The last couple of years have been challenging ones for charities. Covid-19 and the cost of living crisis have all impacted the charitable sector.
The Charitable Aid Foundation and the National Council for Voluntary Organisations have recently issued their trend assessments for the sector, and here we’ll take a look at the key issues facing the charities landscape over the coming 12 months.
Post-Covid comedown
The effects of the Covid-19 pandemic are still being felt across the sector. Lingering uncertainty and the threat of new variants, allied to slow vaccine rollout in the developing world, are all creating challenges for charities.
A subdued fundraising environment that began with Covid-19 is continuing.
A decline in the numbers giving
The recent UK giving data indicates that charities are becoming increasingly reliant on a smaller pool of donors. Despite the amount of giving increasing during 2020, rising from £10.6 billion in 2019 to £11.3 billion in 2020, this was generated by a decreasing pool of donors.
This trend appears to have continued with question marks remaining about when and if the situation will stabilise.
Inflationary pressures
The UK is seeing a return to the kind of inflationary pressures many people believed were a thing of the past.
This will reduce the purchasing power of charities as operational costs increase. These look likely to be exacerbated by further rises in energy costs.
It’s been predicted that the £20 value of the median amount donated to charities will fall to £17.20 by 2026. A grant worth £100,000 in 2021 would only be worth £94,000 after inflation is accounted for.
Reduced household budgets
Inflationary pressures are just one-factor impacting household budgets. Households are now facing choices about their spending and are looking to cut back on unnecessary and discretionary spending to cover fuel, food and heating costs.
Charity giving may well be a soft target when it comes to cutting spending, further reducing the overall pool of donors as well as the amount that is raised.
Growth in cybersecurity threats
Charities have become an increased target for hackers and cyber-criminals who see them as a softer target.
Currently, only one in seven charities train their staff or volunteers to spot potential cyber threats and fraud.
Increased digitalisation
The proportion of people who donate using cash continues to decline as more people move towards online one-off donations.
Charities will need to continue developing online methods that make giving easy, such as sending text messages.
A generational shift appears to be taking place with younger people more likely to give online and older people more likely to donate cash.
With older people often having more disposable income, ensuring there is still the opportunity for people to donate using cash is likely to remain important for some time.
High levels of public trust
Despite the challenges, charities still enjoy high levels of public trust. Trust in charities increased during 2020 and is now higher than it was pre-pandemic.
Many charity resources were invaluable in helping communities and individuals through the pandemic, with more people encountering them for the first time.
It’s hoped that this can continue, with civil society and the charitable sector, in particular, enjoying higher levels of trust than other sectors.
Whether this will translate into more donations in the long-term remains to be seen.
Are you a new charitable organisation trying to navigate the tricky charities landscape? Do you need governance guidance, VAT advice or help with HR issues? Contact our team of Charities advisors at charities@wildercoe.co.uk with any questions.
