Charities need a lifeline to respond to coronavirus — and rebuild society afterwards
The writer is a board member of the National Lottery Community Fund and several charities.
Barely one month ago, the charity P3 was gearing up for one of its biggest annual fundraising events, a pub quiz known as the “Brain Game” held in west London. Instead the organisation, which supports socially excluded and vulnerable people across the UK — and took a prominent role in the response to the Grenfell Tower tragedy — has had to cancel all its fundraising events and move 500 staff to mobile working in sometimes frightening conditions. All this while its work continues.
At 4.30am on Sunday, one staff member was assisting a homeless client with a history of violence and severe mental health problems to move from a tent in a wood into a hostel. Late on Monday night, an emergency meeting discussed how the hostel could manage the large volumes of methadone prescribed to some guests during the lockdown. Demand for P3’s services has nearly quadrupled, and its staff are working around the clock. The same trend is being seen at charities across the world in response to the Covid-19 pandemic, from those running hospices and supporting healthcare to those providing essential social support such as food banks, shelters and domestic violence services.
The non-profit sector employs between three (the rough UK figure) and 10 per cent (the US) of the working population in OECD countries. While the role played by charities varies from country to country, the sector is facing skyrocketing demand and locked-down staff and volunteers, and revenue is collapsing.
Charitable giving cannot meet the scale of demand. Even the national economic support packages announced so far that can be accessed by non-profits, including in the UK, US and Australia, will not be enough to see charities through this crisis.
Charities and community groups — we should not forget the many small non-profit groups not captured by charity regulators’ records — do not operate as businesses. The UK government’s grants to pay 80 per cent of furloughed staff wages will not staff homeless shelters or extra ambulances. Much of this essential work is, and can only be, delivered in person. Frontline charity workers cannot provide their services from home. Such situations also pose a risk of infection, so organisations face extra costs keeping their staff safe.
Some charities also do not have substantial cash reserves. For example, Nonprofit New York estimates that among charities in New York City 40 per cent have no cash reserves, 10 per cent are insolvent, and less than 30 per cent are financially strong.
Philanthropists and funders have been coordinating responses and shifting the way they operate by reducing restrictions on how donations are used and speeding up payments. But critical fundraising activities have been cancelled, donors are stretched in multiple directions and are much less flush than they were two months ago.
Many charities are facing liquidation. The UK’s National Council for Voluntary Organisations reports that charities are set to lose around £4bn over 12 weeks as a result of the coronavirus outbreak. A joint report this week with the Institute of Fundraising projected a loss of 48 per cent of voluntary income.
The question facing governments across the world is where best to invest scarce resources. Will spending now save public money in six months’ time? Mark Simms, P3’s chief executive, has a simple answer — yes. An independent study of some of P3’s work with vulnerable people estimates that the saving to the public purse is nine times what the charity’s costs.
If charities on the frontline of the Covid-19 response — which the NCVO estimates amounts to a significant proportion of the sector — are not thrown a financial lifeline for this immediate period, then the taxpayers across the world will pay many times more in costs incurred in healthcare, policing, social care, housing and social security.
After the immediate crisis has passed, charities will play a critical role in rebuilding society. These organisations cannot be replaced as quickly as private companies, which may have tangible assets to sell and are turbocharged by the profit motive.
There are a number of possible approaches governments could take. They include: establishing emergency funds to support charities responding to Covid-19 and providing social support for those affected directly or indirectly. They could also accelerate payments owed to charities (in the UK this should include Gift Aid); ease performance-based payment requirements; and introduce short-term tax deferments (for VAT, PAYE and National Insurance). Further steps could involve increasing tax relief on donations to incentivise giving and allowing people who have been furloughed from other jobs to work for charities without forfeiting any of the financial support they need to survive this crisis.
The voluntary sector supports much of what is most valuable in society, whether community groups, healthcare, arts, sport or education; most of us depend on them for something. To ensure their survival, governments around the world must do more before it is too late.