State of the nation: the charity sector after a year of crisis
The charity sector has been hit hard by the pandemic – some predicted it would face a £10bn funding gap. How has the sector been impacted and where are the bright spots? Emma Turner, Director of Barclays Private Bank Philanthropy Service, speaks to Angela Kail, Director of Consulting at NPC (New Philanthropy Capital), a think-tank and consultancy for the charity sector, in this special podcast - the second in the ‘State of the nation’ series.
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Emma Turner (ET): Welcome to the Barclays Private Bank Philanthropy podcast, a series that tries to understand what drives leading philanthropists and what they've learned along the way. We'll hear from leaders in the field on a particular topic. My name is Emma Turner and I run the Private Bank Philanthropy Service and today we're going to look at the ‘State of the nation: our charity sector after a year of crisis’.
I'm delighted to be joined by Angela Kail, Director of Consulting at New Philanthropy Capital (NPC), a think-tank and consultancy service for the charity sector. NPC, as it’s known, plays a critical role by working with charities and funders on a range of initiatives, such as strategy development, or impact measurement to ensure effectiveness across the field.
A little bit about Angela. She's worked with a wide range of philanthropists from established funders, such as the RS Macdonald Trust and The Baring Foundation to individuals who are just starting with their giving. She's authored reports on young people in the arts, substance abuse and mental health, amongst many other subjects. She's also worked on helping a number of funders and charities with measuring their impact and in particular, she's worked on initiatives measuring the impact of the youth employability programmes.
Since the pandemic started, NPC has been providing advice to philanthropists and charities on how best to respond. As many of us know there are 160,000 or so charities in the UK. Last year, it was predicted the annual income of around £50bn could drop by at least £10bn. Once there was support from the government, there was a lot of concern about the ongoing state of the sector.
So Angela, good morning. Just talk me through some of the scale of the challenges that you think that the sector is facing one year on.
Angela Kail (AK): Thanks, Emma. So it's been, as it has been for everyone, really, a tough year for the charity sector. Some things have gone a little bit better than we might've expected. So for example, the public have been very generous with their money and they've been giving at a similar rate to what they've been giving before the pandemic, which is really amazing when you think about the hardship that some people have been going through.
And a lot of this money has been going to things that have been sort of directly linked to the pandemic. So the ‘NHS Charities Together’ campaign raised over £140m which is an amazing amount of money which has been spent on supporting NHS staff, volunteers, and patients.
But as we suspected at the beginning of the pandemic, need has gone up hugely. So, increased need is a big issue across all charities. So almost all of them have been reporting it, but how that looks is quite different.
So you get learning disability charities which have been fighting for people with learning disabilities to get the vaccine earlier, for example, through to food banks where usage has gone up 50% over the past year. And that's the sort of scale of challenge that organisations are seeing.
ET: So what out of that, are the particular areas that you think, other than those that have done better, or worse, or what are the secret pockets that are under the radar?
AK: So I think one of the things that has done better have been things that are quite tangibly linked to the pandemic. So where there have been, as I say, money's been going towards hospitals, towards the NHS - people like giving to that and we've seen the amount of money going to hospitals and hospices go up heavily.
And I think one of the interesting things is that as everyone knows, one of the main things that have changed with the pandemic has been the increased use of digital. So for some charities, this has allowed it to open up to new audiences. So people with disabilities who wouldn't be able to physically access a social group or a theatre production are now able to access these online. And so for some people it's opened up charitable services and it's been a lifeline to them and their lives have actually become better in some ways and more sociable.
And another big success was quite early on in the pandemic. We saw the ‘Everyone In’ campaign in homelessness where the government paid to give all homeless people a bed. So it paid for hotels and hostels to pick people up, which made a huge difference to the rates of coronavirus in those groups, but also health more generally. And for example, we had homeless charities who are reporting that they're seeing more people willing to go on substance abuse programmes than they've ever seen before.
So those have been some of the sort of pockets of good things that we're seeing happening. But some of the areas where things have got much worse are often not that obvious and they're often where organisations haven't been able to deliver services.
