We fear that will continue, to the detriment of charities’ beneficiaries, and perhaps also to public trust in charities. It is also our experience that disputes between trustees are often at the heart of governance failures. We know from our own case work, for example, that disputes in charities seem to be increasing in volume and, in some cases, in ferocity. Drawing on our own data, as well as the research findings, we consider that there may be more subtle threats on the horizon for charities, relating to their governance and culture. But only 1% foresee that threat being critical to the charity’s survival.įinancial risks of course don’t tell the full story. On the one hand, over half ( 62%) of those asked anticipate some level of threat to their charity’s financial viability in the next 12 months. Looking ahead, the picture is again complicated, with grounds for concern as well as optimism. So while it’s a mixed picture across the sector, there is no doubt that the past 18 months have had a significant impact on the way charities deliver services to their beneficiaries. Over half of the largest charities we surveyed (those with incomes of over £500,000), said they made use of furlough, or other emergency funding schemes. It’s also clear that government support, including the furlough scheme, helped bolster many charities’ resilience. One in four charities with incomes of less than £10k paused their activities completely during the first lockdown. Smaller charities were especially likely to have taken drastic measures to remain afloat or simply in response to the restrictions imposed early on in the pandemic. Around 40% say they dipped into their reserves. Some changed the way they delivered services, moving them online, refocusing on core projects, taking difficult decisions to cut staffing or spend on things like research. Of the 91%who were affected by the pandemic, nearly half ( 45%) say they took some action to adapt their services to restrictions caused by the pandemic. This resilience may result from charities’ willingness and ability to take steps to address the immediate challenges facing them. Overall, the number of charities closing did not vary significantly compared to the previous year. That is up by a third on the previous year, but still a relatively small number when compared to the 170,000 charities on our register. Last year, 97 charities reported to us that they were insolvent, as part of their annual return to the Commission. Given these findings, it is perhaps surprising that we haven’t seen a significant number of charities fold since March 2021. The majority ( 60%) saw a loss of income, and a third ( 32%) said they experienced a shortage of volunteers. Perhaps the most striking finding is that nearly all charities were impacted by the pandemic – over 90% told us that they have experienced some negative impact from Covid-19, whether on their service delivery, finances, staff, or indeed on staff morale, resulting from the months of frustration and uncertainty. Nonetheless, the research does allow us to draw a few clear conclusions. So it is not possible to make a simple summary of what COVID-19 has meant for charities in England and Wales. The charity sector is immensely diverse – many charities are tiny and are entirely reliant on volunteer trustees, while others run complex national or international operations, employing hundreds of staff. Today we are publishing the findings of that research, so that others draw their own insights and conclusions from the data. We also worked with our research partner Yonder to commission independent research looking at how charities of different sizes perceive the impact of the pandemic on their finances, governance and operations. This involved interrogating the data we already hold – including through the annual return, through reports from auditors, whistleblowers and charities themselves, as well as existing research prepared by charity sector bodies. To that end, we undertook a project to assess the impacts of COVID-19. But as regulator, we needed more concrete data to help us understand how the pandemic has shaped charities so far, and, crucially, to gain a picture of the risks that may lie ahead. These anecdotal accounts help us understand what the pandemic ‘felt like’ from the perspective of people involved in, and reliant on, individual charities. There have been many reports in the media over the last 18 months about charities hit by increased demand, about others struggling to fund their services as restrictions were imposed, and, in a few cases, we’ve heard of charities whose income sky-rocketed thanks to extraordinary fundraising efforts. We have long known anecdotally that the COVID-19 pandemic is having a profound impact on many charities.
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