Hysteresis in the making? Pandemic scars and the charity sector

The Law Family Commission on Civil Society is focused on unleashing the potential of the UK’s charities over the course of the 2020s. Much of the Commission’s work centres therefore on exploring structural shifts within and outside the sector that can be developed and implemented over the next five to ten years in order to create lasting change. Nevertheless, the more immediate issues that have arisen in relation to Covid-19 also warrant the Commission’s attention; especially where there is the potential for near-term circumstances to transform the nature of the sector’s medium-term outlook.

In part, this means recognising those elements of the experience of the past 20 months which should be celebrated and built on. Charities have once again proved their worth to the country, adapting at pace to the rapidly changing backdrop in order to provide vital support for people across the country. Past work for the Commission has shown that 82% of adults in Great Britain think that charities and community groups have played an important role in supporting society during the pandemic. And many of the adaptations that charities have made out of necessity point to the possibility of more effective performance in the post-pandemic world. For example, responses to PBE’s Charity Tracker survey back in April showcased a range of innovations in response to the pandemic, with 76% of charities adopting new delivery models, 59% increasing digital skills within their workforce, 42% collaborating more with other charities, 23% working more with local government and 21% collaborating more with businesses.

Yet it is true also that the pressure exerted on many in the sector continues to build with each passing month. The reserves of energy and resilience that charities have drawn deeply on over the course of the crisis are not limitless. The danger now is that the scars of the pandemic affect not just the sector’s ability to play a full role in supporting the nation’s recovery, but also the limits of its own potential over the longer-term. In economic terms, the threat facing the sector is one of hysteresis.

New polling from YouGov, carried out in October on behalf of the Law Family Commission on Civil Society, suggests that this threat is a real one. It shows, for example, that the resilience of the charity sector has come at the cost of workforce and volunteer wellbeing. Three-in-four charity leaders working in organisations with managers and paid staff are worried about burnout within their team. Almost half are similarly concerned about their volunteers.

Against this backdrop, one-in-four charity leaders say they are more pessimistic today about the operating environment of their organisation than they were three months ago. Respondents expect demand for their help – already at elevated levels – to rise still further over the course of the coming months, prompted among other things by cost-of-living increases, the stock of unmet need associated with public services backlogs and the removal of the Universal Credit uplift.

Health charities and social services charities appear especially concerned, with more than half expecting a deterioration in their ability to manage demand for their services over the next three months.

And, as PBE’s recent Budget analysis showed, the latest projections for the economy provide only modest comfort for charities. While the economy is forecast to continue its recovery over the coming months, it is set to do so alongside a rise in unemployment, a spike in inflation, and a drop in average incomes. If public giving moves in line with household consumption – as seems reasonable to assume – then charities can expect some recovery in their donations over the next few years, but little or no reversal of the estimated £6.6 billion pandemic funding hit suffered to date.

Preventing today’s near-term challenges acting as a drag on the charity sector’s future potential rests in part on directing more resource towards it. That’s something which forthcoming Commission publications will explore, focusing in particular on potential developments around philanthropic and foundation giving. But our new research highlights the need for a broader shift in approaches towards, and within, the sector too.

Charity leaders point to a need not just for more funding, but better funding. More than half cite an emphasis on covering core costs as one of the top three means (outside of simply having more money) by which they might deliver more impact, for example. Similarly, half cite investment over longer timeframes. Building on the positive experience of the pandemic, roughly one-in-five say they would prioritise more collaboration with other charities, with government or with business. And a similar proportion put skills development in their top three: with appetite for increasing knowledge in everything from fundraising to leadership to data.

The near-term challenge facing the UK’s charities is large. To date, the sector has proved itself – as so often before – to be adept at coping with everything that gets thrown at it. But the burden of this effort falls, inevitably, on the shoulders of those working and volunteering within the sector – and it is beginning to take its toll. It’s vital therefore that we take steps sooner rather than later to support those who have done so much to support the country over the past 20 months. It matters in the very near term, but also over a much longer horizon.