Covid strikes third sector

11 January 2021

Covid-19 has hit charities hard, halting fundraising activities and disrupting services, while need continues to rocket. Journalist Juliette Astrup explores the impact and how charities are adapting.

The events of 2020 have blasted a huge hole in the finances of UK charities. The majority of their fundraising activities had to halt or change, and like every other organisation, they have had to grapple with social distancing, PPE and changing the way they work. At the same time, people have turned to charities in their droves seeking their support in coping with the enormous socioeconomic fallout of the pandemic and the measures to tackle it.

Barnardo’s chief executive Javed Khan calls it the ‘perfect storm’ as the need ‘has never been greater’, yet charities are ‘facing substantial reductions in income’.

Financial impact and cuts to services

Analyses of the situation paint a grim picture. A study by independent charity Pro Bono Economics predicted that a £10.1bn shortfall caused by soaring demand and lost fundraising income would leave one in 10 UK charities facing bankruptcy (Pro Bono Economics, 2020a).

Charities had low levels of financial reserves to start with: for just over a fifth of charities in England and Wales, reserves were equivalent to less than a month’s spending before the crisis (Clifford and Mohan, 2020).

Smaller charities, which represent the vast majority of the 170,000 charities in the UK, are expected to fare worse, while big £1m+ charities, which account for about a fifth of the sector but 80% of its income, will better weather the storm. Two-thirds of smaller charities had already had to make ‘significant’ cuts to services during the first lockdown (Pro Bono Economics, 2020a).

In response, in early April the government announced a £750m package of support for voluntary, community and social enterprise organisations. But as Siobhan Endean, national officer for not-for-profit sectors at Unite, points out, with ‘demand for services and support up, and opportunities for fundraising limited’, this investment won’t counter the impact on charities’ finances.

‘The National Council for Voluntary Organisations [NCVO] has estimated a £4bn shortfall in funding,’ she explains. ‘Following our campaign, the government did agree to provide £750m funding, but that is clearly not enough, and applying came with so many caveats it became very difficult to access that money.

‘We’ve seen scaling back of services, charities making redundancies, and some even on the brink of insolvency. What’s going to happen when they go bust?’

Charities in lockdown

During the autumn lockdown, half of charities responding to a further survey warned that demand for their services may outstrip their ability to deliver, and nearly all (94%) said that Covid-19 had posed a financial challenge, with drops in earned income, public donations, and money from fundraising activity. They also reported cuts to the frontline support charities offer, including helplines, events and training, and fundraiser headcount (Pro Bono Economics, 2020b).

As with other charities, Covid ‘drastically changed’ fundraising for charity YoungMinds, says Deirdre Kehoe, director of training and services. ‘From events like the London Marathon and Great North Run not happening, or not having the same impact financially, right through to the community-based activities like coffee mornings having to stop. A lot of corporates are no longer in a position to provide funding, [either].

The more the financial situation begins to bite, will people still be able to afford the devices and the internet they need to access these services? 

‘YoungMinds paused some activities earlier in the year, but we have been very fortunate to access some of the new government grants made available, and some charitable trusts have offered critical support.’ But while some charities remain buoyant, given the long-term economic impact of Covid, concerns abound. Deirdre says: ‘A lot of our partners rely heavily on statutory support and we are worried about what that’s going to look like over the next few years. With the potential impact on both fundraising and statutory funding, there is a difficult future ahead for all of us.’

Rising demand

Coronavirus turned life upside down for many families, with furlough, job losses and the closure of schools and childcare facilities for many months. The number of people claiming unemployment-related benefits in the UK more than doubled between March and August 2020, with evidence that those on low incomes saw a higher-than-average drop in income at the onset of the pandemic (Haves, 2020).

Research by the Child Poverty Action Group (CPAG) into the impact on low-income families found that eight in 10 reported a significant deterioration in their living standards due to a combination of falling income and rising expenditure (CPAG, 2020). An NSPCC Scotland and Barnardo’s report highlighted that many families were struggling to obtain food, secure housing and basic necessities even before the pandemic began – raising concerns the current crisis will compound this (Galloway, 2020).

In these tougher times, more people have been turning to charities. The NCVO barometer survey conducted in September/October found that while nearly half of charities in England have been forced to reduce the services they provide during the coronavirus crisis, more than half said they expected demand to rise (NCVO, 2020).

That is certainly demonstrated by the sudden surge in pressure on food banks. Those in the Trussell Trust’s UK network saw a 47% increase in need during the crisis. Figures released in November show more than 1.2 million emergency food parcels were given out in the first six months of the crisis, with 2600 going to children every day on average (the Trussell Trust, 2020).

Mental health charities are also facing soaring demand, including those supporting children and young people. Covid has led to rising levels of anxiety and stress, with loneliness and isolation, worries about school and the future, and concerns about home life influencing the mental health and wellbeing of children and young people (Mental Health Foundation Scotland, 2020).

Deirdre says: ‘The new NHS prevalence stats show that it is now one in six five- to 16-year-olds, not one in eight, who has a probable mental health condition. And analysis published by the Centre for Mental Health has estimated that 1.5 million more children will need support in the coming years –for depression, anxiety, post-traumatic stress disorders and other mental health difficulties. That is a huge increase, and we need a matching strategy around how we will meet this demand over the longer term.’

She adds: ‘There has been a huge demand for our services, albeit in a changed way. There’s been a 67% increase in website traffic as young people and parents seek information, help and support, and we’ve seen a big increase in demand for our text message service for young people.’

