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Half Of UK Charities Fear Financial Collapse, Polling Shows

5 min read

Over half of all charities in a recent poll have said they fear financial collapse amid unprecedented demand and a huge drop in donations in response to the cost-of-living crisis.

One industry figure told PoliticsHome that “there's never been a time when fundraising in general has been so difficult” as data suggests charities are increasingly reliant on reserves to survive.

Polling between September and January of 1,300 charities by The Charities Aid Foundation (CAF) has found that just 31% had high levels of confidence in their current funding, with half saying they had to use reserves to cover their day-to-day running costs.

Just over half – 53% – reported being worried about their financial survival, a sharp rise on the 35% recorded in April 2022. The issue also badly hit charities based in the North of England, which were disproportionately more likely to have seen record rises in demand and become reliant on reserves to survive.

Another group – easyfundraising – shared with PoliticsHome that polling of 1500 of its members late last year had found 60% reporting rising significantly less from donations, with 75% saying they expected the issue to worsen across this year.

“Even as the economic outlook might look brighter than feared, charities are saying loud and clear that they are still facing the squeeze,” said CAF chief executive Neil Heslop. “The dramatic cut in government support for energy bills from April will put many charities in an even more precarious position, particularly those who are helping the most vulnerable. But they are not businesses and have no way to pass their costs on.” He went on to call on the Chancellor to give tailored support to charities in the Budget next week.

The problem seems to have been exacerbated by an increase in the depth of need. The CAF survey found 57% of charities also recorded an increase in demand for their services since last year.

A spokesperson for The Trussell Trust said its foodbanks had faced “their toughest winter yet”, adding that they were distributing on average more than 7,000 emergency food parcels a day, all while facing “increased operational costs” that left them reliant on emergency appeals for donations. An RNLI spokesperson concurred, saying that its “costs are rising” as “lifesaving essentials like fuel, energy and kit are becoming significantly more expensive”.

These concerns have also come as the charitable sector faces worsening discontent from staff over their own pay and conditions. Staff at housing charity Shelter recently went on strike over a proposed 3% pay increase – and they weren’t alone. Staff at smaller charities across the country, like Hounslow LIFE or Birmingham’s Asylum Support and Immigration Resource Team, have also taken industrial action, as have museum staff nationwide and those working for regulator the Charity Commission.

But as charities have struggled to get traditional donations, charity shops have flourished. The Charity Retail Association, which reorients nearly 500 member charities, found that there had been an 8.6% growth in income from charity shops in the last three months of 2022 versus the same period last year.

“I think there's never been such a great demand for charity’s services. There's never been a time when fundraising in general has been so difficult. There's never been a time that anyone has faced such dramatically increasing costs,” says Robin Osterley, the chief executive of the Charity Retail Association. He added that “other issues associated particularly with people wanting to make purchases more sustainably are making charity shops trading very strong as well.”

“We’re starting to see a significant number of shop openings for the first time since the late 2000s,” he added. “In the absence of other types of fundraising, charity retail is becoming even more important.”

Government sources point to other forms of help for the sector, including a £750 million package of Covid support for frontline charities, which supported more than 14,000 charities and reached an estimated 21.5 million people, and the new Energy Bills Discount Scheme. However, PoliticsHome was told by several groups that years of cutbacks to the statutory social safety net have left charities having to offer a wider array of services than before.

“If you have mental health issues and go to a doctor and they say it’s going to take six months to get referred,” said Osterley,“the next thing that you'll probably try and do is to see where you can get hold of those services from other sources, and that very well may be a local charity.

“And that’s just one example. It goes on all the time whether it’s health, housing or looking after animals. Charities are left to take up the slack during an increasing lack of resources from government."

The issue comes amid a wider drop in conventional donation for charities. PoliticsHome analysed the last five years of annual CAF reports into the state of the charitable sector and found despite a spike during Covid, there has been a steady decrease in the real-terms revenue generated from donations since 2017.

A DCMS spokesperson said: "We know charities are contending with increases in running costs, which is why we provided an £18 billion package of energy support for organisations and businesses throughout the winter.

"Charities have shown huge resilience over the past few years and will continue to receive support for their energy bills until March 2024 under the government's Energy Bills Discount Scheme."

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