Small charities and the post-Covid challenge

Grim warnings over the fate of small charities were issued at the beginning of the pandemic, but many thrived during the crisis. What challenges are they now facing?

Photograph by Rehan Jamil for Women's Inclusive Team
Photograph by Rehan Jamil for Women's Inclusive Team

In the first weeks of the Covid-19 pandemic, people were worried about small charities. The government’s £750m sector bailout was not expected to go far enough, and demand for services was escalating at a rapid rate.

An emergency £5m Charities Aid Foundation fund for small organisations was forced to close within days after receiving grant applications that totalled more than £40m. A snap poll in May from think tank Pro Bono Economics reported that more than one in 10 small voluntary sector organisations feared they would cease to operate.

More than a year later, as the UK edges out of its locked down state, reports suggest the vast majority of small charities have not only survived, but thrived – but for many, the real challenges are just beginning.

Bittersweet success

Far from going dormant or putting services on ice, many small charities reported exponential growth in the last year.

“In one sense we have really flourished in the pandemic, which is bittersweet,” Cat Ross, chief executive of Baby Basics, reflects.

The network of baby banks, which aims to support people struggling with the financial and practical burden of caring for a newborn, should not have to exist, she says. “But we are thrilled that we are able to support communities, so being able to open new centres and increase our referral rates has been fantastic.”

Baby Basics has seen “phenomenal” growth, says Ross, who is the only full-time member of staff. During Covid-19 national referrals to the charity, which reported an overall income of about £140,000 in its accounts ending August 2020, increased by 185 per cent. In its inaugural hub of Sheffield, there was an increase of almost 400 per cent.

Referrals are continuing to increase by 10 per cent month on month, Ross says, and in 2021 the organisation expects to support 35,000 children and their families.

“More families are struggling – it’s just part and parcel of what has happened with Covid-19, in the same way that demand for food banks has gone up,” Ross says.

“For every family with a child under five that needs to access a food bank, it is more than likely that they will also need a baby bank if one is available in their area – and they are not everywhere.”

Baby Basics significantly expanded its output in response, building its logistical capacity, investing in a warehouse and forging new relationships with local authorities, health services and corporate partners.

Despite grim warnings about the impact of furlough, funding pressures and overwhelming demand on small frontline organisations, Ross says there was no point last year when she was genuinely concerned about Baby Basics going under – but uses the word “lucky” on several occasions. Lucky to be able to deliver a Covid-19 response, which enabled the charity to access emergency funding; lucky to have 12 years of longevity under its belt.

“For charities that have only been running for a year or so, that financial stability would not be there,” she says.

A visit from the Duchess of Cambridge sparked interest in the cause area. Before the pandemic, Baby Basics had two big-name corporate partners; now 27 donate items to the charity on a regular basis. The volume of public donations increased, new collaborations were forged with local councils, and volunteer numbers swelled (95 per cent of the centres are entirely volunteer-led).

“There was a point when I thought we would have to dip into our reserves, but actually we haven’t needed to and that’s because people stepped up,” Ross says.

For small charities that were unable to provide a specific Covid-19 service, access emergency funding, or that did not have the solid foundations of Baby Basics, going dormant might have been the only way to survive.

But while some organisations paused operations during the pandemic, the wider small charities picture from umbrella bodies and funders echoes the individual stories of resilience and adaptability.

At the beginning of the pandemic, the Small Charities Coalition opened a Covid-19 response closure line that was widely advertised among members, but chief executive Rita Chadha says the membership body did not intuitively feel it would be needed.

“Those organisations that didn’t have any funding would just carry on as they did before – if restrictions eased they would carry on – the animal welfare charities, the neighbourhood groups,” she says.

“All of them were working as if nothing had really happened, besides the masks and social distancing.”

In the months since, the SCC has recorded the closure of just four organisations – “which probably would have closed anyway, when you look at them historically,” Chadha says. “One later decided to reopen and reconstitute, three went to the wall – everyone else either went dormant, or pivoted their services.”

The SCC’s charity closure helpline received exactly one message, she adds.

A report from small charities funder the Lloyds Bank Foundation, Small Charities Responding to Covid-19, similarly found that no charity funded by the foundation during the pandemic had shut down services, instead evolving their methods of support with minimal disruption.

A summary report published in February 2021, The Value of Small in a Big Crisis, further highlighted the agility of the small charities sector in digitally supporting service users and playing a key role in local economies and supply chains during the crisis.

