Press release: Collapse in charity provision looms at moment of greatest need Download the report 58% of charities to cut back services as coronavirus set to cost sector 60,000 jobs The £10 billion charity funding gap created by coronavirus is putting an “alarming proportion” of jobs and services in the firing line in the social sector. That’s according to the latest Charity Sector Tracker published today by Pro Bono Economics, in partnership with the Institute of Fundraising and Charity Finance Group. The survey of 455 charities found that 19% have already made redundancies, and that 23% plan to make further cutbacks once the government’s furlough scheme comes to an end. That number jumps to 44% among the UK’s largest charities. Remarkably, nearly one-in-ten (8%) large charities anticipate reducing their headcount by 25-50%. 5,400 job losses have already been announced in the charity sector since the start of the pandemic, but the Charity Sector Tracker results indicate that this is just the tip of the iceberg. Pro Bono Economics estimates that the true figure is closer to 25,600 and that another 34,100 charities sector employees may have lost their jobs by the end of the year. Job losses on such a scale will result in a painful contraction of charity provision at the very moment thousands more are expected to turn to them for help. Unemployment in the UK is anticipated to double in the run-up to Christmas, just as the risk of a second wave of coronavirus infections is at its highest. But while 68% of charities expect demand for their support to rise in the next six months, 58% say it is likely they will have to reduce the services they offer over the same period. This pressure is expected to last well into 2022, with 70% of the charities surveyed expecting it to take more than 12 months for their income to return to pre-crisis levels and 26% thinking the climb back will take more than two years. Matt Whittaker, CEO of Pro Bono Economics, said: “Charities have been under extraordinary pressure since the start of the pandemic, dealing with the perfect storm of increased demand and constrained resources. To date they have responded with typical resilience and invention, but the coming months look set to prove tougher still. “With the recession biting and unemployment rising, the social sector has never been more needed. But an alarming proportion of jobs in the sector are now at risk. That means many of the charity workers who have provided vital support to millions across the country since the start of the Covid crisis are facing a very uncertain future.” “Navigating this period rests in part on getting more resources into the sector, from government, from existing funders and from members of the public. But it also rests on reversing the public policy neglect the sector has suffered from over many years. That’s particularly true if civil society is to play the pivotal role that it should do in the country’s recovery from the pandemic, helping to fulfil the Prime Minister’s pledge to ‘build back better'.” Caron Bradshaw, Chief Executive of Charity Finance Group, said: “Charitable activities and organisations are the glue that keeps communities together and a bridge between the sectors. They want to play their part in the recovery but every day society is closer to losing huge capacity at the heart of our communities. “The scale of job losses in the charity sector means less capacity to help people survive loss, hunger, unemployment. Charities are vital to help society through the crisis of Covid and will be essential to the effort to rebuild as we go through a deep-rooted recession and a potential second wave. “These results should ring an alarm bell for Government that without action there is worse to come.” Daniel Fluskey, Head of Policy and External Affairs of the Chartered Institute of Fundraising, said: "The findings from this research show just how challenging the situation is for charities across the UK. The stark figures on reduction of services and job losses are of real concern and will have a real impact for the people, families, and communities who rely on charities every day. At a time where so many people are struggling, we are seeing charities' ability to help them severely reduced, not just in the short-term, but over the months and years ahead." Gemma Peters, Chief Executive of Blood Cancer UK said: “Covid-19 has had a devastating impact on Blood Cancer UK’s finances. Our income has dropped by £6 million and despite extensively cutting operational costs and furloughing 40% of our staff, we have had no choice but to propose a reduction in the number of people we employ by 25%. This is essential to continue investing in research and supporting our community. “It’s clear that we’ll lose a significant number of brilliant, dedicated, people. Even with these measures, we’ll have £1.8 million less to spend on research this year which means we’ll be able to do less for people with blood cancer in the short term. It is a gut-wrenching situation but it's what we have to do to be strong for