So a good example of this is in prisons where for good reasons, they'd been trying to stop the spread of coronavirus. And what that's meant is that prisons are keeping prisoners in cells for up to 23-hours a day.
So that means that activities that would normally happen, so for instance, contact with children of prisoners and family of prisoners isn't happening, education work isn't happening, the mentoring and the counselling, none of that's happening and that is really going to put rehabilitation back. So all of those things that help get people ready to live a life outside of prison, all of those things have stopped.
And another one that sort of comes to mind, an area that you probably wouldn't think of is foster care. So Bernardo's reported that in the first half of the pandemic, the number of people volunteering to be foster parents had dropped by nearly half. And if you think about it, that makes obvious sense because these are often people who are older, who therefore might be shielding, might be worried about their health. They don't want to let new people into their home.
But at the same time, because of additional family stress, the drop in income, homeschooling, all of these things, the number of children needing foster care has gone up by over 40%. So we now have this huge waiting-list for foster care and children who are being kept in institutional homes.
And again, we're seeing the same sorts of things happening there - as in prisons - where it's harder for them to access other services - youth groups, see their family, so all of that contact is gone. So that's been a sort of a big worry, I think, for the sector, those sorts of things.
And I think you sort of asked about secret pockets. And I think one of the things that we've really seen with the pandemic is that everything has changed. All the things that we normally knew and normally expected are no longer there. And it takes a little bit of knowledge and imagination, really, to sort of put yourself in the place of other people.
So refugees and asylum seekers are a group that not that many people know, they don't often interact with and they're not often talked about. And they are a group that suffered from social isolation before the pandemic.
So refugees and asylum seekers only get £38 a week from the government to spend, so a very small amount of money anyway. It's also put on a prepaid card, which could only be spent in certain shops, which when we were seeing those food shortages at the beginning of the pandemic, it becomes much harder for them to shop around than it would be for you or me. So it's a much harder sort of existence for them.
And then the other thing is that they often don't speak English. So there was such a problem with making sure that they understood what the rules and the guidance was. And that's taken up a lot of charities’ time trying to provide up-to-date information in different languages, as well as the providing food and necessities.
And then the other thing I would probably just add to that is that some causes and needs have taken longer to uncover than others. So right at the beginning of the pandemic, as education went online, almost everyone realised that children needed laptops to work. So it was a big push to get one laptop to every family.
And then it took slightly longer for people to realise that actually what we needed was more than one laptop for every family, because children needed to be online at the same time as their parents were working or at the same time as their siblings were online.
And then it took a little bit longer to realise that even if you had the laptops, you might not have the internet. So we needed to pay for a dongle or an internet subscription. And now what we're seeing is that the pandemic has so stretched family finances that you need to pay the electricity bill in order to charge these devices. So, sort of new needs are coming up all the time throughout the pandemic.
ET: Wow. That's an amazing insight. I mean, I just learned so much in the last five minutes from you about things that... It's not that people don't want to think about them, but unless they're brought to their attention, they absolutely won't know about them. So I'm just slightly sort of knocked away by it all.
So now let's talk about the financial landscape. As I said at the beginning and lots of people wouldn't necessarily know this, but we know that the income of the sector overall is about £50bn a year. There was talk about there being a £10bn shortage. And I don't know whether that's true or not.
Maybe you can talk to about that, but could you just talk to us about fundraising and I mean, the obvious ones are you will see charities are closing, you know that marathons aren’t taking place, but I don't think... certainly I don't probably appreciate the magnitude of the drop in that income for a lot of charities that heavily rely on it year in, year out.
And then a little bit about volunteering and then also we talked the other day about the general wellbeing of staff, because there's been a lot of furloughing. We've heard about redundancies in the sector. If you could just try and cover all of those for me, I would be incredibly grateful.
AK: I will do my best, Emma. So you're right, that the income of the charity sector is actually often a lot bigger than people think about it. £50bn is a much bigger number than most people would think it would be. And one of the good things, as I said at the beginning, is that the public has been very generous and it's continued to do that.
