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The Covid-19 crisis and charities Contents

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2The impact of Covid-19 on charities and voluntary organisations

5.The sheer diversity of the sector means that not all charities and voluntary organisations are being affected by Covid-19 in exactly the same ways, and not all are experiencing the same degree of hardship. However, the evidence we have received details the impact the crisis is having on a number of different charities’ finances and operations, indicating that the sector faces a consistent and widespread, if not universal, challenge.

Financial implications

6.The National Council for Voluntary Organisations (NCVO) estimates that charities will lose approximately £4 billion in projected income in the three months from March 2020.5 This is because social distancing measures have resulted in an immediate loss of two key sources of income for many: fundraising and trading. The Motor Neurone Disease Association’s Director of Engagement, Chris Wade, told us that while the charity has previously generated much of its income through community fundraising, the cancellation of marathons, sponsored skydives, fêtes and similar activities means that this income stream has dried up. Moreover, this is happening at the busiest time of the year for community fundraising: spring and summer.6 Similarly, charities that generate income through charity shops have been hit by enforced closures: Age UK reports that the closure of its 400 charity shops resulted in a loss of “one-third of its income overnight”—just under £900k a week.7 CLIC Sargent, which supports children and young people with cancer, also states that access to previously predictable income streams such as trusts and legacies is “becoming more challenging”.8

7.Many charities are taking difficult decisions to address these financial pressures, including drawing on their reserves. The impact of Covid-19 on CLIC Sargent means that:

We are projecting to lose £8m over the year, which is a third of our annual costs. We have had to make big decisions over staff and stopping all non-critical work. Senior staff have taken voluntary pay cuts, 24% of our workforce has been furloughed, while another 29% have seen a reduction in hours—these changes affect our social care staff too. Even with these short-term measures in place, by the end of September, our reserves will have been reduced by [two-thirds].9

In oral evidence, the Secretary of State told us that he expects, in this crisis, “charities, like businesses, should be taking advantage of their reserves”.10 Many larger charities will be in a position to do so; however, the NCVO estimates that nearly one quarter of charities do not have any reserves at all.11 Even those that do, such as St John Ambulance, are cautious about depleting them too drastically, given the risk of a second peak or prolonged period of social distancing, and warn that they are finite: its CEO told us that St John Ambulance would have to start borrowing heavily should the crisis continue beyond August.12

The role of philanthropy and charitable giving

8.It is important to acknowledge the crucial role that philanthropy and charitable giving will play in supporting the sector in the short term and in helping it to rebuild. People and businesses across the country have responded with admirable initiative and ambition to support charities during this crisis. Going forward, Charities Aid Foundation states that mobilising “generosity of the scale required will require additional government support and stimulus” and makes a number of recommendations including: removing declaration requirements so that any donation automatically receives Gift Aid until the end of 2021; offering one-off tax credits for individuals to be donated to a civil society organisation of their choice; and introducing incentives for industry to roll out payroll giving.13 In addition, while some charities have mobilised successful fundraising campaigns in response to Covid-19, not all charities are able to generate income in the same way. Karl Wilding, CEO of the NCVO, told us that that there are:

large swathes of our sector that have always found it difficult to fundraise and indeed will carry on finding it difficult to fundraise. A good example would be women’s charities that work on issues such as domestic violence and rape crisis centres. They find it very difficult to fundraise at the best of times, and it is not a solution for them.14

In Mr Wilding’s view, a stabilisation fund in the region of £4 billion is therefore needed to secure the future of charities and voluntary organisations whose finances have been impacted by Covid-19.15

9.We commend all those who are fundraising for, and donating to, charities during this crisis. Members of the public and businesses alike have stepped up to support this vital sector. Going forward, small and local charities will be invaluable in nurturing this community spirit; yet these are also the charities likely to face the most immediate financial pressures. It would be a perverse and highly regrettable outcome of the Covid-19 crisis if a lack of adequate support were to mean that, at this time of tremendous charitable endeavour, the nation lost the scale and diversity of organisations that makes the charity and voluntary sector so valuable to our society.

