Covid-19 crisis could force one in 10 charities to close within a year, research warns

Eight out of 10 charities believe the coronavirus pandemic will negatively impact their ability to deliver on planned objectives in the next 12 months

(Photo WIktor Szymanowicz/NurPhoto via Getty Images)

The devastating financial impact of coronavirus has left nearly 40 per cent of charities and community groups in a worsening financial situation, with two in five organisations reporting that their financial position had deteriorated in the past month, according to new research.

Eight out of 10 organisations predict the crisis will negatively impact their ability to deliver planned objectives over the next 12 months, according to the Covid-19 Voluntary Sector Impact Barometer. One in 10 believe they will be forced to close within a year.

The barometer is one part of a new research project – Respond, Recover, Reset: The Voluntary Sector and Covid-19 – led by Nottingham Trent University, the National Council for Voluntary Organisations and Sheffield Hallam University.

It will use real-time data to explore the impact of the pandemic on voluntary organisations over the next year.

The report found that more than half (56 per cent) of the 700 organisations surveyed are expecting demand for services to surge over the next month as the impact of local lockdowns and rising unemployment filters down to communities.

In addition, 60 per cent of the organisations said that Covid-19-related safety measures have increased their operating costs.

Researchers also found the pandemic is accelerating digital transformation in the sector, with charities moving existing face-to-face services online and funders supplying local charities with Zoom licences.

More than 90 per cent of organisations reported an increase in delivering their services online.

Commenting on the findings, Karl Wilding, chief executive of NCVO, said: “Whether through falling income from charity shops and fundraising events, or a surge in demand for services from those facing the brunt of the pandemic, charities are under pressure like never before.”

He added that as the sector faces a £10bn funding gap over the next six months, the government must think creatively about where it can find the funds to help communities in need.

Daniel King, professor of organisation studies at Nottingham Trent University and project lead, said: “Our research is confirming what many working in the voluntary sector already knew: charities and community organisations are facing the biggest challenge in a generation, and sadly some will be forced to close their doors.”

However, King said there were signs of resilience and creativity, and he hopes the research will provide examples of best practice for others to follow.

In an interview on the BBC Radio 4 Today programme, charities minister Diana Barran said she was “absolutely worried” by the challenges faced by charities during the pandemic. 

She added that the government was making plans to support charities in the coming year.  

“We won’t sadly… be able to save every organisation, but we have worked closely with the sector and done everything we can to support their fundraising efforts,” Barran said. 

“I recognise that 2021 will be a challenging year for the sector, and we are making plans as to how we can support the sector going forward.” 

Real-time data from the Covid-19 Voluntary Sector Impact Barometer is available here

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