The charity sector was amongst the industries impacted most by the implications of the pandemic. Now, two years on from the original introduction of restrictions, the sector has an opportunity to recover. Two of Champion’s charity experts, Peter Buck & Sue Harris, delve into how the industry has adapted since 2020 and what’s on the horizon to help organisations get back to pre-pandemic operations.
COVID-19 was the curveball no-one expected to deal with in their lifetime. In the charity sector specifically, dealing with furlough rules and applying for pandemic loans was just one tiny implication in a plethora of larger challenges.
Many fundraising activities are people-facing, but social distancing put an immediate stop to them, leading to a major drain on income. While many charities have shops that subsidise other activities, these were hard hit when forced to close because of lockdowns. Charity volunteers are often an older generation, which brings with it increased health risks; lots were deemed vulnerable and forced to shield. Organisations in the care sector had major issues juggling absences when staff contracted COVID-19 and had to invest heavily in safety measures and PPE to protect residents and other users.
During the pandemic, the Charity Commission required extra reporting in charities’ accounts on how they were managing their finances and how they would ensure sustainability for the future. Although many charities were entitled to additional funding, the rules around claiming weren’t always clear. As such, it made it difficult for charity trustees to make confident forecasts, which caused greater unease in the sector.
This meant our charity experts had a very specific responsibility. Throughout the various lockdowns, newly launched grants and loans, and changing legislation, we digested government guidance and communicated it to clients, supporting them with grant applications through to making furlough claims. We helped run payroll and oversaw management accounts to help keep them afloat and presented new areas of income in their published financials.
Despite all the downsides the pandemic brought, almost all of the charities we deal with across our four offices experienced a positive year in 2021. With wages covered by furlough, the achieving of grants and other governmental support increased income, so balanced with reduced running costs due to closure, charities were enabled to build some reserves for the uncertain months ahead. Additionally, communities have become more charitably minded as a result of the lockdowns; as a result, some clients have seen an increase in donations and legacies received. Others found ways of adapting which enabled them to reach audiences they hadn’t previously, meaning they generated alternative income streams.
This is one particular lesson that can be taken forward. The charity sector must diversify its activities to ensure a steady stream of income no matter the economic and social climate. They must become inherently less reliant on voluntary giving, and more on income generating activities to overcome donor fatigue and shortages of funding, especially considering the impending cost of living crisis. While charitable giving increased during the pandemic, over the next two years charity will go full circle and end up being focused at home; people are already experiencing a decrease in their disposable income, and charities must act now to counteract the impact this could have on their organisations.
Charities have learned to be very fluid since 2020; they are better equipped to react to new challenges and to think outside of the box in how to adhere to the priorities of the public. When charities ceased activities they lost continuity with the communities they dealt in, but there is now a big opportunity to use new tactics and re-engage with those they’ve lost contact with as a result of the pandemic. Although many charities had surplus revenues in 2021, much of the COVID-19 financial support available has now come to an end, so it must come from other resources.
We’re currently working with numerous charities across the group, helping to forecast prudently to see how they can make their revenues stretch further. We’re collaborating to generate ideas for new income generation, looking at how they engage with the public in their different areas and how to expand their footprints. We’re also acting as consultants, exploring the benefits of incorporating to limit liability – this is the right step for many charities, but not all. So, when it’s not, we look at other potential areas to de-risk activities and give peace of mind to the Trustees, as well as how they can find and recruit more Trustees.
Our team of experts are immersed in the charity sector, and specifically the intricacies of charity financials, so can support those who want to draw a line in the sand, regroup and look ahead now the pandemic’s most significant challenges are in the past. Though it was such a dark time, there are learnings to be taken to create a brighter future that help ensure the charity sector doesn’t struggle in the same way again.
To find out more and to speak with an expert, visit our charity and not-for-profit page.