UK charities face bankruptcy

Covid-19: 1 in 10 UK Charities Facing Bankruptcy

As the demand for services continues to rise, a study has found that the charity sector is facing a £10 billion shortfall struggle.

By the end of 2020, one in 10 UK charities will have faced bankruptcy due to a £10 billion shortfall left in the wake of coronavirus, with a soar in demand simultaneously combined with lost fundraising.  

Independent charity Pro Bono Economics has carried out an analysis identifying the coronavirus crisis as a trigger causing charities to lose £6.4 billion of income over the next 6 months. There is likely to be a high demand for extra services such as health, debt advice, social care and mental health which will result in the region of £3.7 billion in extra costs, at a time where charities are unable to carry out their traditional fundraising.

The scale of the problem spans from big household-name charities like the National Trust and Cancer Research UK who are having to prop themselves up with public donations, to smaller locally based charities who seem especially exposed to the crisis. Two thirds of smaller charities have had to make significant cuts to their services whilst being unable to furlough staff due to demand, and 13% are expecting to go out of business altogether.

The National Trust has identified a shortfall of £200m this year, and Cancer Research UK has warned it will lose about £120m in donated income over the next 12 months.

It’s clear that charities are in dire need of more resources over the coming weeks and months if they are going to survive this crisis. As if the prospect of 1 in 10 charities going under isn’t shocking enough, even those that do survive will still be significantly struggling to operate under the ongoing constraints.

The capacity of the charity sector in general is facing a huge hit.

What resources do charities have?

Over the past 3 months we’ve seen a heart-warming surge of volunteering and community spirit throughout the nation. The charity sector has the natural ability to further nurture and encourage this shift in society towards kindness and generosity, but it is unfortunately being undermined by the government’s bailout fund of £750 million not being enough to scale the issue.

The biggest impact on the activity of charities seemed to be physical social distancing measures, which are likely to continue for the foreseeable future. The effect of this on their ability to deliver services will further reduce charities expected income. 

Ironically, it seems that the charities that people are relying upon amid this crisis, and will continue to need post Covid-19, are amongst the ones that are facing the biggest struggles.

Whilst the government recognises the “incredible work that charities have done in supporting the national effort and how they are helping Britain bounce back,” – What will happen if their £750 billion bailout fund proves not to be enough?

Perhaps it will once again be the general public who help to lift these charities out of their struggles with their generous donations and commitment to community spirit.

If your charity or cause needs help at this time, find out how we can help you.

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