A new report sharply exposes the challenges facing the sector - and chimes alarmingly with new Scottish data
One in three charities expect to be “overwhelmed” by demand they cannot meet this autumn.
A new report sharply exposes the challenges facing the sector, as it also reveals that one in five voluntary organisations have been forced to cut back on the number or scope of services they offer as a result of rising costs.
The worrying figures come from new research from Pro Bono Economics and Nottingham Trent University’s VCSE Data and Insights National Observatory, and are drawn from a quarterly survey of UK charities.
The findings chime alarmingly with just-published data from the Scottish Council for Voluntary Organisations’ latest Third Sector Tracker.
These show that in Scotland, the number of charities forced to make job cuts has doubled – and many organisations are eating unsustainably into their reserves just to survive.
The new Pro-Bono Economics report, Treatment for the charity sector’s unhealthy status quo (see below for full report), warns that the deep-rooted challenges of financial instability, skills gaps and rising demand are affecting charities’ ability to support people most in need.
It finds that mental health charities that have been forced to end one-to-one counselling services in favour of less-specialised group support, and that a poverty-prevention charity which has had to ‘ration’ its services only to those with the highest needs.
This reduction in support comes as 70% of charities expect demand for their services to increase over the autumn. One in three charities expect to be overwhelmed by that demand, and unable to meet it all.
Though the wider economy is showing some signs of improvement, the report points out that the charity sector’s flawed funding model pre-dates the pandemic and cost of living crisis and is having consequences now.
Without fundamental change, many charities will be forced to continue confronting challenging financial situations. In the months ahead, a third (32%) of charities expecting their finances to deteriorate while a further 35% expect their finances to stagnate.
Recruitment difficulties and the charity sector skills crisis are also contributing to charity cuts. Four in 10 (40%) charities report struggling with recruitment, and 57% of vacancies in the sector are now defined as hard to fill. Strained charity sector finances make this difficult to overcome.
The report describes how charities’ spending on training and development of its staff has fallen by 25% since 2011. Charities are now three times less likely to invest in leadership development than the wider economy.
Without more investment in skills, many charities will be unable to adopt digital technology and innovations that could help them provide more effective services to more people.
Over one-third (35%) of charities with recruitment challenges have had employees working increased hours. In some cases, this has meant managers getting drawn into day-to-day coordination and being pulled away from strategic decision-making and organisational capacity-building. This is affecting organisations’ ability to deliver meaningful change.
Dr Jansev Jemal, director of research and policy at Pro Bono Economics, said: “As the pandemic and cost of living crisis have retreated, the charity sector has reached its new normal. Unfortunately, this new normal is an unhealthy one.
“Too many organisations in the charity sector are held back by the sector’s poor financial model, on a never-stopping treadmill of demand, without the right people and skills to meet the increasing needs of the people they serve. Charities’ unsteady foundations mean cuts to help for people across the country, with services appearing and disappearing despite need because the money and resources can’t be relied upon.”
