Charities struggle to meet growing demand

While inflation may have subsided, demand for charity services continues to rise along with competition for funding, according to research by the Charities Aid Foundation. The CAF research among UK charity leaders found that 86% of their charities had recorded increased demand for their services over the last 12 months, with 54% of those reporting that it had risen by “a lot”. This has increased from 43% in 2023 when a similar survey was carried out.

Charities which are most likely to say that demand has increased “a lot” are poverty relief charities (67%), human rights/equality and diversity charities (66%), and charities helping those in need (55%), affecting services including food banks, debt advice and domestic abuse support. One chief executive of a human rights charity in the North of England said: “We’re not even meeting the demand that exists now and we’ve got 70 people on our waiting list for counselling.”

Despite improvements to the economic climate over the last year, the CAF research also finds that over a quarter (28%) of charity leaders are uncertain that their charity will be able to meet the rising demand.

The situation for charities is exacerbated by increased competition for funding. Half (50%) of the leaders surveyed cited this as one of the main challenges facing their charities.

This uncertainty over funding is forcing charities to change how they operate. Nearly a third (30%) of charities have either reduced the size of their workforce or are planning to do so, while 18% are not confident that they will have the funding necessary to continue their work by the end of the decade.

Wealthy could be tapped more for donations

Research from Pro Bono Economics reveals that wealthy people in Britain say they could give an estimated £2.8 billion more to charity each year, raising the prospect of more than halving the giving gap the country faces relative to world leaders New Zealand and Canada. If that money were donated, health charities and children’s organisations are likely to benefit the most from an influx in giving.

The analysis by Pro Bono Economics (PBE) identifies 5.8 million “wealthy” people in Britain – those with assets of £100,000 or more when their main residence is excluded – of whom 86% give to charity. While some of these donations are very generous, the report – “Mission Give” – reveals a significant capacity for wealthy people to give more.

Survey data shows that more than half (56%) of wealthy donors believe they could give more to charity than they do presently, with one in six saying they could double their donations.

PBE says tapping into this potential giving pool would make a big difference to thousands of UK charities struggling to meet demand for help that surged through the pandemic and cost of living crisis and that shows no signs of abating. Separate survey data analysed by PBE suggests that as many as 70% of UK charities expect demand for their services to increase over the coming months, and that one in three charities do not think they will be able to meet that demand.

Additional funding would be particularly welcomed by the third (32%) of charities which expect their finances to deteriorate in the next three months, and by the further 35% which expect their finances to stagnate.

The research from PBE highlights the important role that financial advisers can take in feeding the additional giving appetite held by the nation’s wealthy.

Previous work has found that simply raising the prospect of charitable giving within a financial advice conversation increases subsequent donations by an average of 40%. But, while around half of the nation’s wealthy access financial advice in some form or other, just 8% receive any guidance on their giving strategy.

PBE estimates that extending philanthropic advice to all those wealthy people who already engage with a financial adviser could generate up to £1.1 billion a year more for the nation’s charities. That would be driven both by encouraging more people to give and by increasing the average value of donations.

Researchers believe that the first step to unlocking that £1.1 billion is to train all financial advisers to better understand philanthropy and how to support their clients with giving to charity. An alliance of accredited bodies, philanthropy advisers and financial advisers are already working together with the FCA to develop and distribute training on charitable giving for the financial advice sector.

Investment income under pressure to meet needs

Newton Investment Management has published its eleventh Charity Investment Survey.  2024 is the third consecutive year in which many UK charities (58%) surveyed saw an increase in demand for services. Smaller charities are twice as likely to experience the effects of this increase in demand, largely driven by the ongoing cost of living crisis.

The survey highlighted a continued fluctuation in the ability of UK charities’ investments to meet their needs. The proportion of charities reporting that the income produced by their investment portfolios being able to meet the obligations and commitments of their charity has fallen this year (to 61%).

