Charity Finance: Recovery At A Glance

At the start of 2020 nobody could have predicted the arrival of the COVID-19 pandemic, or the global impact that this would have on all of our lives. As a result, charitable organisations have struggled to survive and many have had to close their doors. Despite this, some charities such as ActionAid UK  are reporting that  2020 accounts for their highest income level in three years, while baby bank charity Baby Basics' annual income increased by 185 per cent.  Whilst it is important to note that this is not a widely shared experience for charities, it may be an indication of a more widespread change in attitude towards the voluntary sector. As we enter the recovery phase of the pandemic, opening up services for what we can only hope is the final time, there are some clear positives of the pandemic that can be recognised.  

Increased trust in the sector 

Whilst it may only be a marginal increase, the pandemic has supported growth inthe level of public trust in the voluntary sector. Having been significantly impacted by high-profile instances of breaching public trust, the road to recovering the trust that was lost has been long. However, in the times of crisis we have experienced over the last 18 months, voluntary sector organisations have demonstrated their integral role and value tenfold by providing essential services to those in our society who most needed them. In addition to high profile cases of fundraising, such as Captain Tom Moore’s £33 million for NHS Charities Together, the work that charities do were brought to the forefront of people's minds and they were increasingly relied upon by unprecedented numbers of people. Since 2018 public trust has been on the rise, raising by almost 1 full point from 5.5 to 6.4 in 2020-2021, only 0.3 away from the 2014 high of 6.7/10. Whilst this is a start, it is unclear whether this marks a change to the fundamental perception of the sector. All that can be done now is to continue to build upon the exceptional work of the sector during the pandemic and continually demonstrate the hugely integral role our voluntary organisations play in society. 

An increase in unrestricted funding and donations 

A key reason for financial recovery across this sector can be closely linked to the above, this is the rise of unrestricted funding and donations that many organisations were granted during the pandemic. As a result of the rapidly changing and uncertain circumstances we found ourselves in as a society in March 2020, the funding systems that had historically been in place for charities became ineffective and were unable to match the pace for which funds were needing to be delivered. As a result, there was a sharp increase in the opportunity for charities to access unrestricted funding, something that was undoubtedly key to their ability to continue the provision of services throughout the numerous lockdowns. Organisations such as London Funders, who were shortlisted for Breakthrough of the Year at the Third Sector Awards 2021, recognised that in order for funding to be used as effectively as possible charities needed to be trusted to spend it how they saw fit based on what they were experiencing on the ground. The number of individuals needing to access services was rising exponentially, therefore meeting this was the most immediate and important focus. Whilst the first half of 2021 has seen a rise in charities' income and in recruitment, organisations need to capitalise on the successes of how they have used unrestricted funding and ensure that they are self-advocating for more unrestricted funding opportunities moving forward. 

A shift in supporter profiles 

Numerous reports into the state of voluntary sector recovery have taken place, with the sector being closely monitored in order to gauge the real impact of the pandemic. The Enthuse Donor Pulse: Summer Edition shows that charities have been reaching a new range of younger donors and recruits. The report finds that in the last 3 months under 40s have been the most generous age group, with 81% having donated to at least one charity, and previous editions showing Gen Z to be the most generous group individual givers. Additionally, the trends in giving have changed too as under 40s are more likely to spread their giving across numerous causes, rather than consistently donating to one cause. This is likely linked to the continued rise of digital donations as it is easier to donate and discover new campaigns, and with online donations continuing to grow even as we re-open face to face activities it would suggest it is here to stay. 

After what can only be described as one of the most challenging times the sector has ever experienced, recovery will be far from linear. It will be interesting to see how charities, big and small, recover from the impact of the pandemic. In our Voluntary Finance Series with Helena Wilkinson from Price Bailey LLP we will be looking at integrating resilient income strategies into your charity, from 'How Effectively Embedding Your Charity within the Local Community Can Enhance Your Charity’s Impact and Income' to 'What Does the Future Hold? The Vital Steps Your Charity Should Be Taking to Ensure Financial Resilience Over the Next 18 Months.'

Check out the agenda below.

Voluntary Finance Series