Sarah Vibert: Covid left charities in worse position to weather cost-of-living storm

18 Oct 2023 Voices

NCVO’s chief executive reflects on findings from the UK Civil Society Almanac 2023, which showed declines in income, number of charities and workforce size...

Last week, we launched our latest annual UK Civil Society Almanac, providing the most comprehensive picture of the state of the country’s voluntary sector. 

Our insights highlight how the pandemic left the sector in a far worse position to weather the ongoing cost of living crisis – something we’re calling the sector’s long covid effect. 

The data reveals a grim picture of the sector’s post-pandemic finances, with many other key metrics for the sector’s health, such as the number of charities, size of the workforce, amount of people volunteering, also in decline. 

Income decline

In the last decade, voluntary sector income had been increasing year on year. In fact, the trend had been pretty consistent since 2012-13, but the fallout from the pandemic means we’re now seeing the first decline in overall sector income in almost a decade. 

Our figures show overall income shrank by a colossal £1.8bn (3%). That’s £1.8bn that could have been used to house women fleeing domestic violence, provide emergency food parcels, help families out of poverty, support survivors of sexual abuse, or prevent the cruel treatment of animals.

Even though there was an increase in income from the government during the pandemic – because of interventions like emergency funding and furlough – donations and public giving still remained the largest income source for the sector. However, there was a substantial decline in income from the public, going from £30bn in 2019-20 to £26.4bn in 2020-21. 

With income from the government income expected to decrease again in subsequent years, and the general public’s personal finances set to be further tested by the ongoing cost of living crisis, there is clearly cause for concern. Especially for smaller community based organisations reliant on commissioned contracts and the public’s generosity.

Worrying decline in smaller charities 

The decline in sector income has been particularly felt by smaller charities (those with income below £1m), who saw a significant income reduction over the year 2020-21. Worryingly, the number of smaller organisations has continued to decline as a proportion of all charities. 

Smaller charities are less likely to be receiving government funding and are more likely to be reliant on public giving. However, larger charities receive more from government grants and contracts than from donations.

This has left many small charities more exposed to the cost-of-living crisis, and many simply won’t be able to continue battling these difficult financial conditions.

Workforce challenges

Alongside the financial challenges, the sector also faces struggles with resourcing.  Despite an initial boost to these numbers during the pandemic, the sector’s workforce decreased by 4% in the past year. This compares to growth in both the public and private sector’s workforces.

Volunteering numbers also fell and remain well below pre-pandemic levels. These declines in both workforce and volunteer numbers come at a time when demand for charity services is at its highest ever level, stretching already limited charity resources further than ever.

We’re now living with the impact of these challenges as charities head into another winter of hard choices as the cost of living crisis continues. Every day we see smaller voluntary sector organisations make tough decisions to scale back, cut services or shut their doors for good.

Charities, and the communities they support, need, and deserve a more sustainable future if we’re going to make any progress in addressing inequalities across the country.

At NCVO, we’re continuing to work hard to understand the challenges and tough decisions facing voluntary sector organisations this winter. This will inform the support we offer to our members and the wider sector and help us raise awareness of the difficulties that many will face over the coming months. 

Our society is increasingly reliant on charities to act as a safety net. But if things continue as they are, we’ll see more and more people falling through gaps this winter as charities find themselves unable to deliver the vital services communities rely on. 

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


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