Small charities at greatest risk of collapse amid Covid-19, study suggests

Around 15 per cent of small charities predict that they will no longer be able to operate in six months’ time as a result of Covid-19 disruption.

The figures, which form part of the Pro Bono Economics (PBE) weekly tracker, also show that nine per cent of medium-sized charities and three per cent of large charities could collapse under coronavirus-related pressures.

The weekly survey – designed to assess the pressures and challenges faced by the not-for-profit sector – reveals that almost every charity in the UK has taken evasive action to weather the Covid-19 storm.

For example, around three in five charities have taken advantage of the Coronavirus Job Retention Scheme (CJRT) to furlough staff.

But the proportion when including only small charities accessing the scheme drops to 38 per cent, suggesting that the smallest organisations are struggling to access Government support.

Likewise, 40 per cent of all charities report drawing down on financial reserves, while this drops to just 31 per cent among small charities – pointing to the smallest organisations having “less financial wiggle room”.

“In the absence of such sources of resilience,” says the study, “the primary response of smaller organisations has instead been to cut back on their activity”.

Commenting on the figures, Chief Executive Matt Whittaker said there was “little sign” of any easing of pressures faced in the social sector, with nine in 10 organisations expecting the pandemic to negatively affect their ability to fulfil charity objectives.

But “the good news” is that over three quarters of organisations believe they will survive the pandemic, he said.

“Nevertheless, a sizeable minority of one in 10 think they will cease to exist. That’s significantly lower than figures reported in other sector surveys, but it would still represent a big loss to social and economic wellbeing in the UK – with our estimate suggesting that civil society activity is worth some £200 billion a year.”

For support managing your charity’s finances during this challenging time, please get in touch with our expert team today.

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