Pandemic demands don’t stop charities looking to the future By Jack Larkham, Research and Policy Analyst at Pro Bono Economics This summer in the UK has seen society released from the majority of the pandemic’s shackles. The economic recovery has been strong and the success of the vaccine rollout has relieved many NHS intensive care units. Our latest Charity Tracker survey found that the positive signs in wider society have translated into increased optimism about the future for many charities. However, notwithstanding this optimism, we found most charities still faced a growing demand for their services and staff challenges brought on by the ‘pingdemic’. In fact, 66% of charities responding to our survey reported a significant growth in demand for their support and services between April and June this year. Figure 1. Two-thirds of charities have experienced an increase in demand for their services since April 2021 And this spike in demand will have only been exacerbated by the impact of the dreaded pingdemic. In the week prior to our survey going live, there were an estimated 850,000 Covid infections and almost 700,000 had been ‘pinged’ by the NHS Covid-19 app in England alone. So, it is unsurprising to find that more than six in 10 charities (61%) reported members of their workforce self-isolating or affected by a member of their household self-isolating. Figure 2. More than 60 per cent reported that members of their workforce had been affected by the pingdemic in July and August With rising demands on their services and a depleted workforce, it is no wonder more than half of charities (51%) reported that their ability to deliver services was affected by the pingdemic. Similarly, three in 10 (30%) charities said their ability to fundraise has been negatively affected, with roughly one in 10 saying this impact was “significant”. Figure 3. Service delivery was most likely to be impacted by the pingdemic with more than half of charities (51 per cent) reporting an impact, of whom ten per cent classed this impact as ‘significant’ Despite the challenges, the sector has continued to demonstrate its resilience. As charities rebuild from the pandemic, there are now signs of optimism about the future amid increased investment in the workforce and digital technology. Over one third (37%) of charities told us they are more optimistic about their operating environment than they were three months previously. And larger charities, which are better positioned to deal with the operational challenges of the pandemic, appear to be most optimistic – with over four in 10 (42%) saying they felt positive about their operating environment compared to three months ago. Figure 4. Larger charities are feeling more optimistic than they were three months ago with over four in ten (42 per cent) saying they felt positive about their operating environment compared to three months prior In a positive sign for the post-pandemic future, the survey found charities were slightly more likely to have increased spending in the period from April to June this year, when compared with January to March. These rises have mostly been driven by expenditure on the workforce, with almost three in ten (28%) reporting growth in payroll costs and a quarter (25%) telling us they had spent more on staff training and development. Charities also look to be continuing to capitalise on the shift to digital during the pandemic - almost half of respondents (44%) reported increased spending on digital technology and IT equipment in the previous quarter. Figure 5. Charities ramped up their payroll, staff development and digital and IT spending in the last quarter Our survey found a significant minority of charities are still making use of the government’s furlough scheme ahead of its closure on September 30. However, the imminent end to the scheme does not appear to be major issue for most of the charities that responded to our survey. Across all sectors, the number of people furloughed continues to fall as the scheme winds down. Recent figures show fewer than 2 million jobs were furloughed at the end of June, continuing the steady decline from over 5 million in January this year. Almost a quarter of charities (23%) told us that they still have staff furloughed, slightly below the national rate of 28%, while half of these charities reported that less than 5% of their workforce is affected. Figure 6. Almost one quarter (23 per cent) of charities told us they have staff furloughed, with larger charities more likely to be making use of the scheme Encouragingly, most of the charities we surveyed do not expect to see job losses because of furlough ending. Only 7% of charities told us that the end of furlough would have a negative impact on the size of their workforce, with just 1% classifying this expected impact as “severe”. Similarly, only 5% expected the end of the scheme to negatively impact service delivery and 2% of these charities said they expected the effect to be “significant”. Figure 7. The ending of the furlough scheme is unlikely to have much of an impact on the charity sector, with only one per cent expecting a significant negative impact on the size of their workforce and two per cent expecting a significant negative impact on their ability to deliver services There are likely to be several reasons why charities might be prepared for the ending of furlough. One may be the increases in employer contributions as the scheme has tapered - since August 1, employers have been expected to pay 20% of wages on top of national insurance and pension contributions. As well as this, flexible furlough across all sectors is almost as prevalent as full furlough. With this in mind, it is likely many charities are already covering a greater proportion of their payroll from their own coffers. Ultimately though, the relatively low rate of furlough use among the charities responding to our survey could explain why the end of the scheme looks unlikely to represent a dramatic financial challenge for many. The story of this latest Charity Tracker survey is one of a resilient sector that continues to face increasing demands on its services while many of its members deal with additional pressures on resources. Yet despite these challenges, there appears to be more optimism about the future as most charities surveyed expect to find little difficulty with the ending of furlough and continue to invest in a digital future.