The voluntary sector will “inevitably shrink” as the public’s income comes under strain because of coronavirus, the National Council for Voluntary Organisations has warned.
In the latest edition of its UK Civil Society Almanac, published today, the NCVO says that as “recession hits and redundancies are made, and as household budgets come under strain, people may not be able to support charities in the way they have done in previous years".
A survey conducted by organisations including the NCVO showed last month that the sector was facing a £12.4bn shortfall in income for the year because of coronavirus.
The annual almanac, which uses data from about 10,000 charities’ annual accounts adjusted to reflect the whole sector, says that in 2017/18 money from the public was the sector’s largest income source, representing almost half of incoming funds.
But the NCVO warns that the forecasted economic downturn is likely to have a direct impact on income from the public.
The almanac says the sector’s total income was £53.5bn in 2017/18, a rise of 2 per cent on the previous year. But it notes that almost half of the £1.2bn of income growth was accounted for by two legacies that totalled £555m.
It adds that income from government grew by £280m year on year to £15.7bn, but was at its lowest point as a proportion of the sector’s total income, at 29 per cent. The NCVO said this was because other income streams grew more quickly.
The almanac says the sector’s reserves rose from £58.4bn in 2016/17 to a record high of £63.5bn a year later, beating the previous record of £63.2bn, reached in 2007/08 before the last major downturn.
But it notes that since these figures were collated the value of the sector's reserves held as shares will have fallen because of the coronavirus outbreak.
The almanac says that employment in the UK voluntary sector reached a new high of 900,000 in 2019, representing almost 3 per cent of the total workforce.
But it says the predicted loss of income will “instigate restructures within charities and see redundancies across the voluntary sector”.
Karl Wilding, chief executive of the NCVO, said that despite charities having a vital part to play in tackling coronavirus and in helping the country rebuild after the crisis, “the voluntary sector will inevitably shrink in the immediate future”.
He said: “Public income being the main source of income growth means that social distancing restrictions and a reduction in people’s disposable incomes will have a direct impact on charities’ incomes.
“Undoubtedly, this will result in job losses, a possible reduction in services and the closure of some charities.”
Wilding called on the government to support the sector and those affected by charities closing and redundancy.