and 10 = entirely sufficient), the average score across all respondents was 4.4. 

‘Little sign of pressure easing’ 

Matt Whittaker, chief executive of Pro Bono Economics, said: “Seven weeks into the Covid-19 lockdown there is little sign of any easing of the pressures being faced in the social sector.” 

On the challenges faced by smaller charities, he added: “It is important too to note that the proportion thinking they will go out of business rises to 16% among smaller charities. Organisations in this group appear less able than larger charities to access financial support from the government and others: just 38% say they have furloughed staff, compared with 75% of large charities. 

“They also appear to have less financial wiggle room: 31% have drawn down on their financial reserves, compared with 43% of large charities. In the absence of such sources of resilience, the primary response of smaller organisations has instead been to cut back on their activity.”

What more could be done? 

When asked what more could be done to help charities, respondents called for funding to be easier to access. 

One said: “They just need to realise that we are as important as businesses and make their grants easier to apply to our circumstances.”

Another said: “We need more money, more certainty, less hoops to jump through. The reduction of the furloughing scheme is a nightmare.”

Next week’s survey will take place on 19 and 20 May.  

Civil Society Media is a communications partner for the survey   

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