The Courier & Advertiser (Angus and Dundee)
Cash running out for half of charities
COMMUNITY: Fears raised as lockdown takes toll on third sector
Half of Tayside and Fife’s charities fear their cash reserves could run out within just six months as coronavirus restrictions continue to take their toll.
Research carried out by the Scottish Council for Voluntary Organisations (SCVO) has painted a bleak outlook for the third sector after the pandemic forced the cancellation or postponement of crucial fundraising events and sparked a downturn in volunteering.
One in five charities said they may be forced to fold altogether by this time next year.
The issue has been highlighted by Mid Scotland and Fife MSP Claire Baker. She said: “Three months into lockdown, short-term financial shocks are being replaced with longer-term concerns over sustainability and how services can be adapted so that they can continue to be delivered.”
Half of charities in Tayside and Fife believe they could run out of cash reserves within just six months, while one in five fear folding altogether.
The findings came from research commissioned by the Scottish Council for Voluntary Organisations (SCVO) which asked organisations about the impact of the pandemic.
Almost 5,000 responses were received, providing insights from a large cross-section of registered Scottish charities, and the picture across Tayside and Fife is said to be representative of the challenges facing the third sector in Scotland as a whole.
The SCVO said charities are facing a “perfect storm” of reduced income and increasing demand.
Aside from the obvious financial pressures facing the sector, organisations are facing uncertainty over what happens when their reserves finally dry up, any Scottish Government emergency funding is withdrawn and when the furlough scheme is wound up.
On average, between 15% and 30% of staff have been furloughed, which equates to between 16,000 to 32,000 of the sector’s 108,000 paid staff.
David Mcneill, director of development for SCVO, said: “It is clear that while there has been a colossal and inspiring adaptation to support people through the lockdown period, many voluntary sector organisations are likely to face the perfect storm of reduced income and surging demand over the coming months.
“As predictions point towards some significant economic and social challenges as we begin to exit lockdown, organisations will be facing a greater demand for services which support those who have lost jobs, have seen their financial situations change, have faced abuse at home, are struggling without regular childcare or education, and much more.
“The initial response from the Scottish and UK Governments has been focused on the immediate needs of organisations who have had a sudden drop in income or can provide vital support to communities during the crisis.
“Funders have been collaborating more than ever, working innovatively to ensure emergency funds can be accessed quickly by those most in need and allowing existing funds to be used flexibly.
“In the coming months, organisations will need support from all funders – including Holyrood, Westminster, local authorities, independent grant and trust funders and members of the public – to help them as much as they can to survive.
“We know the voluntary sector has been never more needed than at this time, and SCVO will continue to champion the absolutely vital work that organisations are carrying out and work with funders to ensure the sector can continue to support communities during and after the coronavirus pandemic.”
Mid Scotland and Fife MSP Claire Baker believes many worthwhile causes could soon see their reserves drained without the ability to generate income.
“The introduction of emergency funding arrangements for many organisations was welcome, but the fact is that most charities rely on a mix of income to survive,” she said.
“Without the ability to continue fundraising activities or other incomegenerating services, it is only a matter of time before their reserves dry up.
“Three months into lockdown, short-term financial shocks are being replaced with longer-term concerns over sustainability and how services can be adapted so that they can continue to be delivered.
“The immediate measures that were taken, including resilience funding, have an end date and the Scottish Government must consider how longerterm funding needs will be met.”
The SCVO revealed most charities have been active in countering the impact of Covid-19 on their organisation, with 95% having taken some type of action.
However, the cancellation or postponement of planned work or events has affected more than threequarters of those surveyed, while 51% said they had lost income from fundraising.
Half of the respondents said they feared running out of cash by the end of 2020 and 20% reported a “critical threat” to their financial viability in the next 12 months.
The same number predicted they would be unable to do the work they were set up to do at some point in the next year.
The Scottish Government says it has fast-tracked tens of millions of pounds worth of lifeline funding to charities since the start of the coronavirus crisis, but communities secretary Aileen
Campbell has raised doubts over a further £10 million. In April, £35m of Barnett consequentials was earmarked for the Scottish Government in respect of charity support direct grants but this was later amended by the Treasury to £25m.
Ms Campbell said: “Charities and third sector organisations have worked tirelessly throughout the Covid-19 crisis to ensure food, essential supplies and other vital services reach those most in need in our communities, as donation streams and other funding routes dried up overnight.
“Now more than ever these organisations deserve clarity. Had we not acted quickly at the start of the crisis to ensure tens of millions in funding reached the frontline, many organisations would not have been able to provide the level of service they have delivered in communities across Scotland, and that would have been hugely damaging to the people who rely on them.”
“The immediate measures that were taken, including resilience funding, have an end date. CLAIRE BAKER MSP