But one of the things, as you've sort of saying is that a lot of income sources have dried up. So in addition to sort of the marathons being cancelled, the coffee mornings are cancelled, the face-to-face fundraising that you get in the street, whether you like it or not, it's a very successful method of fundraising, or people knocking on your doors - none of that's happening. Even things like raffles that you might do at a church or a group, if you're not there in person, all of these are slightly harder to do.
So, what we're seeing is that for the types of organisations that we're relying on that, and a lot of that is your big name charities, your Cancer Research, who do a very good marathon or Mind, who have so many charity shops or Shelter, all of those charities, they're really suffering from the income from that.
So for example, and actually I, this number is lower than I expected, but in December when restrictions were lifted and then imposed again, income from charity shops was 20% lower than it had been in December 2019. So that's quite a big hit. And when you think about it actually there were huge months of the year like November or April, where charity shops were just shut and so it was a 100% down.
And I think, although I've said, a lot of this will be your big name charities, it's important to remember that it's not just them. So many local charities will have local charity shops and one Welsh Children's Hospice has said that it's lost over £100,000 from the closure of its charity shops and it said that in October. So, we're four months on from that. It's a lot more money now.
And the other thing is that, although I've said that public giving has held up, it has changed. So the number of people giving to medical research has dropped quite dramatically. And we're already seeing that roll through into redundancies.
So Macmillan has already announced over 300 redundancies and Cancer Research UK, the same amount. And we've been tracking the number of redundancies in the sector so far, and we've counted over 7,000 and those are just the ones that have been announced. So there'll be a lot more that don't make it in to the press, etc.
And nearly 6,000 of those are in arts and culture and in health, which makes sense entirely. So arts and arts and culture income has completely collapsed because it doesn't have any ticket revenue. It doesn't have any cafe revenue. It doesn't have any entrance revenue whatsoever and health because people are prioritizing needs now over medical research in the future.
But the other thing to sort of think about with finances is expenditure. So income has sort of not done as badly as we feared, but expenditure has gone up heavily. So most charities have had to incur unexpected costs. For some that'll be a relatively small amount. It will be such as making sure that everyone has equipment to work from home. So it might be that they've paid for a new headset for people.
For others, this will be huge. So social care charities have had to be providing PPE equipment for all their staff. And one social care charity was telling us that that was hundreds of thousands of pounds a month of additional costs.
If you then think about the people who were serving additional needs, so your housing charities that have also had to give people food or your youth charities that have had to give a young person a laptop. All of those things are sort of additional costs that are going on. So even if the income's the same, the expenditure isn't and so charities are having to dip into their reserves.
And then in terms of volunteering the first lockdown was an explosion in volunteering. It was really heartening, I think, for those of us who worked in the sector to see that response from the public. There was a record day in March, where over 400,000 people signed up to be an NHS volunteer, which is just amazing.
But as the pandemic continued, people have got tired. That's dropped off. And that's partly estimated as being lockdown fatigue, pressures of homeschooling, the ongoing pandemic getting to people as well as coronavirus itself - meaning that lots of volunteers were just unable to do the shifts that they'd signed up to. So the Independent Food Aid Network said that it was a lack of volunteers because of people self-isolating that was preventing it, giving out the amount of food that it could do.
And the NSPCC (National Society for the Prevention of Cruelty to Children) has also said that the number of volunteers it has on Childline is down by 40%. So that's a big gap there, and it obviously affects different charities differently. So if you have a lot more older volunteers who are more likely to be shielding, you're more likely to have seen a drop-off. If you're dealing with difficult situations like Childline is, then people don't want to be doing that in their house where their child might be listening. So they're less likely to volunteer there.
So there's a quite different picture depending on where you are in the sector.
ET: And then what about the wellbeing of the staff themselves? Have you had any feedback about the kind of the biggest ones, you’ve hearing, we’re all hearing, a lot about stress in the health service with doctors and nurses just being continually, basically working around death, , for want of a better way of describing it. And have you heard anything about the mental health side of people working for charities?
AK: I think that's the real difference in lockdown three is that we've gone into lockdown three with a lot less mental resources than we had in lockdown one. And people who work for charities are just people. They're worried about elderly parents getting sick or having to homeschool at the same time. So there's all of the stress that everyone feels, are also true for the charity sector.