“They showed up and stuck around because that’s what they do,” Paul Streets, chief executive of the foundation says.

“The biggest surprise for me was how quickly and effectively so many organisations adapted digitally. We work with large national charities that were frankly pedestrian by comparison, especially when you consider how poorly-resourced so many of these smaller organisations are.”

Embedding digital resources for the long term will bring challenges, he adds, particularly with building new relationships with service users in a digital environment, as demand continues to rise: “But the switch to digital has been massively impressive and humbling.”

A fool’s funding paradise

Women’s Inclusive Team, a charity that works with the Somali community in Tower Hamlets, east London, developed specialised services including a community kitchen and food bank, and befriending by phone for elderly members of the community during the pandemic.

“We had to act quickly, because there was a real concern that we had vulnerable people who were especially vulnerable to Covid-19: because they were black, because of their age, and because most of them had underlying health issues. Being hungry or not eating well was not something we wanted to add to the mix,” chief executive Safia Jama says.

A local housing association, Poplar Harca, offered the charity a space for its community kitchen and a £10,000 grant to get off the ground, while community restaurants and a local bike project co-ordinated to enable food deliveries in the borough. There were other food banks in Tower Hamlets, Jama explains, but Somali communities were not accessing them.

“We were able to create something that the council was really happy with, because it was tailored: when you have a certain community giving out the food and buying the food it represents the community and is therefore more accessible,” Jama says. The community kitchen will continue to be run by WIT post-Covid-19, along with its early years strands, youth project and women’s projects.

But the organisation now faces a fresh challenge: sustaining the enormous growth it has experienced.

“We went from around a £200k organisation to about £800k: four times the size,” Jama says. “It became a panic – we had to recruit new trustees to make sure we were able to take on that responsibility, have training for those trustees, and meetings because things were happening so quickly.”

Growing was not a choice – the charity had to respond to the need – but now it has become a “victim of its own success”.

WIT must disclose its latest annual turnover in the funding applications it makes, an exceptional figure that it never expects to make in a year again.

“But the question we have to answer is: what is the size of the organisation, and once you hit £500k, you are not eligible,” Jama says.

“So the very funding that is supposed to be for grassroots organisations like us – with our ears and eyes to the ground, the community, the ones who respond to the need – it’s upsetting that those little pots that made us survive before, we are not eligible for now.”

As a result, despite receiving pots of emergency Covid-19 funding from organisations including the London Community Fund and Barnardo’s, WIT is eating into its reserves. “If we can’t remedy that, we will find ourselves in a position that is not good,” Jama says.

Streets describes the funding landscape for small charities now as a “fool’s paradise”.

He says: “We should give DCMS and funders some credit – there was a lot of short-term money around and some of that has carried over into the new financial year.

“But this means we are almost in a mirage – people might think we are fine now, but many are worried about the future.”

Decisions made by the Chancellor in the autumn about whether to continue or curtail government spending will be critical, and local government will be fundamental. Streets also believes that there will be a greater focus on funding smaller, black-led organisations and new geographical areas: an overdue and important decision, but one that could cause pockets of financial pain in other areas.

“Most funders have a finite pot and if that switches from one thing to another then there will also be areas where funding problems will be compounded,” he says.

“What remains fundamental is what local authorities will do and how they are affected. Organisations are telling us that while they are getting money from local government, it is hypothecated, net zero, or for something very specific – there is less unrestricted money from local authorities”

Human resources

While the ability of so many small organisations to work on a shoestring kept them afloat during the pandemic, human capacity is not without limits. LBF’s Value of Small report highlights a growing concern in the sector about the toll that the intensive work and emotional strain of the pandemic period has taken on staff and volunteers.

“Burnout is a huge risk,” Baby Basics’ Ross says. “We also have a risk of volunteer shortage. Our original volunteers who were vulnerable during Covid-19 are just starting to come back, but we are losing some volunteers as they go back to work and college, and people are not going to be as available to volunteer as before.”

As a result, organisations that were in a position to expand rapidly during the crisis could suddenly find themselves without the resources to sustain their increased capacity, and have to consider other options.

In 2018/19, Chadha says, the SCC helpdesk fielded eight enquiries about mergers and collaborations. Over the course of the Covid-19 crisis, the number jumped to 46 – and, she believes, the true scale of long-term challenges for the sector have not yet been realised.

“This financial year organisations will trudge on and we won’t see huge numbers of closures appearing through the register,” she predicts.

