Many small charities ‘now face an uncertain future’ due to lack of long-term support

13 Aug 2021 News

The focus on short-term, emergency funding in 2020 is now making it difficult for charities to address long-term problems, which have been made worse by the pandemic, according to new research. 

The report from Lloyds Bank Foundation for England and Wales, Small Charities Responding to Covid-19 Summer 2021 Update, builds on the previous two publications, which were published in May and December 2020.

It is informed by the views of 401 charities supported by the foundation and is compiled from the annual monitoring reports completed between November 2020 and May 2021.  

These charities have been working in communities delivering frontline specialist services to help people overcome complex social issues like domestic abuse, mental health and homelessness. 

Increased competition for grants

The report finds that while emergency funding ensured that many charities could adapt to continue to support people, many now face an uncertain future.  

“While emergency funding in 2020 ensured that many could keep their doors open, adapt their delivery models to continue to support people and meet the increased demand and complexity in need, many now face an uncertain future,” the report reads.

Charities have also reported increased competition for grants and contracts in the last year, while complex issues led to higher costs for charities to deliver their services.  

“While charities have welcomed the emergency funding, they consistently stress that what they need, especially now, is longer term funding. Short-term funding is problematic for service development and staff retention as well as financial sustainability,” it adds. 

Many organisations said they are worried about the ending of furlough, the forthcoming cut to universal credit, and concerns over increased evictions and unemployment.

These funding obstacles and the increased demand of the pandemic have also “presented unique challenges with recruitment and retention of staff”. 

Charities have needed to increase their workforce to cope with rising demand, but as short term funding comes to an end, so do staff contracts. 

Conversely, “charities have commented on how light-touch reporting during the pandemic is something that should be kept”.

‘If we are to recover from this crisis we need to support small charities’ 

Paul Streets, chief executive of Lloyds Bank Foundation for England and Wales, said: “The crisis has exacerbated existing inequalities and deeply impacted our communities, the effects of which will be felt for years to come. Small and local charities, which by design are rooted within their communities, have been vital to the humanitarian response.

“They showed up and stuck around throughout the pandemic in ways that others couldn’t, didn’t and wouldn’t. They also face insurmountable challenges. Alongside the rising demand and complexity for their services and the wellbeing of their staff and volunteers, they are seeing great fluxes in their income.

“The short-term funding which helped them keep their doors open last year cannot adequately solve the long term problems we face as a direct result of the pandemic. If we are to recover from this crisis we need to support small charities to survive and thrive.”

Lloyds Bank Foundation for England and Wales is calling on funders to provide longer term unrestricted funding.

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