The majority of organisations still face rising demand but falling revenues as the Covid-19 crisis drags on

Economists have warned of unabated financial pressures facing the charity sector in 2021, as need rises and income continues to fall. 

In the latest edition of the monthly Covid Charity Tracker by Pro Bono Economics, in partnership with the Chartered Institute of Fundraising and Charity Finance Group, three quarters (75%) of charities warn they are preparing for next year to bring high levels of demand for their services. And worryingly, 83% of groups questioned forecast that their income will decline.

The survey showed a dual source for the ongoing increase in demand: firstly, people turning to charities’ services for the first time; secondly, existing service-users seeking more support than previously. Four in 10 (39%) of the charities that reported an increase in demand this year attributed it to both these user groups.

Shirley Scotcher, director of fundraising and marketing at DeafBlind UK said: “We support people with sight and hearing loss and whereas they usually are able to access face to face befrienders or our social groups, many of them are completely isolated now. They’re struggling to access to food, prescriptions and it’s affecting mental health. When your hands are your eyes, feeling your way around in a pandemic is incredibly difficult. So our members are coming to us more and more, for advice, support, and just a friendly voice sometimes. Where we were taking 300 calls per month, we are now taking over 1,400.”

As charities wrestle with these new pressures, eight in ten (83%) are braced for a continued decline in their income over the next 12 months, relative to their pre-crisis expectations. Just over a third expect their income to decline by more than 25%, while two thirds of charities (69%) think it will take more than a year to return to pre-crisis income levels.

Pro Bono Economics, the charity that specialises in research on the social sector, has now warned that the combination of many sources of additional demand and continued fundraising restrictions risks a ‘charity crunch’ next year.

Matt Whittaker, chief executive of Pro Bono Economics, said: “Charities have demand for their support coming from every direction, and it shows no signs of dissipating. Challenges that existed before the pandemic have not gone away. The fallout we see today in terms of isolation and mental ill health is expected to continue. Then there are backlogs to tackle, while economic consequences worsen. At a time when resources are diminished, it all adds up to charity crunch where need outweighs the sector’s ability to meet it next year.

“As the government considers how to soothe the social scars Covid has created, charitable organisations can be a core ingredient of the balm the country needs. But the sector can only play that crucial role if ways are found to urgently inject more resource.”

Caron Bradshaw, chief executive of Charity Finance Group, said: “Our communities are struggling with the direct and indirect impact of this pandemic and 2021 is expected to be another difficult year for many. Charities are the backbone of society and have proved their value time and again during this crisis. What charities offer and deliver is essential to those people who rely on them.

“Our research shows that charities are seeing rising demand from both existing and new beneficiaries, while their capacity to meet that demand is becoming ever more constrained. However, more than two-thirds of charities say they expect it will take at least a year to see income levels return where they were before the crisis and we know it took them over 10 years to recover from the 2008 crash. Relatively modest investment to support charities to meet those demands now could make the difference between permanently losing what they offer– depriving generations to come – and preserving their services.”

Daniel Fluskey, head of policy and external affairs at the Chartered Institute of Fundraising, said: “Once again we are seeing the huge challenges that charities face in being able to meet need and demand. Nine months into the pandemic things are not getting any easier, and while charities have cut costs and made savings wherever possible, too many are simply now running on empty. It’s a matter of time before we lose some charity services, or organisations, for good. The research shows that there are multiple and overlapping demands - no charity is the same as any other - so we need appropriate support from Government that can help charity services continue for the people and communities that need them, and for the benefit of us all.”