“The critical point will be between January and March next year, when people come to their filing and think: ‘What the hell, I can’t do this’ – that is when we will see the peak of decisions taken to close. I think the Charity Commission register will look very different this time next year than it does now.”

Mergers could be one solution, according to Chadha, but only on a case-by-case basis, and done in the best interests of the organisations’ charitable objects – “not because everyone is exhausted, or because a funder thinks it is a bright idea”.

“My biggest concern is whether they will be nimble enough for what lies ahead,” she says. “As some return to service-delivery mode, will they fall behind on the investment that has previously gone into building their investments for the long term?”

And without workforce and volunteer force protection and the protection of staff wellbeing, she says, the sector will be nothing.

The role of small in rebuilding society

As the UK grapples with the pandemic’s long-term consequences, Streets says there has to be an emphasis on the value of small, local organisations in supporting societal recovery.

“We need a better conversation with the government about what ‘levelling up’ means for the sector, and the role of the sector in achieving it,” he says.

“We don’t do enough to make economic arguments about the footprints these charities have. They bring material value to local economies, create jobs – especially when it skewed to the poorest areas in the country, and particularly as people are struggling to get back onto the post-Covid-19 employment ladder.

"We can make tear-jerker arguments all we can, but if we can convince Rishi [Sunak] that this is where the economic ‘levelling-up’ of Britain begins, that is where things will get interesting.”

National sector leaders have a responsibility to get to the Treasury and make the case, he says: “I know they are trying, but try harder.”

Chadha agrees this conversation is vital. “Initiatives like ‘levelling up’ and the Community Wealth Fund are going to start incurring administration costs, but not delivering for small charities,” she says.

“A fear is that between now and the autumn some small charities are completely restarting services, some are repositioning – and are so busy doing that they will not have the chance to take advantage of the bigger opportunities out there, or influence those decisions.”

“We need clear data and evidence-based policymaking between us[...] That ability to work in unison, to protect everyone’s needs, has been really powerful, but we have not had an opportunity to shine and say: ‘This is what we are saying as a sector.’”

And within the sector, Streets says, funders must think about long-term support: “Giving people unrestricted money is critical [...] getting back into a cycle where they have a core pot of money – and if it is unrestricted it will help them do the things they need to do, as opposed to the things they are simply contracted to do.”

He says there is a role for everyone in the sector to ensure small organisations can adapt further in the future, investing in finances, data and digital capacity.

They are big asks, he says – and large sector organisations must support small charities in realising them, rather than expect them to do the heavy lifting themselves.

Yet, despite a potentially rough road ahead, there is palpable optimism among those interviewed for this feature – something Chadha says is intrinsic to their DNA.

“I keep using this phrase: small charities are built on hope and optimism. That is how they continue to function,” she says. “This was the moment to step up, and the opportunity that they capitalised on. It was a coming of time.”

“The allyship we created in our community is beautiful, and they want to see us succeed, and ultimately funders – I hope – will listen to our stories, and this has given hope that they will listen to us,” WIT’s Jama says.

Ross agrees. “It’s an innate part of the small charity world that you are hopeful and optimistic, and you achieve far more than you think you are going to,” she says.

“Sometimes you need to do a self-check and pat yourself on the back for what you have done.”

A mission on hold

Hammersley Homes, which seeks to provide long-term supported living assistance to people who suffer from enduring mental illness, gained charity registration in 2018, but through the pandemic was unable to progress in its plans to launch its first assisted living site.

Investing in housing and providing face-to-face services became increasingly difficult and, unlike many other organisations, the charity could not develop digital services as most of the people it supports are not able to use computers or digital tools: “Often people struggle to even pick up messages,” founder Louise Hallett (pictured, right) says.

The problems were compounded, she says, by the fact that support workers for the people the charity works with were redeployed onto hospital wards: “Because they had to keep those open, and there was so much illness, community nurses were taken out of the community.”

If the people the charity worked with stopped taking medication, or became agitated or frustrated, things rapidly deteriorated, Hallett adds.

Finances proved an additional struggle: the trusts and foundations Hammersley Homes had previously been communicating with redirected funds to Covid-19 services, and the charity did not have one to offer.

“But we had to be up and running with something, to show we had beneficiaries and were going out there to help people, so we set up a home visit support scheme,” Hallett explains, adding that she is “enormously proud” of all the charity has achieved, despite the challenges.

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