New data resource from leading voluntary sector bodies shows small charities are delivering vital services despite shrinking government funding in the lead up to the pandemic
10 December 2020
Small frontline charities faced years of funding cuts leaving many in a precarious financial position coming into the Covid-19 pandemic. Despite this, these vital charities have provided a lifeline to at-risk communities throughout the crisis, yet their own future is at risk without long term support.
A new resource pulling together five years of the best available data - including during the pandemic - on small charities from a wide range of sources shows that:
- 96% of the UK’s 166,000 charities are small – defined as charities with an income of less than £1m.[i]
- Small charities saw a year-on-year decline in income leading into the pandemic. The second largest source of income for small charities is from government, but that has decreased in real terms by twenty percent since 2013/14 to reach the lowest level in five years.[ii]
- One-third of small charities were already dipping into their reserves[iii] before the pandemic, while almost a quarter of those with an annual income of under £100k had no reserves to dip into.[iv]
- 79% of small charities have lost funding since the start of the pandemic, while 43% project they will lose more than half of their annual income due to the crisis.[v]
- Where funders have made emergency grants available, it hasn’t always been even - 6% of COVID-19 grants distributed to small charities went to the West Midlands; this compares to 42% in London.[vi]
The analysis comes from the newly launched Small Charities Data hub and an accompanying report by Lloyds Bank Foundation for England and Wales: Small Charities Responding to COVID-19.
Small Charities Data is a new resource bringing together the latest and best available data on small charities all in one easy to access hub that will be updated yearly. The initiative is led by Lloyds Bank Foundation for England and Wales in partnership with the Small Charities Coalition, NCVO, LocalGiving, the FSI, Locality, 360Giving and more. The insights drawn from bringing together a wide range of datasets over five years show the stark challenges small charities across the UK are facing due to a decade of cuts, increased competition for grants and contracts and the COVID-19 pandemic. Yet these small charities are rooted in their communities working locally delivering vital frontline services to local people.
Ahead of the pandemic, one third of small charities were already dipping into their reserves. Insights from the hub also warn that nearly half of small charities are facing further financial hardship in the months to come as demand for their services have sharply increased during the lockdowns.
One such charity is Wyre Forest Nightstop and Mediation (Nightstop), which provide emergency accommodation for young people. Judith Ford, the charity’s CEO, spoke about how the disadvantages already faced by young people in the area has led to an increased level of homelessness.
“By August, Nightstop had surpassed the nights of accommodation that it provided during the entirety of 2019. Most of our emergency funding will have to be spent by the end of March 2021 and will not address the ongoing problems being experienced by young people,” Ford said.
The Small Charities Responding to COVID-19 report also published today, which analyses qualitative data from a group of 180 small charities, tracking how those charities have responded since March. It highlights the range of ways they have adapted to provide vital services to people in their communities including through providing essential food, toiletries and even internet and phone data to people who are at risk of digital exclusion. Most of these charities, regardless of the main focus of their services, also began supporting people’s mental health needs as more people were affected by mental ill health and the risk of suicide and self-harm increased.
These charities were delivering vital humanitarian aid when it mattered the most. But with a funding cliff facing them in the spring as emergency grants from the government and independent funders runs out many small charities will struggle to survive.
“Small and local charities have long been unseen heroes in their communities, providing a wide range of services and support but – as the data we are releasing today shows – they were already under financial pressure before Covid, with limited or even no reserves to fall back on,” Paul Streets, Chief Executive at Lloyds Bank Foundation for England and Wales, said.
He added: “Small charities have long been at the heart of their communities but are never more needed than now. To ensure small charities can help people and communities to build back better, we need national and local government, alongside independent funders, to commit to providing the funding for core costs they need using grants wherever they can and not contracts.”
Drawing on the evidence from the hub and the report, Lloyds Bank Foundation for England and Wales is calling on the government to:
- Provide long-term funding to small charities to protect their future.
- Provide support including sustaining universal credit for the poorest.
- Adequately fund and support local government and public services which have been cut over the last five years.
- Recognise the value of small charities and their expertise to ensure that communities get the best support and ‘build back better’ from the pandemic.
- Provide increased support to charities delivering services remotely.
“Small charities are the bedrock of civil society. As we saw during the first wave of the pandemic, they are trusted sources of information. Often run locally and embedded in the community, they provide vital services as well as essential insight based on lived experience which informs better decision making,” Sarah Vibert, Director of Public Policy and Volunteering at NCVO said.
While £370m of emergency government funding announced in April was distributed through the National Lottery Community Fund, only 16% of small charities expect to be able to access the scheme.
“When Covid hit small charities stepped up, going to great efforts to keep services open or adapt them to provide support online and adding a whole range of other ways to help those they serve, particularly food and mental health,” Rita Chadha, CEO of the Small Charities Coalition said.
She added: “But charity leaders have told us that the immense efforts they have made have come at a cost to staff wellbeing. And whilst action by funders and emergency support from the government has helped charities this year, as this comes to an end of top of years of challenges many charities are fearful of how they will raise the resources they need in 2021.”
As we look towards recovery beyond the pandemic, it’s vital small charities are better supported so they can continue to help communities impacted by the pandemic and its after effects. This can only be achieved through: longer-term core cost funding for small charities; a stronger safety net for people at risk of being left behind; adequately funded local government and public services; valuing the knowledge and expertise of charities to influence change; supporting charities with digital delivery, and investing in sustained partnerships to effect systems change.
[ENDS]
For more information, please contact Charlie Ensor on censor@lloydsbankfoundation.org.uk or 07384535633
Notes to editor:
About Small Charities Data
https://smallcharitiesdata.org/
Small Charites Data is a digital research hub that brings together the latest and best available data on small charities in the UK. The initiative makes evidence on small charities accessible and usable for anyone interested in the voluntary sector. We draw on data from a wide range of sources, like government, regulators, membership bodies and infrastructure organisations in the charity sector, independent funders, academics researchers, and many others.
About Lloyds Bank Foundation
https://www.lloydsbankfoundation.org.uk/
Lloyds Bank Foundation for England and Wales partners with small and local charities who help people overcome complex social issues. Through funding for core costs, developmental support and influencing policy and practice, the Foundation helps charities make life-changing impact.
During 2020, the Foundation awarded £24.8m to small and local charities helping people facing disadvantage. With the unprecedented circumstances of coronavirus such charities have been never more needed. The Foundation is an independent charitable trust funded by the profits of Lloyds Banking Group.
About the Small Charities Coalition
https://www.smallcharities.org.uk/
The Small Charities Coalition exists to make life easier for small charities. Founded in 2008, SCC currently have over 14,000 members across the UK, made up of groups of volunteers, local community and neighbourhood organisations, registered charities and community interest companies. Across the UK there are officially more than 200,000 registered charities and many more community interest companies and unregistered organisations all working to make the world and our lives better.
About NCVO
NCVO champions the voluntary sector and volunteering because they’re essential for a better society. Each day, millions of people make a difference through voluntary organisations and volunteering. Their vision is a society where we can all make a difference to the causes that we believe in.
[i] NCVO
[ii] NCVO
[iii] The FSI
[iv] NCVO
[v] Small Charities Coalition
[vi] 360 Giving