A quarter (25%) of charities surveyed did not know what a balanced withdrawal rate might be, to ensure their portfolios do not reduce in long term value. In the history of Newton’s survey that has been running for over a decade, this is the highest number of charities who did not know the rate.

Despite this, 2024 saw a significant improvement in investment returns. In 2023, charities reporting returns of less than 3% represented 70% of respondents. This year, this figure has fallen to 14%.

Hilary Meades, head of charity investment at Newton, says: “Our findings reveal that the charity sector appears to be on the road to recovery, moving away from several challenging hardships of the last decade including lingering pandemic effects. Notable challenges still exist however, with our findings revealing a continued uncertainty in the ability of charities to plan for the future in the face of rising pressures, such as elevated spending levels and the ever-increasing demand for services.”

Reputational risks big worry for charity leaders 

Senior charity leaders are becoming increasingly worried about reputational risks with investment issues and budget constraints among the reasons for concern, says research from wealth manager Rathbones amongst charities with stock market related investments. Nearly two out of three (65%) leaders of these charities are concerned about potential reputational and brand damage. Just one in three (32%) say they are not becoming more concerned about damage to their charity’s reputation and brand.

The biggest reputational concern highlighted by the study is increased scrutiny of charity activities, cited by 70% questioned, while nearly six out of 10 (59%) point to the potential for brand damage from social media comments by people criticising their charity’s work.

However increased scrutiny of investment policy is also seen as a major potential risk to reputation – around 44% highlighted this as a concern – while one in three (32%) are worried that budget constraints on the services they are able to provide could lead to brand damage. Around 35% point to increased scrutiny of staff as a reputational risk.

Andy Pitt, head of charities at Rathbones, says: “Charities are coming under increased scrutiny and the rise of social media is making it more difficult for them to answer criticism. Investment management and the squeeze on their budgets are adding to the rising concern about reputational and brand damage, underlining the need for charity trustees to ensure their investment portfolios are aligned to their values and purpose.”

Charity workers take second jobs

More than half charity workers surveyed are working multiple jobs according to a survey by recruitment website Charity Job Finder. A striking 58% of charity sector workers have more than one job which highlights potential concerns about pay and financial sustainability within the sector, says the website.

Taking on additional jobs has helped workers in the charity sector to maintain or improve their living standards through the cost of living crisis. Over the past three years, 44% of charity workers say they have experienced no change in their standard of living, while 39% say their standard of living had improved. Only 14% of charity workers believe their standard of living has fallen through the crisis.

Bev Garside, senior partner at Charity Job Finder, says: “We’ve seen a noticeable shift in charity sector recruitment, particularly during the cost of living crisis. More candidates from the sector are taking on multiple roles, not out of choice but out of necessity.

“It’s a worrying trend – passionate, skilled individuals are being forced to seek additional income outside the sector, which raises concerns about long term sustainability and retention. Charities are struggling to compete with the private sector on salaries, and we’re seeing increasing numbers of job seekers who love their work but can’t afford to stay in it full-time.”

Recruitment and retention crisis for legacy sector 

To better understand and help find potential solutions for the staff recruitment and retention crisis currently facing the UK legacy fundraising sector, consultancy Legacy Futures, in association with charity Remember a Charity, consulted senior legacy fundraisers on how the key challenges are impacting their organisations and themselves as legacy professionals. The result is a report Building Better Futures in Legacy Fundraising 2024. 

The report also shares strategic recommendations and practical advice that charities could take to improve their recruitment processes, to better source relevant and transferable skills, and to retain valuable talent and experience. This was compiled by the Legacy Leaders Forum, a special interest group facilitated by Legacy Futures comprising senior legacy fundraisers from charities including Alzheimer's Society, Parkinson’s UK and British Red Cross.  

Among the strategic recommendations provided in the report are the need to create a clear pathway that allows legacy fundraisers to become leaders. The need to remind charity leaders of the critical importance of legacies and their impact on the future sustainability of their charities is also highlighted. 

