Recent reports indicating that many charities are facing enormous challenges, including today’s analysis by Pro Bono Economics analysis projecting up to 60,000 job losses in the sector, because of Covid-19 are deeply alarming.
The present and further decline in income, the closure of charities, the loss of services, a diminished voice for communities and large numbers of redundancies should be a wakeup call for everyone concerned about the future of civil society, communities and the economy - the consequences of which will be experienced for years to come.
Government needs to act and offer at least the same level of support to charities that it has offered to key industries
Talk of the “gentleness of charities” and offering only £750m when the need is for over £4bn are hardly indications that the government actually understands or truly values the role of charities and the voluntary sector. I know that the national sector bodies continue to make representations on this matter, but it is clear that their efforts are yet to bear much fruit.
Even if income generation can recover (which, in the short and medium term, looks most unlikely), there will be a long lag before income is in the bank. Candidly, few charities have the reserves to bridge such a gap and the consequential shortfalls in income.
Inevitably, it follows that many (if not most) charities are going to have to radically change their business models and, in many cases, their operating models in response to the new norm, changing external environments and demands for their advocacy and their services. Without such change, many charities will struggle to survive, be relevant, or maximise their impact.
What can be done?
In light of the above, there are two immediate actions that the government could and, I believe, should make.
First is to extend the job retention furlough scheme for charities for at least another six months beyond October. This extension may be in a different form to the current scheme but it is essential that any revisions should be jointly agreed between the government and charities.
Second is to introduce a ‘charity investment fund’, financed by central government from taxation - not the National Lottery. Such a fund should be used to support investment in staff development, designing and implementing new business and operating models - and in some cases, to facilitate mergers.
Charities could receive both grants and/or very low interest-based, long term ‘patient loans’, to support business cases for reform and recovery. The details of any such scheme should also be agreed, jointly, between charities and the government – and certainly not unilaterally simply dreamt up and implemented by the latter.
There is a strong case for this funding (or a sizeable proportion of it) to be devolved to local authorities, combined authorities, and elected mayors, to allocate in partnership with local charities and community groups. In my view, this would be preferable and more effective than creating yet another new national body or to use an existing national sector body to manage the funding. However, what matters most is just to get on and create such an investment fund - with significant resources.
Shaping the future
As I suggested in Civil Society on 13th May this year, charities should be seeking to help shape the future of society and even the economy as the Covid-19 recovery planning takes place. They should be arguing relentlessly and consistently for fundamental reform to create a fairer society and an economy based on social justice, equality, and sustainability.
Charities and the wider civil society groups have critical roles to play in contributing to short term responses to the Covid-19 crisis but an even greater role in national, regional and local recovery and reform programmes. They have to be there, at the table and in the room, to do this, and so they must be enabled to survive this short- term crisis if they are to play their proper part and fulfil this longer-term contribution.
Government must be persuaded of this fact, and also to appreciate and respect the vital advocacy and campaigning role that charities make in modern democracies. There has been a tendency for the government to play such roles down or even to oppose them. And notably, during the pandemic, the government has more commonly tended to regard the charity sector merely as a source of volunteers to act as surrogates for the state and to bolster public services. This must change - and any investment programme must not be conditional on such a narrow-minded and constraining prejudice.
Given the negative news from across the charity sector just in this week alone, there should be no delay to bold, imaginative, and well-funded government action.