This is a blog series on the role of sustainable funding in the VCSE sector, produced by our North East and North Cumbria Engagement Coordinator, Sian. In this first post, she reflects on the background and context of funding over the last four years.
This blog series also highlights some of the ideas shared by people and organisations who Sian has been able to engage with via our VCSE Partnership Programme and it’s Sub-Groups. Learning from organisations working at the coalface and those responsible for health and wellbeing strategy.
With the VCSE becoming more integrated and involved in health and care structures, it is more vital than ever that the VCSE has the ability to plan long term. To do this, it is important to approach the subject of funding, and more accurately, the state of funding in the VCSE sector.
Key highlights:
- Initial reports in 2019, highlighted the retraction of the state as a key issue for funding in the sector.
- The pandemic brought a reduction in funds for those relying on fundraised income.
- Charity service demand increased during the Covid-19 pandemic.
- The Cost-of-Living crisis is also bringing rising demand, while also bringing increased cost for services to run.
- Charities continue to struggle; workforce is a huge issue facing the sector.
2019 – 2020
In 2019, the Canaries in the Coal Mine report, identified the views of the VCSE sector in Newcastle and Gateshead, with key elements of the report showing the VCSE sector struggling with “funding and sustainability, regardless of size” and “retraction of the state” as well as “rising personal debt” and “increasing demand on services”.
In 2020, as highlighted by Third Sector, the VCSE were concerned about the impact of the pandemic on fundraised income. Charities expected the “pandemic to cause an average decline of 48 per cent in fundraised income alongside a 43 per cent rise in demand for their services” according to the Institute of Fundraising, the National Council for Voluntary Organisations and the Charity Finance Group.
This article from Charity Digital highlights that “market research report from IBIS World suggests 25% of charities lost 40% or more of their income in 2020, the hardest hitting year of the pandemic, with up by a £10 billion reduction in the sector.”
During this period, some VCSE organisations received funds and investment as a one-off for their role in response to the pandemic. According to 360 Giving’s report on Sector Infrastructure Funding Analysis “large one-off grants to help infrastructure bodies support their members as well as help them survive as organisations themselves” were a staple during this time. However, the report goes onto say that “While this impact has manifested in a rise in the total incoming resources of the sector in 2020-21, it is unlikely that these increased resources will be sustained over time”.
However, according to the Charity Commission, most charities "experienced some negative impact from Covid-19, whether on their service delivery, finances, staff or indeed on staff morale, resulting from the months of frustration and uncertainty. The majority (60%) saw a loss of income, and a third (32%) said they experienced a shortage of volunteers."
2021
As highlighted in the UK Civil Society Almanac 2021, there was a “small decline in funding from both central and local government, as well as a much more drastic fall in funding from European and international governments.”
Charity Digital also highlighted “the Charity Commission’s COVID-19 Survey 2021, all charities (91%) in England and Wales have experienced some negative impact from COVID-19, with the biggest impact hitting service delivery (85%) and their financial position (72%).”
2022
In 2022, the Community Foundation released their Third Sector trends report. Key highlights from a recent VONNE blog focused on issues around overoptimistic financial projections, unsustainable funding from delivery contracts and the impact of Covid-19 on finances. Workforce issues have also continued to affect the VCSE as well as the Cost-of-Living Crisis affecting the services which the VCSE is able to provide.
The UK Civil Society Almanac 2022 states that “Income from the public increased by 9% to £30.bn, while investment income rose by 7.5% to £5.2bn from the previous year. This is the first time in over 20 years that public income has made up the majority of voluntary sector income. Most other sources of income declined, including government income, which fell to £15.4bn or 26% of all income.”
The State of the Sector report by Wood for Trees demonstrates the positives and negatives of income from the public, highlighting that “results from the review show the resilience of the sector and the continued generosity of the UK population. They do show some shifts in the way that people are giving with more people giving in ad hoc ways rather than commitment of regular giving”. And that the demographic of those giving is changing, stating that there is a “small but discernible shift towards a younger and less affluent demographic.”
2023
Prior to the budget in 2023, The Chief Executive of the Charity Commission in this Third Sector article, highlighted that the financial conditions meant the sector faced “a perfect storm”. Further, that charities were asking for the Government to provide decisive action and a reduction on cuts in the budget or face charities having to “further scale back their work if they do not receive targeted help”.
On 15th March, the Chancellor, Jeremy Hunt, released his 2023 budget statement. Civil Society has provided a break-down of what will be impacting charities, including £100 million spread across grants in 2023-2024 and energy efficiency. NCVO, Charity Finance Group and ICAEW provide insight into what this funding could mean and implications for charities.
NENC VCSE Partnership Programme continue to work on NHS contract issue, the progress so far:
In January, a query was raised with the VCSE Partnership Programme via the sub-groups regarding NHS contracts that run out in March. There were a lot of organisations who hadn’t heard whether or not they would be continue to be commissioned from 1st April, which was causing a lot of concern.
We raised this with Dan Jackson, North East & North Cumbria Integrated Care Board (NENC ICB) Director of Policy, Public Affairs and Stakeholder Affairs, who attended the VCSE Partnership Forum. He asked for information from organisations so this could be passed on to the ICB Executive Directors. We collected and collated this information throughout January and February via a survey, which 19 organisations responded to, and the details were passed on to the ICB.
Jane Hartley, the VCSE ICB representative, raised the issue at the ICB meeting in January, and again in March, where the ICB Chief Executive and Chair committed to taking action and in April, organisations who were still unaware of arrangements moving forward were invited to come forward for resolution directly by the ICB.
As part of the work of the VCSE Partnership Programme and the ICB in 2023/24, there is a commitment to collaborating on a joint piece of work to address this issue and put in place processes to ensure that it doesn’t happen again. The Partnership Programme will also be supporting awareness raising across the Integrated Care System (ICS) of the importance of sustainable funding and the ability to carry out long-term planning for the VCSE sector, and supporting VCSE input into the ICS Finance Strategy, which we have been funded to carry out, once the strategy is able to move forward.
Earlier in April, The Foundation for Social Improvement (FSI) closed.
A recent VONNE blog highlights that “Following the closure of the Small Charities Coalition last year, and with data from the 360Giving report showing a continual decline in both national and local infrastructure organisations, at a time when VCSE organisations are needed more than ever, it understandably raises concerns about what this means for the wider sector and the impact these closures will have on small charities.”
The NCVO and FSI were delivering on the legacy work of the Small Charities Coalition which closed in 2021. NCVO continue to deliver on support for small charities, stating that “Following the announcement that the FSI will close in Spring 2023, we remain dedicated to our shared vision of a sector in which small charities can thrive.”
The NCVO have also opened the Small Charities Advisory Panel which will help NCVO “continue legacies of both the FSI and the Small Charities Coalition. They play a vital advisory role and will hold NCVO and any future partners to account.”
In part two, Sian focuses on the impact on the VCSE sector, how this can affect planning in the long term and what wider issues may exacerbate this.