Increased demand for services

10.The Covid-19 crisis has resulted in many charities, especially those working with vulnerable persons, facing increased demand for their services. This work looks different depending on the organisation. Some are working directly alongside public services to fight Covid-19 or assist people with medical conditions who need to shield. Other charities, while not on the medical frontline, are providing advice and support to help people deal with its wider consequences and so find their services more important than ever. Martin Houghton-Brown, CEO of St John Ambulance, told us that 20,000 of its volunteers were preparing to deploy to provide additional capacity alongside NHS staff and ambulance services, at a cost of £1.6 million a week.16 Similarly, we heard from numerous charities, large and small, that have experienced an increase in workload as they deliver support to people with underlying health conditions or other needs, such as those who are socially isolated or homeless.

11.Charities working on the frontline tackling Covid-19 face similar pressures to the health and social care system, including a need for adequate supplies of personal protective equipment (PPE) and testing.17 Marie Curie, which delivers palliative and end-of-life care, states that “confusion in both central and local Government about who should be supplying PPE to non-NHS frontline services” has resulted in the charity facing “a critical shortage” of PPE. The charity told us:

This is having a direct impact on patient care—with visits to dying patients having to be cancelled because we don’t have the PPE to deliver care safely.18

Charity workers beyond the medical frontline are also in need of adequate PPE. For example, homelessness charity Centrepoint asks that “homelessness accommodation providers are added as a priority to the supply chain for Personal Protection Equipment”.19

The consequences of these pressures

12.Many charities need immediate support to plug the funding gap. More than 70% of charities surveyed by the Directory for Social Change reported that without financial support they will “go bust” before the end of 2020.20 While smaller charities are particularly vulnerable, with many facing imminent closure, Martin Houghton-Brown also explained the impact that failure to adequately support charities such as St John Ambulance will have on the UK’s ability to recover from the crisis.21 He told us:

I cannot emphasise enough that, if we are financially depleted, I am not sure how quickly we will be able to get back to certificating the nation so that they can go back to work. [ … ] I am quite sure that we will all need a really good sports game or recreational concert to go to and relieve the pressure of this nightmare. We provide the first aid for those, too. If we are disadvantaged through delivering for our nation’s health at this moment of crisis, we will stand in the way of being able to rebuild the nation’s culture and community when we recommence.22

13.The financial and operational pressures of Covid-19 have also impacted charities’ wider activities, such as supporting life-saving research. The Association of Medical Research Charities states that more than half of its members “have stopped, paused or delayed the majority (75–100%) of their clinical trials”.23 Chris Wade from the MND Association told us that the need to furlough workers will mean stopping research into treatment and a cure for the disease.24 Similarly, the Asthma UK and British Lung Foundation Partnership states:

Up to 50% of the clinical research we are funding has been paused, delayed or stopped to date. Delays to clinical studies could mean delays to potentially life-saving therapies and therefore unnecessary deaths.25

14.At this time of unprecedented uncertainty and upheaval, many sectors of the economy—including others under our remit—face financial pressures that threaten their survival.26 However, supporting charities is not just about protecting the 870,000 jobs in the voluntary sector (some 2.7% of the UK workforce).27 Rather, it is about protecting the services many charities provide to the most vulnerable in society. Indeed, Karl Wilding told us that while he does not think “charities have some sort of right to survive”, he does believe that “people have a right to the services that we provide.”28 As Age UK West Cumbria states:

The fundamental issue is not about saving charities or charity jobs but the beneficiaries that rely on the safety net that charities provide.29

This is arguably even more significant given the recent trend towards public services being delivered through partnerships with charities and voluntary organisations.30 Given the central role that charities play in delivering public services, we were concerned that the Secretary of State echoed the Chancellor in stating that

we cannot save every single business, and that would include not being able to save every single charity.31

15.The committee is concerned at this answer from the Secretary of State, given the scale of the loss the sector is warning of, or the impact it would have on those in society who rely on charities’ support. Moreover, charities are not the same as businesses, and thus to suggest that they should be treated the same ignores the fundamental principles upon which their work is based and the nature of their contribution to society. In particular, it undermines the efforts of the many charity workers whose commitment to serving the public is demonstrated by the efforts they are making, and risks they may be taking, to assist others. Many charities and voluntary organisations perform essential work that, while not directly tackling Covid-19, underpins the fabric of our society. Losing their services in either the short term or after the country emerges from this crisis will cause untold damage to individuals and communities. It cannot be allowed to happen.

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