Small charities have reported a large increase in demand for their services in recent years, according to research by the Foundation for Social Improvement, a charity that supports small charities.
The FSI’s quarterly tracking survey the Small Charity Index, the latest of which covers the period between 1 December and 29 February, shows that 60 per cent of small charities reported an increase in demand for services over the quarter, with 21 per cent reporting an increase in demand of more than 10 per cent.
The index, which is based on data collected from 316 respondents between 1 March and 22 April, says overall demand for services has increased by 56 per cent since June 2013, with a 7 per cent increase in the latest quarter.
The index shows that the number of small charities holding reserves is rising – 78 per cent this quarter reported holding reserves, compared with 75 per cent and 71 per cent respectively in the two previous quarters.
But 22 per cent of small charities still operate without reserves, and 39 per cent said they had dipped into their reserves over the previous quarter.
About 20 per cent of small charities said they experienced a fall in voluntary income; 22 per cent said they felt the chance of their charity closing in the next 12 months was between five and 10 on a scale of one to 10, with 10 being very likely to face closure, the index says.
Only 1 per cent of small charity trustees reported being "fully confident to take up opportunities for development, outside of their current business plan that carry a financial risk", the index says.
The index says the majority of small charities – about 59 per cent – do less than 10 per cent of their work in partnership with others and another 30 per cent do no collaboration.
The index criticises the knowledge and use of social impact bonds by small charities, with more than half having little or no knowledge of the social investment tool and less than 1 per cent having used SIBs in the past year.