Sector in crisis as charities face unprecedented £12.4bn loss

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Analysis outlines the size of challenge facing UK sector #NeverMoreNeeded

19th June 2020 by Robert Armour 0 Comments

Charities are facing a staggering £12.4bn loss of income as they continue to grapple with the impact of the pandemic and social distancing measures.  

Analysis by the Chartered Institute of Fundraising (IoF) and Charity Finance Group (CFG) follows a survey of charities reporting financial loss and reforecasting their income for the year ahead.

On average, respondents reported they were expecting a reduction of 24% to their total income for the year, which would mean a £12.4bn loss of income if the average was applied to the sector as a whole.

It has lead Peter Lewis, chief executive of the Chartered Institute of Fundraising, to call for a package of measure to support the sector.

He said: “This new research shows that the impact of coronavirus is going to have a hugely significant impact on charity finances for the year ahead.

“With social distancing remaining in place for the foreseeable future, and an exceptionally difficult time ahead for the wider economy, the fact that the charities who responded to the survey are planning for a loss of almost a quarter of their total income is extremely worrying. 

“The government urgently needs to review and enhance its emergency support for charities, with a further bespoke package of support, an extension to the Job Retention Scheme that specifically supporting those charitable activities which are still unable to take place, or both.”

The research also showed that charities received 29% less income than they had budgeted for while 84% of respondents reported a decrease or a significant decrease in their total income. And 92% of organisations reported a fall in trading income during the lockdown with just 5% reporting that income from trading had increased.

Many charities – 57% - are planning a fall on trading income.  

Caron Bradshaw, chief executive at the Charity Finance Group, said: “Charities are telling us that they are planning for a substantial decline to their incomes for the year ahead, at a time when the need for their services has never been more acute. 

“We calculate that drop to be in the region of £12bn.  These survey results are strongly indicative of the scale of loss being suffered and is consistent with what our members and other data points are also telling us. 

“I cannot stress enough however, that this isn’t about the survival of the institution of charity or individual charities, but the devastating impact that this will have on those who rely on the services charities provide. 

“From providing food to the most disadvantaged in our society, to supporting people through cancer, if charities are not there to meet the need, someone will have to pick up that work or that need will go unmet. It’s not about us it’s about them.

“Failing to invest in us now will be false economy and will let those most marginalised and disadvantaged shoulder the greatest fall out from this crisis.”