the long haul, to beat blood cancer. “Blood Cancer UK remains committed to funding vital research and supporting people affected by blood cancer. If you, or anyone you know is worried about blood cancer, you can call our free and confidential helpline on 0208 2080 888.” Key findings: Job Losses When the Job Retention Scheme ends, do you expect your organisation to make staff redundant as a result of Covid-19? Total Small (annual income <£500k) Medium (annual income £500k-10m) Large (annual income £10m+) No 57% 69% 54% 39% Yes – under 25% of pre Covid-19 headcount 19% 8% 22% 36% Yes – 25-50% of pre Covid-19 headcount 4% 2% 4% 8% Yes – 50-75% of pre Covid-19 headcount 0% 1% 0% 0% Yes – over 75% of pre Covid-19 headcount 0% 1% 0% 0% Don’t Know 19% 20% 19% 17% Income Levels How long do you expect it will take your organisation to return to pre-crisis income levels? Total Small (annual income <£500k) Medium (annual income £500k-10m) Large (annual income £10m+) Less than 6 months 6% 8% 5% 5% 6-12 months 13% 15% 13% 6% 1-2years 44% 47% 43% 37% More than 2 years 24% 15% 26% 40% Never 2% 3% 1% 0% Don’t Know 12% 12% 11% 12% Service Delivery How likely is it that your organisation will need to scale back its service delivery over the next six months, compared to pre-crisis plans, as a result of financial pressures created by Covid-19? Total Small (annual income <£500k) Medium (annual income £500k-10m) Large (annual income £10m+) Very Likely 27% 25% 26% 31% Quite Likely 31% 29% 31% 37% Neither Likely nor Unlikely 21% 27% 19% 15% Quite Unlikely 12% 11% 14% 12% Very Unlikely 9% 8% 10% 5% Demand Roughly what impact do you expect Covid-19 to have on demand for your organisation's services in the next six months relative to your pre-crisis expectations? Total Small (annual income <£500k) Medium (annual income £500k-10m) Large (annual income £10m+) A negative impact 21% 27% 17% 19% Zero impact 11% 7% 11% 22% Increase of up to 25% 36% 20% 45% 42% Increase of 25% to 50% 10% 27% 17% 10% Increase of 50% to 75% 8% 11% 6% 7% Increase of more than 75% 5% 8% 4% 0% Redundancy Level Estimate Methodology The redundancy level estimate is calculated by combining survey responses to the questions: ‘Has your organisation made staff redundant as a result of Covid-19?’ and ‘When the Job Retention Scheme ends, do you expect your organisation to make staff redundant as a result of Covid-19?’ with Total Number of Employees reported in the NCVO, UK Civil Society Almanac 2019 (taken from the Labour Force Survey). We have assumed that the Total Number of Employees is spread across charities of different sizes in line with their income share, using income data from NCVO, UK Civil Society Almanac 2019. NCVO, UK Civil Society Almanac 2019: https://data.ncvo.org.uk/about/almanac-data-tables/ 18th August 2020 Notes to editors: The August 2020 PBE Charity Tracker Survey was conducted between 3 August and 7 August. 455 charities responded to the survey, with 408 responding in full. Several large charities have already announced the beginning of the redundancy process, include AgeUK, Cancer Research, Oxfam, the RSPCA, St John’s Ambulance and the National Trust. New Philanthropy Capital maintains a tracker of redundancy announcements from the sector https://www.thinknpc.org/resource-hub/covid-19-charity-redundancies-monitor/ More information on Pro Bono Economics’ estimate that the funding gap for charities stands at £10billion can be found here https://www.probonoeconomics.com/news/charities-facing-%C2%A3101-billion-funding-gap-over-next-six-months About Pro Bono Economics: PBE helps charities and social enterprises understand and improve the impact and value of their work, matching professional economists who want to use their skills to volunteer with charities. Set up in 2009, PBE has helped more than 500 charities large and small, covering a wide range of issues including mental health, education, employment and complex needs. PBE is supported by high-profile economists, including Andy Haldane (Bank of England), Sir Dave Ramsden (Bank of England), and Clare Lombardelli (HM Treasury) as trustees. Lord Gus O’Donnell has chaired PBE since September 2016. About Charity Finance Group Charity Finance Group (CFG) is the charity that inspires a financially confident, dynamic and trustworthy charity sector. We do this by championing best practice, nurturing leadership and influencing policy makers. About the Chartered Institute of Fundraising: The Chartered Institute of Fundraising is the professional membership body for UK fundraising. We support fundraisers through leadership and representation; best practice and compliance; education and networking; and we champion and promote fundraising as a career choice. We have over 6,000 individual members and over 600 organisational members who raise more than £10 billion in income for good causes every year. Media Contact: Pro Bono Economics can be reached through Nicole Sykes on 07545601980 or email: [email protected] Follow Pro Bono Economics at (@ProBonoEcon) and Matt Whittaker (@MattWhittakerPB) on Twitter.