As we gradually emerge from the latest lockdown, there is widespread hope that – variants notwithstanding – the worst of the pandemic is behind us. The past year dramatically transformed many people’s personal, social, and working lives, but as the economy unlocks, there is a sense that much is beginning to return to pre-Covid normality.

This hopefulness is reflected across much of the economy. The most recent OECD business and consumer confidence indices for the UK now exceed pre-pandemic levels, and the latest Bank of England forecasts predict a rapid economic upturn, with almost all GDP losses recovered by the end of 2021.

However, the results of our latest PBE Charity Tracker show that a return to normality is still a long way off for many charities and the general sentiment is not one of optimism. Charity shops might be re-opening and staff may be headed back to offices, but increasing freedoms aren’t creating the same widespread expectation of an uptick seen in the rest of the economy.

Instead, the figures spell out a long road of recovery ahead for much of the sector. There are concerns that financial challenges will not abate. In particular, a slow and cautious return to fundraising events is expected to hold the sector back, as organisations struggle to get events back in the calendar and to fill those already pencilled in.

Short-term cost-saving measures many organisations undertook in order to survive the crisis generally focused on reducing spending on operations and reducing their workforce. As a result, reduced capacity coupled with an ongoing dip in income leaves large parts of the sector without the means to rapidly recover lost ground.

The sector has taken significant steps to manage this. Major operational, strategic, and environmental changes have led to the development of new ways of working. Charities have invested in improving the digital skills of staff and beneficiaries, while new relationships have been forged within and outside of the sector. Many organisations have strengthened bonds with their local communities and brought many new people into the volunteer workforce.

Yet, with expectations that further growth in demand for services will outstrip supply, some charities fear a continued capacity crunch in 2021. Smaller charities are particularly nervous about this. They have in general been more likely to experience decreases in income and less likely to have accessed targeted financial support. Many small charities have not made the same kind of operational or financial changes as large charities because those options are less readily available. That leaves smaller charities’ projections for 2021 gloomier than those of larger ones, with concerns relating to finances and demand significantly higher and a return to pre-pandemic service and fundraising events levels expected to be slower.

Rather than 2021 being the moment for an optimistic return to pre-Covid normality, much of the charity sector fears slipping unnoticed into a new phase in their long Covid crisis.

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17 June 2021