And burnout was the main worry of charity leaders in November. And that's because of what I've been talking about there with the rising need, but not necessarily the rising income. And in addition to sort of the rush to put things online, while obviously a good thing to keep services going, just led to difficulties that you might not have expected. So for instance, advice charities that help asylum seekers have to hear quite a lot of upsetting stories about the reasons why people are seeking asylum. None of that's easy.
And if you're in an office, then your boss is probably at least saying something like, "It's your job, get on with it," in the nicest possible way. When you're at home and your child in the next room could come in at any moment and this is meant to be your safe space, is it really the same thing to be listening to these stories?
How does that impact people? How are they able to put their laptop aside at the end of the day and move on from these things that they've heard? So I think a lot of those worries are playing out now. And it's a bit harder for people to put aside what they're hearing in their everyday job. So burnout there is a really tricky thing. And I think it's the same as lots of people are experiencing in working from home. It's a lot more socially isolated and lot more difficult for all of us to do.
ET: I think we all thought at the beginning of last year, which was let's face it, pretty much a year ago that working from home was like, "Oh, this is going to be absolutely great." And I think there was a novelty element to it in the earlier days. But I think coming into this year, it feels remarkably different for everybody for all the reasons that you've talked about.
So, let's look at some bright spots. I think it's incredibly important that we talk about the things that we have. I think it would be wonderful to just hear a bit of optimism. So, there's a few things that you thought you might talk about - about the collaboration that you see in the turn to digital, and then also some new funding, and I think, some of the ideas that might have come out. It would be great to hear a few bright spots, as we’ve discussed.
AK: So I think one of the things that we've really seen working well is collaboration. And this is the Churchill aphorism that's been far too quoted over the pandemic of, "Never waste a crisis." And we've seen COVID-19 really accelerate the shift towards ways of working and attitudes that we've been wanting to address for many years. So faster collaborations, stronger shared focus, more pooling of data resources and less bureaucracy and the sort of lowering of organisational boundaries.
And you see this a lot in quite local places. So in Buckinghamshire we've been seeing lots of charities working together with the local authorities to make sure that any gaps in the system are addressed quickly and people get the help they need. And I think that's one of the things that we're hoping will stay after the pandemic. And it won't be a case of people going back to the old bureaucracy, but instead people will continue to put the needs of people at the heart of what they do. And just keep that focus on that.
So that's one of the, one of the things that we're looking forward to keeping. And then I think digital is the sort of other thing. I mean, people say that the sector has come along 20 years in a space of two weeks or whatever it was in March and lockdown has meant that many charities moved their services online for the first time or deepened their digital offer. And also many people interacted online when perhaps they wouldn't have done.
They might have preferred to do things offline, but seeing as they were forced to do things online, they've actually found that they like it. And this has improved the range of services for people.
So one of my favourite examples here is Place2Be, which is the mental health charity that probably a lot of listeners know - it works with young children in schools and provides a sort of counselling service to them. And it partnered with other sort of services that were a bit more online than they were to increase the range of services it can offer. And it now has a mental health and emotional wellbeing app designed to help young people manage their own anxiety. And that's received 4,000 downloads since the start of lockdown.
So you can sort of see how that might be a model that it can continue as we become able to meet offline again. And it's putting more content onto this app. So it is putting on guidance about the transfer from primary to secondary school, which will only help increase its reach and scale in the long term. So I think that's something that we're hoping to see… to keep as well.
And then the last one funding, which is really important to me being a philanthropy advisor for many years, really important to you too, I know Emma, and we've seen lots of really good things happen here. So right at the beginning of the pandemic, lots of people came out and said they were giving more, and said that really publicly. And I know from the range of people that I work with, lots of people immediately thought, "How can I help more people?"
And the other thing that we've seen is people sort of giving in collaboration. So realising that needs were changing really quickly, they couldn't do all the work themselves. So how could they think about working with other people, piggy-backing off the knowledge that other people had? And I think that's a sort of more efficient use of resources.
