The UK economy continues to grow incredibly slowly, and the latest government data shows people are generally feeling less happy than they were a year ago. As the country hits the 18th month in which inflation outstrips pay growth, the cumulative effects of the cost of living crisis are becoming harder for many people to manage. Charities’ support remains important for many.

Yet the past quarter has been one of tentatively improving news about the economy. Two years ago, 'inflation rate hits 8.7%' would have been a dramatic news headline, but the latest data showing inflation returning to single digits is now a reason for quiet optimism about the long-term. Energy prices have begun to fall, for the first time since October 2020.Meanwhile, there are fewer people ‘economically inactive’ (meaning they are out of work, but not actively looking for work either) than there were last summer, though there are still record high numbers of people who are economically inactive due to ill health. Nonetheless, this is good news for employers struggling to recruit new staff members.

Some of these glimmers of hope in the wider economy seem to be translating into glimmers of optimism in the charity sector. Results from the third wave of the quarterly VCSE Sector Barometer, carried out by Pro Bono Economics (PBE) and Nottingham Trent University National VCSE Data and Insights Observatory, show that, while a large majority of charities still expect demand over the coming months to increase, a growing proportion expect that they will be able to meet it. For the first time since the survey started in November 2022, more than half of charities of all sizes (51% of large charities, 52% of medium charities and 61% of small charities) expect to be able to meet demand for their support over the next three months.

In part, this is because fewer charities expect large increases in demand for their support. It may also be helped by the improved financial circumstances that many survey respondents report and an easing of the recruitment challenges that charities faced last year. Charities of all sizes, large charities in particular, are feeling more optimistic about their finances than they were in November last year – the proportion expecting their finances to improve over the next quarter has almost doubled (from 17% to 32%).

Meanwhile, charities of all sizes are feeling less worried about staff recruitment, though this is an issue which is much more important for large charities than small ones (40% of large charities are worried about it, compared to just 5% of small charities). Almost half of large charities (48%) and a third of small (34%) and medium charities (35%) expect their paid workforce to grow over the next quarter.
But paid staff are only part of the charity sector’s workforce. Volunteers are the backbone of the sector, and most charities say they would not be able to keep going without them. Yet the latest government data shows a decade-long decline in regular volunteering rates and this survey shows that recruiting and retaining volunteers is fast becoming one of the biggest concerns for charities.

Six in ten (63%) small charities now cite volunteer recruitment as a major organisational concern, and most charities now describe their experience of volunteer recruitment as ‘difficult’. Wider economic and social pressures are exacerbating this trend, with a third of charities (34%) citing the cost of living crisis as an issue for volunteer retention. Nonetheless, a quarter of charities (27%) cite a lack of organisational capacity as a key issue preventing volunteer recruitment.

The impact of the challenges with volunteer recruitment and retention has been significant. In the face of rising demand across the sector, four in ten (40%) charities say that a lack of volunteers over the past year has stopped them meeting their main objectives.

As levels of need and volunteering head in opposite directions, it is vitalthat efforts to grow volunteering are successful. With the Big Help Out attracting around 6.5 million volunteers as part of the Coronation celebrations, and an estimated 7.8 million people saying they are more likely to volunteer as a result, it is crucial for the charity sector and those it supports that intentions translate into action.

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