14.The Department has not yet evaluated whether the funding package has met its objectives of supporting vulnerable people and relieving pressure on frontline services during the pandemic. It explained that it was in the process of procuring an evaluation and was aiming to produce a report before the end of 2021. It estimated that this will cost £2 million, with £1.6 million of that being allocated to evaluate the Coronavirus Community Support Fund (CCSF).
15.The National Lottery Community Fund (TNLCF) told us that it undertook regular surveys of customers who were accessing its funding. TNLCF explained that 77% of its customers rated their experience between eight and 10 out of 10, with 10 being the highest score; and 75% of respondents noted that as a result of the funding they were able to reach people that they were not working with previously. Additionally, it told us that the survey showed promising results around improved mental health, wellbeing and loneliness, both for recipients but also for volunteers working for the charities. Four out of five (81%) beneficiaries said that their mental health and wellbeing had improved and 86% reported a reduction in isolation and loneliness. Almost two in three said that the CCSF funding had enabled them to improve social connections. TNLCF reported that the funding enabled around 40% of projects to bring back staff who had been furloughed to allow them to continue to deliver services and increase the services on offer. It also told us that one of the great strengths of CCSF was that it brought together national lottery funding with funding direct from government. As a result, those organisations which had a religious or moral objection to receiving funds generated through the proceeds of gambling were still able to access funding. It explained that it planned to undertake a full evaluation to establish the impact of the fund more generally which would report in summer 2021.
16.The National Audit Office found that the information available on the geographical distribution of funding was at times inconsistent or missing, making it difficult to determine the geographical spread of funding awarded. At 19 February 2021, the Department held no information on where funds were being used for 18% of awards. This accounted for £101 million of taxpayer’s money and 2,882 funding awards. To the extent that information is available, analysis showed that London had received the most funding (£47 million) and the North East the least (£14 million). The Department told us that it wanted the funding to be demand led “rather than a predetermined equal regional distribution”. It explained that for some funds, such as TNLCF, it offered indicative regional allocations, but that it did not make these formal because it did not think it would be appropriate. Additionally, it told us that while it asked all those receiving grants to tell it about the location of beneficiaries, it said that “sometimes that does not give us all the information we would like about regional distribution” because a charity’s headquarters might be located in a different place to where the funds are actually spent. It committed to using its upcoming evaluation to determine the regional distribution of funding.
17.The Department told us that its intention was that the overall funding provided would be of “significant assistance [to the sector] even if it wasn’t able to cover every gap” and that it understood that “charities would have to make difficult decisions” as a result of the pandemic. It said that in designing the package it worked closely with voluntary sector umbrella bodies to get a sense of the health of the overall sector. Once the package was designed, however, it explained that its focus was on distributing the funding at pace. It intended to award and disburse funding until 31 March 2021. After this, any funds remaining would be returned to HM Treasury. We asked whether any money had been unspent and so returned to HM Treasury. The Department said it was too early to give a final figure but that it anticipated it being a very low percentage of the overall value of the fund.
18.The Department recognised that charities had lost traditional sources of income during the pandemic, such as fundraising through large events like the London Marathon and the closure of charity shops. However, it also suggested that moving fundraising online may have increased overall funding levels. In addition, the Department highlighted that charities could access other government support throughout the pandemic, such as the furlough scheme. It explained that introducing match funding on the Community Match Challenge scheme sought to encourage the continuation of an “explosion in private philanthropy and fundraising” that it believed had been witnessed up to that point. Written evidence we received about charities’ income levels was more mixed; the Charity Commission told us that in the first half of 2020 individual donations increased by £800 million. We also received written evidence from the Association of Chief Executives of Voluntary Organisations (ACEVO), which told us that charities might have lost as much as £4.3 billion between March and May 2020. Pro Bono Economics ran a survey which suggested as much as £6.7 billion had been lost in income. The Department told us that it will not know whether the funding it distributed has met the increased demand caused by the pandemic until the evaluation is conducted.
19.We asked about the impact of the pandemic on the financial health of the sector as a whole. The Charity Commission told us that a range of indicators suggest that charities’ finances were worsening. It explained that the number of auditor reports on matters of material significance, that highlight a number of charities are either experiencing financial difficulties or are at risk of insolvency, had risen by about 25%. It similarly explained that the number of charities with income over £500,000 which have negative or no free reserves had more than tripled over the last year from 9% in April 2020 to 28% in March 2021. In written evidence, the Charity Commission also highlighted that it had received nearly 3,000 Serious Incident Reports since the start of the pandemic. Of those that directly related to the pandemic, the most common reason for the report was a concern about long-term financial sustainability. It noted that so far, it had not seen significant numbers of charities removed from the official register as a result of financial issues, but that there may be delays in the process.
49 Qq 93, 99; C&AG’s Report, figure 4
50 Qq 54–55, 93
51 C&AG’s Report, para 3.2, figure 10
52 Q 52
53 Q 52
55 Qq 1, 5; C&AG’s Report para 3.1, 3.4
56 Qq 4–5
57 Q 72
58 GSC0013 Association of Chief Executives of Voluntary Organisations’ submission; GSC0006 Pro Bono Economics, page 2
59 Q 92
60 Q 94; for the definition of charity reserves see: www.gov.uk/government/publications/charities-and-reserves-cc19/charities-and-reserves
61 Q 94; GSC0023 The Charity Commission submission, page 2