April 2020

In this briefing we discuss the challenges faced by charity and philanthropy as a result of the Covid-19 crisis, and outline six policy recommendations that would unlock vital funding.

We begin by explaining the current unique charitable giving environment, detail what has already been put in place to support charities, and why we believe more is needed.

What is the problem?

In this time of unprecedented uncertainty and instability, charities continue to do vital work across the country and are at the heart of so many communities. They are stepping up to fight the COVID-19 pandemic, continuing to provide vital services and networks, and playing a crucial role in giving voice to society’s most vulnerable  - bringing us together towards common goals. But while donations dip at the same time that demand rises, fundraising and operations also become harder due to necessary social isolation and distancing measures - so it has become clear that charities need help.

 The true impact for the sector is as yet unknown, but has been estimated at between £4bn and £10bn - the RSA, for instance, has suggested a £10bn support package for civil society. What we do know is that there has been an immediate drop in fundraising income from events that have been postponed or cancelled, and there has been an immediate fall in trading income with the closure of charity shops and other activities.

CAF polled its charity customers overnight on 18 March, with 223 charities responding: overwhelmingly the number one thing they said they needed from government was unconditional cash grants (53%) – followed by extra people to deliver services (19%).

All of the evidence is that demand for charities is higher than ever: both from people directly affected by the pandemic and from the knock-on effects of disruption to economic and social life.

There are two major issues

  1. Maintaining charities’ ability to support communities affected by coronavirus now and in the immediate future
  2. Ensuring there is a strong charity sector able to respond to national needs once the peak of the pandemic has passed

The need for some form of help is borne out in CAF’s research CAF from the end of March  when we asked charity clients how long they thought they could continue to operate in their current form without extra help from Government or elsewhere. Worryingly, 37% said less than 6 months and 54% in total said less than a year.

To help meet these needs, CAF has responded with a £5m emergency fund to support small and medium-sized charities with unrestricted grants of up to £10K. Within a week of launching this fund, we received nearly 5000 applications totalling almost £40 million in value.  The scale of this response highlights the seriousness of the challenge facing civil society right now, and the importance of identifying further measures that can be taken during this crisis.

Why philanthropy and individual giving are important

A funding crisis of this scale cannot be dealt with solely through philanthropy – government support is crucial. On 8 April 2020 the Chancellor announced a £750 million package to support charities to “ensure they can meet increased demand as a result of the virus as well as continuing their day-to-day activities supporting those in need”.

From the package, £370 million will support small charities looking after vulnerable people, provided through organisations such as the National Lottery Community Fund in England and £60m provided to Scotland, Wales and Northern Ireland using the Barnet formula.

The Government will provide £360 million directly to charities providing essential services, with up to £200 million of those grants supporting hospices and the rest going to St John Ambulance, Citizens Advice and charities supporting vulnerable children, victims of domestic abuse and disabled people.
The BBC has also announced The Big Night In charity appeal, for which the Government has offered to match donations from the public pound-for-pound with a guaranteed minimum of £20 million for the National Emergencies Trust (NET) appeal.    
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Welcome support, but more is needed

This package of measures will offer important and welcome support for civil society: recognising the humbling generosity of the British public as well as the vital function that charities play on the frontline of the response to this crisis and in their ongoing work to support and speak up for some of the most marginalised people and communities in our society. But given the enormity of the financial challenge facing civil society, we will still need to think creatively about how to fill the gaps that remain.

Philanthropic funding cannot do this by itself, but it can play an invaluable role in protecting and rebuilding the sector - especially given some of its unique features: flexibility, innovation, rapid response, deep knowledge of communities, and the ability to connect and convene.

What is needed?

Philanthropy and charitable giving can play an important role in supporting civil society through the current crisis, and in helping it to recover and rebuild over the longer term. However, to mobilise generosity on the scale required will require additional Government support and stimulus. Extraordinary times call for extraordinary measures - hence the policy ideas presented here should be understood in the context of this unprecedented crisis. This is not a time for business as usual, and we must acknowledge that the political and social environment is shifting significantly and at speed.

It is important, however, that this sense of urgency should not lead us to overlook concerns about the need to ensure philanthropic funding does not simply replicate or reinforce unfair systems and inequalities, but instead aims to overcome them where possible. Policy measures and funding allocation should therefore reflect existing discussions around equity, diversity and inclusion instead of reaching for ‘tried and tested’ approaches for expediency’s sake.

See, for instance the work Charity So White is doing in highlighting the particular challenges faced by BAME charities in the response to Covid-19, or the Association of Charitable Foundation’s 2019 report on diversity, equity and inclusion for funders.

These recommendations require action from both Government and private funders, and – crucially - collaboration between the two. We have worked to think creatively during this crisis and develop ideas that unlock support from a variety of sources. It is vital that these are not seen as a replacement for other necessary measures, or taken as reason not to provide wider support for civil society. Many of the measures are also designed to offer temporary stimulus, so they include sunset clauses where possible in order to avoid setting legal, policy or regulatory precedents for the post-crisis period.

1: Government support for giving >

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