Study finds charities' pessimism for the future is well founded

Charities across the country are fighting to stay afloat as they struggle to raise money and meet ever increasing demand, new research shows.

Findings from a joint study by the Charities Aid Foundation (CAF) and the Association of Chief Executives Voluntary Organisations (ACEVO) says one in seven charity chief executives say their organisation is struggling to survive, growing to one in five among smaller charities with an income under £1 million - 96% of the sector.

And a third of charities have dipped into their reserves to cover an income shortfall in the last year, according to the survey of 572 voluntary sector chief executives.

These financial worries come as demand for charity services grows, over three quarters (78%) of charities seeing an increase in the last year and 83% anticipating a rise over the next twelve months.

The majority (59%) of charity chief executives also said they were pessimistic about government support for the sector, and only 12% were optimistic.

Generating income and achieving financial sustainability is the biggest challenge currently facing charities, 60% of chief executives citing this as one of their most pressing issues.

Large charities, with incomes of over £5m, are particularly worried about reductions in public or government funding, 40% listing this as one of their biggest concerns.

But there is evidence that charities are teaming up with other voluntary groups or private companies, potentially to help cut costs and make their work more effective.

The research, Social Landscape: the state of charities and social enterprises in 2015, is released just six weeks before the election, and as representatives from five major political parties prepare to debate key issues surrounding the voluntary sector in a live debate tonight (24 March).

John Low, chief executive of CAF, said: “Charities are facing many tough challenges in this continued age of austerity as generating income continues to prove difficult, whilst demand for services increases significantly.

“They are resilient and do adapt to a changing world. It's clear that many remain optimistic and are taking steps to overcome these problems, but it is very worrying if a significant proportion of charities, especially smaller organisations, feel they are reaching breaking point.

“They also play a central and essential role in UK society, working closely together with the state at a national and local level to enrich our communities, carry out vital support work and deliver services.

“As another general election fast approaches, surely it is obvious that politicians of all parties must recognise and do all they can to support and sustain the work and value of charities which do so much to underpin society in Britain."

Sir Stephen Bubb, CEO of ACEVO, said times were tough for charities.

“Members tell me that in recent years demand for their services has surged while the funding environment has got tougher,” he said.

“This survey shows that charity CEOs are cautious but optimistic about their organisations’ future.

“Politicians of all parties should take on board the main message from this report and act on it: the third sector is vital to a free and fair society, and it needs their support.

“Politicians and the public should listen to charities and their beneficiaries, not close their ears to their concerns. We’ll be watching closely to see which parties take heed of this important message.”