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We are in unprecedented times, and the Government has gone to astronomical economic lengths – to stave off the threat of the Coronavirus.

And yet, in spite of its huge efforts, one industry has been somewhat forgotten about.

That is, the charity sector. 

Read the newspapers and there’s no shortage of big names calling for help.

Oxfam, Barnado’s and the Directory of Social Change (DSC) have all had to furlough significant numbers of staff (70 percent of employees in the case of DSC, with Oxfam and Barnado’s not much further behind).

Some of this was to be expected after the Government created its Coronavirus Job Retention Scheme, meaning that any employee that furloughs staff can claim a grant to cover 80 per cent of their wages (up to £2,500 per month).

But what continues to plague charities is cash flow issues.

Javed Khan, Chief Executive of Barnado’s, said the organisation’s income had been “wiped away literally overnight”.

Before the Coronavirus, the charity once generated around £25m a month, but estimates show this has now dropped to £8m.

The reason money has dried up – aside from a more fiscally prudent public – is that so many cash-generating activities, such as charitable events and shops, take place offline.

Thus, they have come to a halt in an era of social distancing.

While some charities have tried to be proactive about what’s happening – shifting their fundraising efforts to the virtual realm and coming up with other creative solutions – the sheer scale of money being lost makes it practically impossible for them to fill in the gaps.

The National Council for Voluntary Organisations (NCVO) has warned that charities could lose at least £4.3 billion in just twelve weeks, with staffing expected to fall by 50 per cent overall as illness and self-isolation increases.

The sadness in all of this is that the most vulnerable in our society will pay the price. 

Hospice UK, for instance, estimates its sector will lose out on £70m a week.

Marie Curie says it cannot function properly without £2.5 million a week.

These concerns are exacerbated by the fact that demand for charities, as well as food banks and helplines, are growing in line with the Coronavirus.

Gemma Peters, Chief Executive of Bloodwise, said that the organisation has seen a “monumental increase” in calls because people with blood cancer are at high risk from the virus.

The Government can feel the pressure to produce a plan. Already over 236 MPs and peers from parties across the House of Commons signed a letter to Rishi Sunak asking for help, writing: “Without an immediate injection of money, many charities, voluntary organisations and social enterprises of all sizes will soon close out.”

Last Friday, Michael Gove said that would be announced in the coming days, with ministers apparently rushing to put something together.

Some have concerns that the bailout that’s coming could be overly focussed on big charitable organisations – whereas little businesses are most at risk of faltering.

Andy Cook, Chief Executive of the Centre for Social Justice (CSJ) and charity founder, said that the Government needs to work for the “many not the few”, when devising its economic rescue plan.

Speaking to ConservativeHome, Cook said: “The UK charity sector is a lop-sided one with a few big names with some big budgets to boot. What is less well known is 83 per cent of charities have a turnover under £100,000”.

“Fundraising is hugely skewed in the direction of the household names with 95 per cent of fundraising money going to bigger charities. Many small charities have virtually no reserves at all and if, like business, the government doesn’t step in they will simply go to the wall.”

“While the government has stepped in to pay up to 80 per cent of salaries to stop companies laying off staff, this is a round peg in a square hole for charities. The people working in and for small charities provide  a lifeline of support to the most vulnerable, ‘furloughing’ these people means taking away that support at a time of crisis.”

The CSJ recomends the Government uses collectives, such as the UK Community Foundation (a collective of 46 regional grant-making organisations across the UK), as an infrastructure to reach small charities.

It also estimates that the smallest charities need £500 million to keep afloat.

Clearly what’s at stake is not only the financial survival of businesses, but has a humanitarian cost too – given how essential the services charities offer are.

Whatever the Government does, it doesn’t have much longer to act.

As the parliamentarians’ letter aptly warns, “[f]unds are running out”.

30 comments for: Charities are in crisis. A Government bailout is urgent – but they must not forget small players.

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