• Third quarterly survey by PBE and NTU receives over 1,100 responses
• Demand still rising – 4 in 5 large charities expect demand to grow
• But for the first time since November, over 50% of charities of all sizes expect to meet demand
• Proportion of large charities expecting finances to improve has nearly doubled since first survey
• Volunteer recruitment is rising concern – 63% of small charities worried
• Overall, 4 in 10 charities say they have not had enough volunteers to meet objectives

A major new survey of charities has identified growing optimism in the sector following months of financial hardship associated with the cost of living crisis – but there is rising concern about dwindling volunteer numbers leaving charities in a precarious position.

The latest VCSE Sector Barometer, a quarterly survey conducted by Pro Bono Economics and Nottingham Trent University’s National VCSE Data and Insights Observatory, found an increasing expectation among charities that their financial position will improve, alongside a marked reduction in concern about energy costs.

It means that for the first time since the survey series began, in November 2022, more than half of charities of all sizes now expect to meet demand over the next three months. The survey also found increased confidence in recruitment – with a rise since November in the proportion of charities of all sizes expecting their workforce to grow in the next three months.

This shift in confidence among charities comes against a persistently challenging backdrop. Charity demand remains elevated, with a majority saying it continues to grow. And, while more expect to meet demand, it remains the case that a large proportion do not expect to do so. 

There are also particular concerns about volunteer recruitment, retention and wellbeing. Four in 10 (40%) organisations reported they have been unable to meet their objectives over the last 12 months due to a lack of volunteers, while concern about volunteer recruitment has grown among charities of all sizes, especially small charities, since November last year. This has been driven by a combination of factors, but reflects a wider decline in volunteering across the country over the past decade.

Glimmers of hope in the economy – with energy costs dropping and inflation starting to tick down – are reflected in charities’ responses to this latest survey. Between November 2022 and May this year, charities of all sizes have reported increased optimism about their financial outlook.

Optimism among medium-sized charities has hiked to 28% from 21% in November, while a quarter (25%) of small charities now expect their finances to improve, compared to one-fifth (20%) in November. Large charities have recorded the biggest jump in optimism, with a third (32%) now saying they expect their financial position to improve over the next three months, compared with less than a fifth (17%) in November.

This growing optimism is likely driven in large parts by the drop in energy prices. The latest Barometer found concerns about energy prices have fallen over the past six months for charities of all sizes. The Chancellor’s announcement at the Budget of over £100 million for charities in England, combined with warmer weather, may also have played a role. Small charities, in particular, are less concerned about the cost of energy now – with just under a quarter (23%) ranking energy prices as a main organisational concern, compared to two-fifths (41%) in November.

Renewed confidence has also been identified in relation to recruitment. Since November, the proportion of charities of all sizes expecting their workforce to grow in the next three months has increased. Nearly half (48%) of large charities now expect to recruit more staff, compared with just over a third (36%) in November.

Although expectations for recruitment and the near-term financial outlook have improved, the challenging economic landscape means demand for charity services remains very high. Almost three-quarters (73%) of large charities and four in five (81%) medium-sized charities responding to the survey said that demand had increased over the last three months. More than four in five (83%) large charities said they expect demand to grow over the next three months too.

Despite more than half of charities of all sizes now expecting to meet demand over the next three months, there are still large numbers that do not expect to be able to meet the level of need. In total, 47% of large and medium-sized charities do not think they will meet demand over the next three months, compared to 31% of small charities.

This is likely to be driven in part by growing concerns about volunteer numbers among charities. Almost six in 10 (56%) charities say volunteer recruitment over the past year has been difficult and the latest survey found that volunteer recruitment is a rising worry for charities of all sizes, especially small charities. Since November last year, the proportion of small charities ranking it as a main organisational concern has grown from four in 10 (45%) to six in 10 (63%).

The latest Barometer found that more than four in 10 (42%) small charities consider volunteer retention a main concern for their organisation. Furthermore, around one in six (17%) charities overall believe the wellbeing of their volunteers has deteriorated in the past 12 months.

These findings reflect government data showing a decade-long decline in regular volunteering rates. Wider economic and social pressures are exacerbating this trend, with a third (34%) of charities citing the cost of living crisis as an issue for volunteer retention and one in five (19%) saying it has made volunteer recruitment more difficult. Nonetheless, a quarter (27%) of charities cite a lack of organisational capacity as a key issue preventing volunteer recruitment and one in six (17%) say they lack the resources to retain them.

Matt Whittaker, CEO of Pro Bono Economics, said:

“With the tougher winter months behind us and the first glimmers of hope emerging in the economy, our latest survey seems to suggest that the car has at least shifted out of reverse for the social sector.

“Nevertheless, there is a lot of ground to make up. Demand for charity support continues to rise and finances remain restrictively tight for very many organisations. Against this backdrop, it’s worrying to see concern about volunteer recruitment, retention and wellbeing growing across the sector.

“The enormous number of volunteers that came forward for the Big Help Out, as part of the Coronation celebrations, was hugely encouraging to see. It is important the sector is now supported and puts in a concerted effort to convert this show of volunteer spirit into a sustained return for organisations around the country.”

Prof Daniel King, Director of the National VCSE Data and Insights Observatory, said:

“This is the third of our quarterly Barometer surveys and we are now beginning to see evidence of trends in the sector’s evolving response to the conditions in which it is operating. It is heartening to see that concerns over energy costs and staffing are beginning to ease.

“However, there is an emerging picture of increasing challenges for our small groups and organisations, who are so dependent on the energy, commitment and skills of volunteers for their survival. 

“According to the Barometer, 58% of small organisations found their experience of volunteer recruitment over the past year difficult, and concerns around volunteer retention are escalating.  Worsening wellbeing among volunteers in smaller organisations is also an emerging concern.”

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