Voluntary organisations located in the poorest areas of north-east England are four times more likely to have lost significant levels of income over the past two years than those in the richest areas, according to new research.
The final report from the Third Sector Trends Study, a piece of research carried out to provide free information on not-for-profit activity in Cumbria and north-east England, shows that 30 per cent of organisations in the poorest areas (ranked as 1-2 on the Index of Multiple Deprivation) lost significant levels of income between 2012 and 2014, compared with one 7 per cent of those in the richest areas (9-10 on the IMD).
The report, which was funded by the Northern Rock Foundation and the Community Foundation, Tyne & Wear and Northumberland, says this was unlikely to be related to a lack of propensity for organisations in the poorest areas to be enterprising in their practice, because the proportion of organisations generating more than 60 per cent of their income from contracts or trading was about the same in affluent and deprived areas. "It is clear that enterprising activity is not dominant in richer areas," it says.
The last in a series of papers, The Situation of Third Sector Organisations Working in Rich and Poor Areas is based on a survey of 1,063 people working at voluntary organisations in County Durham, Cumbria, Northumberland, the Tees Valley and Tyne and Wear.
It says there is a clear link between the level of affluence or deprivation in the area in which an organisation is located and the likelihood that it has used its reserves for essential costs. It says that 25 per cent of organisations had done this in the poorest areas, compared with 14 per cent in the richest.
"Although the majority of voluntary organisations are keeping income levels stable and in some cases seeing some rises in income, this isn’t an even picture across the region," Northern Rock said in a statement about the study. "These findings highlight serious pressures on voluntary organisations working in the most deprived parts of the region and the danger of major contraction and closure of services for vulnerable people."
The report says that 69 per cent of voluntary organisations view grants as the income source upon which they are most reliant, and only 16 per cent of them are actively engaged in bidding for or carrying out public sector contracts. This reflects the fact that only larger organisations are generally in a position to deliver such contracts, it says.
Tony Chapman, professorial fellow at St Chad’s College, Durham University, and author of the report, said: "Charities have borne the pressures of austerity better than many expected over the last five years, but those that are based in the poorest areas are definitely struggling more to maintain funding than charities in rich areas. This is a matter of real concern as they generally deliver to the most needy."