UK Charities Rebound, But Leaders Remain Wary

Post-pandemic consumer confidence in the United Kingdom is ticking up, but leaders at UK charities still anticipate a long recovery road. Even with charity shops — thrift stores that benefit UK nonprofits — reopening, fundraising drops, the effects of reduced staffing and program cutbacks are still being felt. 

The overall financial picture is a mixed bag, according to the latest PBE Charity Tracker from Pro Bono Economics, a London-based advisory service for small- to mid-sized charities.

Nearly half of UK charity leaders surveyed experienced a revenue decrease during the past 12 months, while 36% reported an increase. Only 46% believed they would be holding pre-pandemic levels of fundraising events by the end of 2021. Furthermore, nonprofits experiencing growth were more likely to see modest gains, while funding drops were more likely to be significant. Only one in 10 had overall annual increases from the previous year in excess of 10%, while 22% said their income had fallen by at least 25%.

More than one-third (35%) of leaders said their losses had been offset by increases in government grants and programs. Almost four in 10 said support from trusts and foundations increased, but a disturbing 24% reported this source of income had dropped.

Larger nonprofits (those with annual revenue in excess of £500k) weathered the financial challenges better than mid-sized and smaller charities. Among large charities, 41% had income gains and 45% reported income drops. But among smaller charities, 57% reported decreases while only 27% said their finances had increased. Government grants, especially, passed over smaller nonprofits in favor of larger organizations, according to the report.

Largesse to larger charities might be the result of an increased demand for their services. Overall, 53% of charities reported a significant uptick in service requests, while another 38% said demand stayed the same. But among larger charities, 58% had significant increases in requests, compared with only 43% of smaller charities.

UK charities are struggling to meet these demands. More than 4 in 10 (42%) cut spending on service delivery. Another 21% reduced fundraising expenditures, and 58% furloughed staff.

In-person fundraising isn’t likely to be the engine it has been in years past. Among organizations that have already organized in-person events, 62% report demand for places at them is either slightly or significantly worse than is typically seen.

Nonprofits are responding to these financing challenges by examining their operations and exploring lower-cost, high-return activities. More than three quarters are experimenting with new delivery methods and another 59 percent have boosted the digital skills of their employees. Just under half (48%) are testing new fundraising approaches.

For all this, pessimistic outlooks still dominate, although these are slowly improving. A year ago, 44% of charity leaders surveyed were very negative about the future, with another 46% somewhat negative. As of the most recent survey, the percentage who felt very negative had dropped by nearly half, to 23%, while the percentage who were somewhat negative had ticked up to 47%.

This trend is seen in respondents’ outlooks regarding when they will return to pre-pandemic levels of service delivery. Just more than half (56%) thought they would be there by mid-July, with 73% anticipating reaching that level by mid-September. Even with the holiday giving season and anticipated continued recovery, only 85% said they would reach this level by the end of 2021.

The current edition of the PBE Charity Tracker is based on 260 responses from charities across the United Kingdom. Responses were collected between April 19 and May 3. A full copy of the results is available here: https://bit.ly/3jn4dhu