Funding sources are projected to decline across this sector this year as the pandemic’s impact on charities continues to be “uneven and unpredictable”, according to new research.
A survey by the National Council for Voluntary Organisations with Nottingham Trent and Sheffield Hallam universities asked 600 organisations for their views on the impact of the coronavirus on the sector.
It is the fifth snapshot report in the Respond, Recover, Reset: The Voluntary Sector and Covid-19 project.
Respondents were asked to project changes to their income streams for the 2021/22 financial year, compared with the period before the pandemic
Two in five voluntary organisations reported having just six months of reserves left; at the same time nearly half (46 per cent) of those surveyed reported demand on their services increasing in the previous 30 days.
Just over one-third said their costs had increased in the past year, while 46 per cent of organisations have had to use their cash reserves to cope with the pandemic’s impact.
Almost 10 per cent of respondents said they either have no cash reserves or not enough to last them a month.
Overall grants income is expected to decline slightly, with the average percentage change down three per cent, according to the research, despite warnings of a sector-wide cliff edge as emergency grants expire at the end of this year.
Larger declines were projected for service delivery contracts, public donations, investments, other income sources, and trading activity.
The research also underlines that while the pandemic has put the sector under immense pressure, the effect on individual charities vary widely.
Researchers found that while 43 per cent of respondents had reduced their range of services since March 2020, 37 per cent had widened theirs.
Nearly one-third of respondents reported an increase in total income since last year, while 47 per cent said income had dropped.
Despite one-third of respondents reporting a deteriorating financial position over the past month, nearly half said it was unchanged, and 18 per cent reported an improvement.
Alex Farrow, head of networks and influencing at NCVO, said: “While many organisations have been able to build up reserves, half of organisations are using them to cover day-to-day costs.
“The expected downturn in income – even for those organisations seeing only marginal declines – is worrying not just for the charities and groups involved, but for the lives and communities that they serve.”