And they've also shifted a number of their funding requirements. So they're being a little bit less prescriptive about how money should be spent, being a bit more flexible with their funding and all of that has helped the sector to be a bit more responsive to what it does. And again, that's a long-term change that I'd like to see happen.
ET: It sounds, from what you're telling me, and you and I worked in the sector for many years, that there's been a massive acceleration in places where it was really needed and only a crisis would bring it about.
And like you, I really hope that it doesn't go backwards afterwards; that one can harness all the goodness, if you like, of people collaborating, the digital stuff, the stuff that would have happened, but had to happen in order for organisations to survive in the last year. So I find that incredibly heartening and you and I will keep an eye on things.
Right. My last question really is, so what do you think about the year ahead looks like – what it looks like - even though we will be asking you to come back in a year's time to let us know. So I'm not asking you to have a complete crystal ball and you can come back and tell us how much of it was right or not so right.
But looking at the year ahead, if I was sitting, listening to you now, and I might be thinking, "Well, okay, so now I know where we are." So, what do you think might happen in the year - good, bad or indifferent, or even beyond if your crystal ball can take us that far?
AK: So, unfortunately I think we're going to see more redundancies. I think we're going to see more charities go under. So the furlough scheme has largely protected charities from some of the income hits, but the numbers that I reported earlier that we've seen - about 7,000 - we're expecting numbers much higher than that, nearer 60,000 by the time this plays out. And that will be really difficult for organisations and for people to deal with.
So it'll mean that there will be less medical research and that'll put back their timetable of some sort of good work that's going into cancer care. But I also think that more generally, there'll be a settlement that has to benefit young people. So young people have taken such a hit in terms of their education, their mental health. And so what I'm hoping for perhaps more than expecting is that there will be more money going into young people's services.
So, young people are about two months behind, we think, the latest evidence says in their education compared to the year before. So the loss of learning is substantial, but that's also a loss of learning that could be made up if there was a lot more effort going into tutoring services, into mentoring services, into arts education. So I'm expecting to see shifts in funding towards those sorts of things. I also think, and we've seen people say they're going to fund work like Outward Bound once it's able to happen again. So, all of those activities.
So, I would expect the shift of funding to change as well and for that to be interesting and difficult for charities to navigate, but also this whole move towards digital. So one of the things that we've seen is that charities have adopted digital very quickly, really, without really doing any user testing. And now they're going to have to think about, actually, are we going to do this online? Are we going to continue to do this? Are we going to move some of these things back offline?
And for some people, online will be the better service. So you can reach a lot more people through a digital mental health app than you can through one-to-one counselling. And so in order to help children, I think there should be a lot more investment into that. But for older people, they will want to see people again after a year of being in their own houses. So it will be different for different people.
And I think one thing that we really need to look out for, sorry, I'm ending on a sad note again, is what happens to state funding? What happens to investment? So, of the £50bn, about £15bn comes from the state. So a lot of that comes through local authorities, which as we all know have been hard hit themselves by the pandemic. So, what will that mean if local authorities have less money in the future? So two, three years out, we'll still be getting the hits from this.
And the other thing that I think will really matter is investments. If investments continue to stay up as they have been surprisingly in 2020, then I think people will still be willing to give, but how much they're able to give if investments fall, I don't know. So those are the things that I would look out for over the next year.
ET: Well, you've given us lots to think about, lots of new information. I think if I was listening to you today, I would feel much better informed as to the state of the nation in the charity sector. And it will give me some things to think about, but I think the call to arms is that we can all do something, however small, and it will make a difference.
And if we can all manage to just find maybe one thing to support, if you haven't done it before or not to forget the ones that you are supporting and try and do something with them.
Angela, thank you so much for joining me today. I've really enjoyed our chat. And as I say, I'll see you in a year's time. So thank you.
Thanks for listening to everybody and please subscribe and follow us to receive regular updates. And my next podcast will be with David Nott, a trauma surgeon and also known as The War Doctor.
Philanthropy - state of the nation
Emma Turner, Director of Philanthropy Service, speaks about the affects of COVID-19 on the Philanthropy sector.
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