The Charity Commission suspected that the impact of the pandemic on charities was complex and commissioned research to better understand the position.
They sought concrete data, rather than anecdotal evidence to understand how the pandemic has shaped charities to date and the risks that may lie ahead. The research commissioned allowed them to draw some clear conclusions:
Nearly all charities were impacted by the pandemic – 90% reporting negative impacts on service delivery, finances, or staff, with 60% reporting a loss of income and 32% reporting a shortage of volunteers. The Commission is surprised, given these conditions that more charities had not become insolvent. Their figures indicate that of the 170,000 charities on their register, 97 reported insolvency in their last returns. While this was an increase of 33%, the number is still relatively low, given the conditions.
Their resilience may have been due to adapting service delivery (45%), dipping into reserves (40%) or pausing their activities during the first lockdown. It is also clear that the furlough scheme and other government support helped them to survive.
The commission comments that while many have survived the last 18 months, difficult times lie ahead with 62% of those surveyed anticipating some level of financial threat in the next 12 months. It is perhaps encouraging that only 1% see that threat as likely to be critical to their charity’s survival.
Wayne Thomas, partner at Bates Weston comments:
“The Commission cautions against drawing general conclusions from their research, emphasising the complex picture it presents. Charities that are adaptable and can embrace change, with strong communication and collaborative skills are likely to be best placed in the longer term. We work alongside our Charities to help them identify and assess risk, helping them to spot the challenges ahead and make informed decisions, even when those decisions are unpalatable.”