Deirdre says that demand for the charity’s parents’ helpline has remained steady, but the number of emails has increased. ‘We put that down to parents at home with their children who maybe aren’t able to have a 20-minute phone conversation, but can send a quick email. Because of that we’ve created a webchat service for parents as well, which has been incredibly busy.’

Response and innovation

Innovation and adaptation have been the watchwords for many charities in 2020 as they step up to meet the increased demand, despite the challenges. A community survey of small charities and community causes found organisations and volunteers were transforming services, with almost 75% completely remodelling, as they more than doubled the number of people they support each week. (Neighbourly, 2020).

Many have been embracing technology, moving services online, especially as time has gone on. Asha Day, CPHVA vice-chair, says: ‘At the start, many just closed their doors because they didn’t have time to change their processes, but as things have gone on, charities have been able to adapt.

‘So, for example, in Leicestershire, we have the charity Baby Basics, which provides equipment and clothing for new mums. Health visitors would always pop in and collect [equipment and clothing] and deliver that equipment – but now they can’t do it as often, so the charity will email or leave a phone message with the health visitor. Charities are working differently.

‘Some have moved over to online and telephone [services] and are taking the opportunity to offer virtual appointments, others still haven’t been able to get people into their services because of the logistics of it. The walk-in element has gone and so provision is often more targeted.’

Charities are also morphing the way they raise funds, says an NSPCC spokesperson. ‘We rely on donations for 90% of our income, and with fundraising events being cancelled or postponed, we expect our underlying income to drop by at least 10%. ‘We have had to quickly find new ways of raising money as best we can, like moving our Christmas fundraising concert online. We have also prioritised keeping our services running wherever we can, which has required dedication and ingenuity from volunteers and staff.

‘We have been able to keep Childline and our helpline available throughout the pandemic, and at the moment our Speak Out Stay Safe school assembly is having to be delivered online, with thanks to Ant and Dec who present them with us.’

The crisis has also prompted the development of new schemes and partnership work between charities, and new funding streams too. For example, Barnardo’s is delivering a government-backed programme called See, Hear, Respond, in partnership with more than 80 other organisations, to help children, young people and families cope with the Covid-19 crisis.

This new service, funded by the Department for Education, aims to quickly identify and support children, young people and families who are struggling to cope with the impacts of Covid and provide early intervention before these children reach the threshold for statutory intervention.

The future?

Sadly, not every charity can successfully adapt to this ‘new normal’. Almost 6000 charities were forced to close in the year to June 2020, a 19% increase on the previous year, and a five-year high (Independent, 2020).

Chris Sweeney, a health visitor in Glasgow, says Covid has hit charities his clients relied on: ‘Over 80% of the children on my caseload have at least one parent with English as a second language. I would often refer to a community shop and information hub in Govanhill, which provided translation services with different interpreters on different days. Families would take letters to be translated – bills, hospital appointments or GP registrations, for instance. It was mostly staffed by volunteers but because of the risks presented by Covid, it closed in March and hasn’t reopened.

‘Services like that were invaluable – but we can’t refer to them anymore because they don’t exist. Now, many clients save letters for my visit. They are asking health visitors to help with these things because we’re one of the few professionals who still sees them face to face.’

While some have disappeared altogether, other charities Chris routinely refers to have gone ‘online only’, which means parents are relying on him to email on their behalf, especially those with English as a second language.

Going online has other limitations, Deirdre says. ‘For some young people it works really well, but others don’t have the technology, or the environment at home to engage with it, or online support just doesn’t work for them as well as face-to-face interaction. We need to make sure we see that therapeutic face-to-face support return.’

The longer the pandemic rolls on, the more issues are likely to emerge, adds Asha: ‘The more the financial situation begins to bite, will people still be able to afford the devices and the internet they need to access these services?

‘One of the things we’re also seeing is that, where people are being hit by the financial impact of Covid, they are less likely to donate their old baby clothes and equipment – they will sell it.

But Asha insists a lot of goodwill has been generated by the crisis too. ‘We have seen people setting up new support services in their local communities in their own time – for example, I know of a new listening service for mothers. While some are very good, they aren’t registered charities and aren’t regulated. Another concern is that when the Covid situation changes and these charity “entrepreneurs” return to their normal full-time jobs, what will happen to the people who have been relying on them?’

The pandemic has also served to highlight pre-existing systemic flaws, says Asha. ‘There was so much disinvestment in the third sector in the years before Covid it was starting off from a low point anyway. A lot now depends on where charities are in the country and whether the local authority support is there for them as to whether they will survive.’

For vulnerable families, the end of the pandemic might not spell the end of their worries. Chris says: ‘Charities are often a symptom of a gap in public services – where charities and volunteers have been forced to move into the vacuum left through cuts to public expenditure.

‘I’m concerned that we could see future cuts to public services as a result of government policy to cut public expenditure following Covid, putting even more strain on local charities and their beneficiaries.’

Matt Whittaker, chief executive of Pro Bono Economics, says that failure to ‘square the circle of rising demand for help and shrinking capacity’ in the charitable sector could have ‘very serious consequences for all of us’. 


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Clifford D, Mohan J. (2020) Assessing the financial reserves of English and Welsh charities on the eve of the Covid-19 pandemic. See: (accessed 23 November 2020).

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Mental Health Foundation Scotland (2020). Impacts of lockdown on the mental health and wellbeing of children and young people. See (accessed 22 November 2020).

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The Trussell Trust. (2020) 2,600 food parcels provided for children every day in first six months of the pandemic. See: (accessed 16 December 2020).

Image Credit | IKON