As the cost-of-living crisis continues to escalate, with rising energy costs and other supplier increases, the VCSE sector are facing really difficult choices over how they support their staff and help their communities. In this opinion piece, our CEO Carol Botten considers the many challenges our sector is facing, and what needs to be done to strengthen it, ensuring the longevity of our crucial organisations and services.
The cost-of-living crisis has created a perfect storm of high costs, static or falling income and a rising demand for services with less capacity to deliver. Organisations are being forced to make very difficult decisions like:
- How can we increase staff pay in line with levels of inflation when we face other rising costs and are struggling to increase our income?
- How can we respond to the rising demand and complexity of support required when we don’t have any more funding or capacity?
- How do we manage to respond to the ever increasing and complex needs of the people and communities that we support, without endangering the longer-term financial sustainability of our organisations?
Below are the key factors to be taken into consideration.
Income
Many charities have a fixed or reducing income with significant amounts of money coming from grants or contracts with a fixed amount agreed in advance. With costs rising across the board, charities effectively need to deliver the same services but with less money. Many of our members and customers are other charity and community organisations, schools and other service providers or the people and communities we support. It’s very difficult for us to increase our prices when our customers and service users are already struggling. In addition, many charities are expecting lower levels of donations and seeing reducing community and corporate fundraising levels.
Demand
We’re seeing a rising demand for VCSE organisations to support their wider communities. Alongside advice and poverty charities like Citizen’s Advice and foodbanks, there’s been a knock on effect of people looking for support in other areas as a result of the impacts of poverty, debt or money worries. The statistics from the NE Child Poverty Commission and Newcastle Citizen’s Advice set out below indicate worrying trends that will only be exacerbated by the current cost-of-living crisis:
- 37% of North East children are living in poverty
- 47% of North East children are living in a family with a child under the age of 5
- 46% of people in debt are facing a negative budget
- 3 in 10 clients are at crisis point (52% higher than last year)
- In June 2022, an average of 700 people were referred to a foodbank per day (300 more than June last year)
- 1 in 2 adults in debt have a mental health problem.
VCSE organisations that support people around mental health, alcohol and substance use, domestic violence, crisis support and a range of other services are also seeing significant increases in individuals needing help. Those people who were already struggling are now at crisis point and those who were just about making ends meet before, are now struggling or worried about increasing levels of debt and are looking for additional support.
Impact on Workforce
The increased demand for services has a big impact on staff as workloads and the complexity of support required increases. Dealing with complex issues at scale can also have an impact on staff wellbeing as there’s a desire to help everyone and a potential feeling of not being able to do enough, which adds to stress levels. On top of that, we’ve seen a drop in volunteer levels as a result of the pandemic, and challenges around recruiting staff are being felt across the sector as other sectors are able to increase their prices and offer higher levels of pay. In general, wages in the VCSE sector are lower than the private sector and that gap is increasing which creates issues around staff retention and attracting new staff.
Finding a way to increase finances to support staff by paying them the Real Living Wage, whilst trying to service the growing need for charity support within communities feels like an impossible task which could result in many organisations risking their own long-term sustainability. There’s also a real risk that these organisations could become part of the problem – if they can’t afford to pay a Real Living Wage, then their employees are hit harder by the cost-of-living crisis and in turn, need more support from charities themselves.
What should happen now?
Now is the time to say enough is enough. The government should be providing a safety net to ensure that people’s basic needs are met, that they can afford to heat their homes and put food on the table. The holes in the government’s current safety net are getting bigger, more people are falling through and it’s the VCSE sector, local authorities, schools, employers and others that are catching and supporting people. With no additional resources or help, and reducing capacity in terms of staff and volunteers, we need to be realistic about what we can do without risking the wellbeing of our workforce or our organisational sustainability. So many organisations are already seeing high levels of burnout from staff as a result of 10 years of austerity and then having to navigate two years of the Covid pandemic. There can’t be an expectation that charities will naturally fill the increasing gaps being created by the cost-of-living crisis and the inadequate response from government.
This perfect storm has created a fine line for organisations to tread when considering the choices they need to make. It’s understandable that charities want to do whatever they can to help, it’s in our DNA to do so, but the longer-term implications need to be considered to protect the longevity of their organisations and their staff and volunteers.
What does the VCSE sector need?
It’s clear that in order to continue supporting our communities and our workforce we need:
- Increased funding and an uplift in contract values to meet rising costs and to enable us to uplift our staff salaries
- More support around energy efficiency and financial planning
- A redrawing of what the charity sector is for – what are we agreeing to do and how much money/support do we need so that we can do that well, and whilst paying a living wage?
What are we doing?
At VONNE, we’re getting behind other organisations to support the voices of the sector at both a regional and national level through our links to national infrastructure organisations, NAVCA, NCVO and ACEVO and initiatives like the VCS Emergencies Partnership.
We are raising awareness of the issues outline above with funders, commissioners, local authorities and Combined Authorities and encouraging them to consider offering greater support including uplifting grants or contract values in line with inflation, working closely with our Local Infrastructure Organisation (LIO) colleagues across the region.
We are working closely with other regional organisations such as the NE Child Poverty Commission, the Chamber of Commerce, the network of Citizen’s Advice organisations and others to apply pressure on the Government to consider policy interventions to provide additional support to the most disadvantaged households and communities and therefore, relieving the impact of rising demand on VCSE organisations. You can read the letter recently sent to the Prime Minister and Chancellor here.
We continue to work with Combined Authorities and other lead authorities in the region on their UK Shared Prosperity Fund plans, to ensure that this funding and the initiatives within it is accessible to a wider range of VCSE organisations and will help support building capacity within the VCSE sector.
We continue to support networks, forums and meetings where organisations can share their challenges and offer advice and support to each other including the LIO Networks , the Health & Wellbeing Networks, Skills, Inclusion and Employment Network, the North East VCSE Policy Forum and the VONNE CEO Peer Support Network for senior leaders of Silver & Gold Membership+ supporters (drop vonne@vonne.org.uk a line if you’d like to be added to any of these mailing lists or click here to sign up to the Health & Wellbeing Networks).
In addition, we are continuing to provide information, tools, resources and practical support to the sector such as this cost-of-living resource , access to training and support through the Digital Pathfinders programme, and the Going Green Together initiative to help organisations reduce costs, become more efficient and embed environmental sustainability within their organisations, which will help with securing new funding and contracts.
We continue to provide timely and relevant funding information to the sector via our FINE bulletin (available to all Membership+ supporters) and the searchable online FINE Directory (available to Silver & Gold membership+ supporters). Our Membership+ packages and fees are tiered, offering substantial discounts for smaller VCSE organisations and Bronze Membership+ is free for organisations with a turnover of £50,000 – find out more and sign up here. Finally, we have committed to not increase our job advertising or Membership+ fees for the remainder of this financial year.
If you’d like to share any thoughts on this blog, or provide evidence on how these things are impacting on your organisations, that we can use in our lobbying and influencing work, please contact me at carol.botten@vonne.org.uk