20 Mar 2020

Charities across the country are facing imminent collapse as fundraising income dries up, charity leaders warned today.

Charities have been in conversation with the government about a package of support for the charity sector, but warned today that without an urgent injection of money many charities of all sizes would start to close their doors as soon as next week.

With charity shops closed and fundraising events and activity cancelled, reserves depleted and demand for services increasing, charities are having to make immediate decisions about their financial viability. 

Charity sector bodies have made initial estimates that charities will miss out on a minimum of £4.3bn of income over the coming 12 weeks, though the figure could be far higher[1]. Many will also face increased costs as part of their role in tackling the outbreak.

Many charities would normally expect to make significant proportions of their income from public fundraising events in spring and summer.

Charities have asked for commitments from the government including:

* emergency funding for frontline charities and volunteers supporting the response to the coronavirus crisis, especially where they are alleviating pressure on the health service or providing support to people suffering from the economic and social impact of coronavirus
* a ‘stabilisation fund’ for all charities to help them stay afloat, pay staff and continue operating during the course of the pandemic
* confirmation that charities should be eligible for similar business interruption measures announced by the chancellor for businesses[2].

Mark Russell, Chief Executive at The Children’s Society, said: The government has recognised the critical role we play in supporting the most vulnerable children and young people in the UK by identifying our frontline as key workers during this crisis.

This includes young people who are at risk of abuse, neglect and poverty and who no longer have the support and stability that regular school provides in their lives. Recognising our vital role urgently needs action as well as words.

Our teams are working tirelessly to reconfigure our services, to comply with government advice, but support some children who are really at risk.  We face a significant drop in income at the same time as trying to coordinate our efforts when our time is now mostly working at home.

As every day goes by we are spending vital resources without any certainty about the future. Right now, we need the government to show they are with us, all of us, and won’t forsake our work and the children and young people we support. Regardless of size, charities need to know they have financial support to keep the lights on and help those most in need.

Karl Wilding, chief executive of the National Council for Voluntary Organisations, which represents charities and volunteering, said:

Every day counts here. I’m hearing from charities whose income has disappeared overnight but who still have to run services for their communities. Many of them have very little emergency cash to tide them over, and even those that do will run out in a matter of weeks.

Many charities are helping in the current crisis to alleviate pressure on the health service or providing support to people suffering from the economic and social impact of coronavirus. Supporting the national response and helping vulnerable people to cope is our first priority at the moment but we cannot do that if we are on the brink of financial collapse.

I know the government is working on this but for many charities around the country there is very little time to spare.

Vicky Browning, chief executive of ACEVO, said:

Charities of all sizes – from local community groups to our well-known national organisations – are a vital part of our country’s response to this crisis. But the voluntary sector cannot do what it does best if it has gone bust. Charities need swift, simple and substantial funding now. The government’s promise to do ‘whatever it takes’ must include charities

Peter Lewis, chief executive of the Institute of Fundraising, said:

Charities will have planned on raising millions of pounds which is going to be irrevocably lost because of the impact of coronavirus. The cancellation of high profile events such as the London Marathon, as well as thousands of smaller events run by local charities across the country, closure of shops, and a halt on public fundraising activity have already caused huge problems for charities who quite simply can't plug the gap in such a short time. 

Spring and summer is a key time for fundraising, and without the right support from the government right now to mitigate the lost millions of pounds, many charities, and the services they run are at threat.

Caron Bradshaw, chief executive of the Charity Finance Group, said:

We have encouraged charities to diversify their funding models over the years and retain reserves on a risk basis. But this situation is unprecedented in attacking every area of charity income, whilst increasing demand and costs, and is rapidly burning through reserves.  If the government doesn't act now then the longer term impact on the economy, society and social well being will be devastating and almost impossible to recover from.

[1] This conservative figure is based on charities’ overall income, making assumptions that public fundraising, foundation income, investment income and income from the private sector are all significantly hit. It is calculated using initial survey feedback from charities about their experiences in the last week and NCVO’s authoritative data on the sector’s finances. It assumes that government income remains stable but there is no guarantee of this. It covers normal expenditure and does not include any extra costs related to the pandemic or responses to it.

[2] We sought these assurances last week and are still awaiting confirmation that the following measures are available to charities:

  • £330bn loan guarantees
  • Business interruption loan scheme – we understand charities receiving over 50% of their income from trading will be eligible, but this is not yet clear
  • Additional business rates measures – charities get 80% relief automatically, and up to 20% discretionary relief from local authorities. We understand charity shops will be eligible for the retail scheme if necessary, but other charity premises would not be covered by any of the additional measures.