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Small charities 'appear to be especially vulnerable' to impact of Covid-19

22 May 2020 News

Most charities are expecting coronavirus to have a negative impact on their income but smaller charities are most likely to fear large falls, according to a survey from Pro Bono Economics.

Pro Bono Economics is conducting a weekly tracker to find out how Covid-19 is affecting charities.

This week 90% said they expected Covid-19 to have a negative impact on their ability to meet their charity objectives over the next six months. Nearly half, 47%, said that they expected it to be a “large” negative. Nonetheless, 7% said they thought it would have a positive impact. 

A total of 196 respondents filled in the survey on 19 and 20 May. The respondents were split between 65 small charities (annual income of less than £500,000), 113 medium-sized charities (income between £500,000 and £10m), 17 large charities (income of £10m or more), and 1 “other”. The medium and large charities have been grouped together this week, due to the small number of responses from large charities.

Almost half of the respondents, 49%, said their level of concern was broadly unchanged over the past seven days, but 41% said that their expectations had deteriorated, with 13% saying their level of concern had increased “a lot”.

Small charities more likely to fear large income drops 

Smaller charities were more likely to report large potential reductions.

That is, 40% said they thought their income would be down on their plans by more than 50%, and 18% thought the drop would be greater than 75%. Among larger charities, the corresponding figures stood at 22% and 6%. 

There was a small difference by size in charities’ perception of the impact Covid-19 would have on their ability to meet their objectives over the coming six months. Indeed, small charities were slightly less likely (at 86%) to predict a negative impact than larger charities.

Small charities were more likely than larger organisations to cite the impact of social distancing on their ability to deliver services as being the single biggest challenge they are facing, with 51% compared with 43%.

Conversely, they were less likely than larger charities to point to fundraising as the single biggest issue facing them, with 23% compared with 30%. 

'Smaller charities appear to be especially vulnerable'

Matt Whittaker, chief executive of Pro Bono Economics, said: “The chancellor warned this week that the UK’s post-Covid economic recovery was likely to lack any 'bounce', and our survey findings point to a similar sentiment across charities.

“95% say they expect to suffer lower income over the next six months than they had planned for pre-crisis, and 10% think it is 'likely' that the crisis will bring their operations to a complete halt.”

He added: “Smaller charities appear to be especially vulnerable, with 40% saying they expect their income to fall by more than half over the next six months relative to their pre-crisis expectations. Worryingly, 12% say they think it likely that they will cease to operate.

“The opening of applications for support through the new Coronavirus Community Support Fund from today is therefore hugely welcome, though many charities tell us they fear being overlooked.” 

Furloughing staff

Although just under one-fifth pointed to the pandemic's effect on their ability to plan ahead as the single biggest challenge, nearly all (96%) of the respondents said they’d taken some form of action in response to the financial challenges raised by the crisis. 

The most cited response was the use of the government’s Job Retention Scheme, with two-thirds stating they had used the furlough scheme. 

Charities also said they had reduced their activity and sought funder flexibility on their spending plans, project delivery and reporting requirements. 

Two in five, 42%, said they had drawn down on their financial reserves. A significant minority of one in ten said they thought it was “likely” that they would cease operating – with 2% saying it was “very” likely. 

Of the respondents, 23% said they’d applied for support from the government’s £750m charity-specific package. 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. 

Next week’s survey will take place on 26 and 27 May 

Civil Society Media is a communications partner for the survey   

For more news, interviews, opinion and analysis about charities and the voluntary sector, sign up to receive the Civil Society News daily bulletin here.

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