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THE iMPACT OF COViD ON NOT-FOR-PROFiT ORGANISATiONS

2021-04-20T08:15:10+00:00April 20th, 2021|

The not-for-profit and charity sector plays a huge role in our society, both ethically and financially –  with research showing the sector contributed £18.2billion to the UK economy in 2017/18. Unfortunately, the sector has become one of the casualties of the pandemic, with pressure mounting due to an increase in demand for their services and a reduction of donations. 

According to Pro Bono Economics, this trend of lack of resources across many UK not-for-profits seems to be continuing in 2021 – the latest report by the organisation suggested there was a £10.1bn funding ‘gap’ suffered by the charity sector last year, and forecasts indicating there will be little sign of shrinkage over the next 12 months. 

The report also found that three-quarters of charities are expecting a higher demand for their services in 2021, while 83% anticipate a decline in income and research from the COVID-19 Voluntary Sector Impact Barometer has found that one in ten charity organisations believe they will have to close within a year. 

If you are part of a Not-for-profit or charity organisation, it is important to understand the impact of the pandemic on your sector, and the financial impact it may have on your business. Firstly, it is important to take stock of the last 12 months and review cash reserves and anticipated donations and fundraising taking place. With the reports indicating that cash donations are on a downward trend, sustainability should be a key focus for the trustees and board members. 

This includes disclosing the impact of COVID-19 in your annual reports and being transparent on the cash reserves held by the organisation. The government has announced a number of support packages and schemes available to businesses who have been negatively impacted by the pandemic, with available for small and medium-sized charities to support local organisations including those delivering food, essential medicines and providing financial advice. 

The Chancellor also allocated £360 million to charities providing key services and supporting vulnerable people during the crisis, so it is important to understand if you and your organisation are eligible for this funding. 

For organisations that have paid employees, The Coronavirus Job Retention Scheme has been extended until 30th September 2021 – this will allow you to manage capacity within the business and minimise job losses. It is still expected that when the CJRS expires, a further Job Support Scheme aimed at minimising unemployment will replace it, which may be a lifeline for many charity workers. 

Identifying inefficiencies can help you become a more sustainable organisation – although some will argue that charities should focus on raising funds rather than trying to cut down on outgoing costs, donors will potentially look more favourably on charities that spend their funds more effectively. 

It’s also important to think beyond the immediate and consider the strategy for the future. Charities should ensure they fully understand their purpose and positioning to ensure they sure in the best position to attract donors going forwards.

Find out more about organisations within the not-for-profit sector that we have supported here

 

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