On Thursday the 26th April 2018 we released our third annual Local Charity and Community Group Sustainability Report. This report found that local charities and community groups in the UK are stretched to breaking point. Over recent years, cuts and austerity measures have increased the burden on local charities and community groups. Many groups are now facing a trade-off between the quality and the durability of their services.
Each year the Local Charity and Community Group Sustainability Report provides a snapshot of the local voluntary sector, highlighting both the unique value of local groups and the key challenges they face. Now in its third year, this report revisits the core themes of sustainability, staffing and skills while also addressing emerging issues such as the potential impact of Brexit, GDPR and devolution.
We would like to thank all 686 local charities and community groups who participated in this year's survey.
We would also like to thank Sage Foundation for kindly funding our 2018 report.
Demand for the services of local charities and community groups has increased.
- 78% of respondents reported an increase in demand for their services over the past 12 months, with just 3% seeing a decrease.
- 85% of groups predict a further increase in demand over the coming year. Just 14% of those groups feel sufficiently resourced to meet this demand.
- Organisations working in areas affected by cuts in public services, welfare reforms and the wider impact of austerity have been affected significantly. 93% of respondents working in homelessness or providing counselling services have experienced an increase in demand.
Most groups are confident that they will stay afloat in the short term but fear for their long term prospects.
- 82% of respondents were confident that they will sustain themselves financially over the next 12 months, dropping to 47% over 5 year.
- 56% of respondents said that ‘generating income and achieving financial sustainability’ was their greatest concern.
- 5% of respondents had faced impending closure over the last year, while 10% have seen a discontinuation in one or more of their services for financial reasons.
- 29% of groups are concerned that they are over reliant on a single funding stream
Building and maintaining adequate reserves has become increasingly difficult for local charities.
- 48% of respondents had dipped into their reserves over the last 12 months compared to 43% in 2016.
- 42% said they were concerned by a lack of sufficient reserves - up from 36%.
While grants and contracts remain core sources of income, there are major concerns over the long term sustainability of these streams.
- 48% of respondents said grants were their primary source of income in the last financial year.
- 73% see competition for limited grants as their primary income generation issue.
- 49% had concerns about accessing unrestricted funding, hindering their ability to cover core costs such as salaries, training and rent.
Public donations play a key role in the funding mix for local groups and, with the right training, there is a huge potential to expand this funding source.
- 81% of groups have received funding from the general public in the last 12 months.
- Over 50% of groups expect the percentage of their income generated through online donations to increase in the current financial year.
- Only 18% of the groups had carried out crowdfunding activities over the last year.
- 71% of respondents are concerned that their organisation does not have the requisite skills to run a successful fundraising campaign.
Earned income is another funding stream that has a huge potential for growth but must be treated cautiously, particularly where it may hinder beneficiaries from accessing their services.
- 59% of respondents carry out some form of trading.
- Trading is the main source of income for only 16% of groups.
- Of those groups that trade, 59% carry out primary purpose trading while 54% carry out non-primary purpose trading.
There is widespread uncertainty about the impact of Brexit on the local voluntary sector, with deep concerns among groups in Northern Ireland
- Only 2% of organisations feel that Brexit will have a positive impact on their organisation.
- There is widespread uncertainty about Brexit. 40% of respondents said they felt uncertain about the impact of Brexit on their finances while 42% were unsure about the wider impact on their services and beneficiaries.
- However, in Northern Ireland feelings were much clearer. 64% of groups believed Brexit would have a negative financial impact compared to an average of 24% across whole of UK.
There are mixed opinions about the potential impact of devolution but the the lack of consultation with local groups is a worry.
- 27% of respondents believed the impact of devolution would be positive while 17% viewed it as negative - the majority were ‘unsure’ or believed there would be ‘no significant impact’.
- Just 5% of groups in areas where devolution has taken place recall being consulted about the process.
Nearly half of the survey respondents were unlikely to be compliant with GDPR by May 2018.
- 45% of group are unlikely to comply with GDPR by May 2018.
- 9% of respondents, while aware of the legislation, did not think it applied to their organisation.
Volunteers play a critical role and bring huge value to the sector, and their communities.
- We estimate that the annual financial value of volunteers in the local voluntary sector lies between £7.5 and £10.5 Billion per year.
- Only 62% of local charities and community groups have paid employees.
Local charities continue to struggle to help staff and volunteers to develop the skills required for a sustainable future.
- 48% of groups struggle to providing adequate support and training to their staff and volunteers.
- 71% of groups believe they would benefit from marketing training while 85% of respondents believe that they would benefit from support with online fundraising.
Paul Streets OBE, Chief Executive, Lloyds Bank Foundation for England & Wales said:
“As a funder of small and local charities, every day we see examples of organisations stretched to capacity facing rising demand and increasingly uncertain futures. This report shows that now more than ever it is important that we speak up for charities on the frontline supporting people facing the greatest challenges, helping to raise their voices too. The upcoming Civil Society Strategy needs to grasp this as a chance to shift the focus of government back towards the value and needs of these local charities, through reforming commissioning and supporting their vital role in communities.”
Lewis Garland, author of the Local Charity and Community Group Sustainability Report 2018, said:
“We are consistently impressed by the resilience and resourcefulness of local charities and community groups – particularly their ability to provide high quality services on limited budgets. This is testament to the incredible passion of those working and volunteering in the sector. However, these services cannot be run on passion alone. If the sector is to survive this period of uncertainty and resource scarcity, it is essential that local charities are actively included in key decision making processes - both at the local and national level. Furthermore, we must find way to increase, and diversify the funding and support available to them”.