UK charities face £10 billion funding gap

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Survey reveals impact of coronavirus on third sector organisations. 

10th June 2020 by Gavin Stuart 0 Comments

UK charities are facing a £10.1 billion funding gap over the next six months as a result of the coronavirus outbreak, financial experts have warned.

Analysis from Pro Bono Economics (PBE) suggested incomes could drop by £6.7bn over this period, while demand for charity services rises by the equivalent of £3.4bn.

The analysis draws on data from PBE’s weekly charity tracker survey, covering 261 civil society organisations across the UK. Almost nine in ten respondents (88%) said they expect the impact of Covid-19 to reduce their income over the coming six months relative to pre-crisis plans, and well over half (59%) say they have had to “significantly” reduce their activity in response.

Many charities have sought additional funding, but PBE points out that such sources are not available to every organisation, noting that 12% of charities say they expect to cease operating altogether before the start of December.

The anticipated income hit sits alongside a sharp increase in demand for the services of many charities, with 72% of those polled saying they expect additional demand over the next six months.

PBE, who provide financial advice to the third sector, said small charities with incomes of less than £500,000 a year are especially exposed to the income squeeze. Its survey suggests 63% of organisations in this group have already reduced their activity in a significant way and one in eight (13%) expect to go out of business within six months.  

Matt Whittaker, PBE chief executive, said: “Charities and other civil society organisations play a vital role in the day-to-day lives of many millions of us – and even more so at times of crisis. That contribution is too often taken for granted, leaving the sector subject to chronic policy neglect. If we don’t funnel more resource to charities in the coming weeks, it’s clear that many will struggle to survive.

“The fact that one in ten charities expect to go under in the next six months is on its own a shocking enough statistic. But once we add in the significant constraints being faced by many of those organisations that do survive, we’re looking at a huge hit to the overall capacity of the sector – with implications for all of us.

“The significant scale of the support being provided by government is of course very welcome – as is the generous help being provided by the public in the form of donations and volunteering – but it’s not enough. Charities’ incomes are under great strain at precisely the same time that demand for their assistance is rising, generating a £10.1 billion funding gap that translates into huge unmet demand.”