Financial concerns are leading a majority of United Kingdom-based charities and community groups to dip into their reserves to cover operating costs, according to data in a new study. Among all organizations, 55% report tapping these resources and 17% have trimmed back either the breadth or level of services offered, with leaders at 23% of the larger organizations indicating they have done so in an effort to focus on their core competencies.
Leadership at 49% of the charities and community groups surveyed expect demand for their offerings will exceed their organization’s ability to meet that need, with just less than one in five (19%) characterizing that shortfall as significant. Just fewer than half (44%) expect to meet demand, albeit with either limited or no space capacity. Only 4% anticipate meeting demand with significant spare capacity.
One in five have cut back use of their primary premises to save on energy expenses, and 8% have reduced their hours of operation, according to Breaching the Dam, a report from London-based Pro Bono Economics, which uses research and policy recommendations to benefit the public sector, and the Nottingham Business School at Nottingham Trent University.
On a sector basis, organizations that address poverty or disability concerns are faring worst, with 93% of the former and 89% of the latter indicating demand for their assistance has increased, followed by health (78%), community and recreation (57%) and education, research and training concerns (53%). At least part of the disproportionate impact is attributable to rising food prices, according to the report.
The headwinds of rising demand and scaled-back financial resources are affecting organizations across the sector, but smaller charities and community groups are, unsurprisingly, feeling the pinch disproportionately. More than one quarter (27%) of the smaller organizations have involuntarily reduced paid staff during the past three months, and more reductions in force are expected during the winter.
Part of the reason for these shortfalls is staff related. More than one-third (36%) are facing recruitment issues, including nearly half (47%) of large organizations reporting difficulty in filling paid positions. An unspecified percentage don’t have the financial wherewithal to staff up, despite the increased demand for their offerings. Nearly one in three (29%) are using temporary staffing services, usually at costs greater than hiring full-time staff would incur. These factors influence the 41% indicating they will be cutting services.
“This data makes a strong case that the safety net is not just fraying, but that parts of it have snapped,” the report authors wrote. “People are falling through the gaps as services are being pared back. The unsustainable footing that much of the sector is now on means that the gaps in the safety net charities find themselves filling will continue widening.”
Report results are based on 661 U.K.-based social sector organizations surveyed between November 7 and November 22, 2022. The full report is available here: https://www.probonoeconomics.com/Handlers/Download.ashx?IDMF=a7a2f20d-2ec0-4d6e-8d58-db005c6651fa