Key findings include: 

• 77% of respondents reported a shortage of quality candidates responding to job ads. 
• Three quarters (75%) said that finding candidates with the right skill set for the role is a challenge. 
• 61% of legacy fundraising professionals are leaving their roles due to salary dissatisfaction.  
• Over two thirds (67%) have been tempted away by a role in a different charity. 
• More than half (53%) reported moving to another organisation because their current charity did not offer them career progression. 

To help rectify the situation, the report shares how some charities have responded to these challenges – as follows:

• Almost three quarters (73%) have allowed for more flexibility.
• 60% have hired from other areas within the charity. 
• Almost half (48%) have hired from outside the charity sector, with the teaching profession being cited as one such industry to which charities have turned.

Variety of factors force charities into cuts

A report from Pro Bono Economics and Nottingham Trent University’s VCSE Data and Insights National Observatory, Treatment for the charity sector’s unhealthy status quo, warns that the deep-rooted challenges of financial instability, skills gaps and rising demand are affecting charities’ ability to support people most in need.

It finds that as many as 1 in 5 charities have been forced to cut back on the number or scope of services they offer as a result of rising costs. This includes mental health charities which have been forced to end one-to-one counselling services in favour of less specialised group support, and a poverty-prevention charity which has had to “ration” its services only to those with the highest needs.

This reduction in support comes as 70% of charities expect demand for their services to have been increased over the autumn. 1 in 3 charities expect to be overwhelmed by that demand, and unable to meet it all.

Though the wider economy is showing some signs of improvement, the report points out that the charity sector’s flawed funding model pre-dates the pandemic and cost of living crisis and is having consequences now. Without fundamental change, many charities will be forced to continue confronting challenging financial situations. In the months ahead, a third (32%) of charities are expecting their finances to deteriorate while a further 35% expect their finances to stagnate.

Recruitment difficulties and the charity sector skills crisis are also contributing to charity cuts. 4 in 10 (40%) charities report struggling with recruitment, and 57% of vacancies in the sector are now defined as hard to fill. Strained charity sector finances make this difficult to overcome. The report describes how charities’ spending on training and development of its staff has fallen by 25% since 2011. Charities are now three times less likely to invest in leadership development than the wider economy.

Without more investment in skills, many charities will be unable to adopt digital technology and innovations that could help them provide more effective services to more people. Over one-third (35%) of charities with recruitment challenges have had employees working increased hours. In some cases, this has meant managers getting drawn into day-to-day coordination and being pulled away from strategic decision making and organisational capacity building. This is affecting charities’ ability to deliver meaningful change.

Trustees need to be aware of tax obligations

Charity trustees who ignore their tax obligations could be disqualified from their role like Naomi Campbell and the other Fashion for Relief trustees, says accountancy firm Blick Rothenberg. Director Robert Salter observes: “The recent announcement that the trustees of the Charity Fashion for Relief, including Naomi Campbell, have all been banned from being charity trustees for a number of years due to ignoring their tax obligations must be a wake-up call for UK charities.”

Salter comments: “Reports indicate that Ms Campbell received various ‘perks’ from the charity Fashion for Relief while involved in trustee duties; these included free spa treatments and cigarettes. Such perks aren’t just arguably incompatible with the moral duty of a charity, they also create a tax obligation.

“The provision of benefits or perks to a charity employee, including a trustee, are subject to income tax and often National Insurance (NIC) too. As such, the charity has an obligation to report such perks to HMRC either via a payroll or sometimes a P11D form.

“When a charity hasn't accounted for the UK tax and NICs on benefits provided to trustees, HMRC will look to capture the PAYE and NIC which is due via a Tax Settlement. This makes the charity liable for any tax and employee NICs which should have been accounted for by the trustee or other employees.”

Adds Salter: “However, if HMRC decide that individual trustees received their perks knowing that the charity was ignoring its tax obligations, they can impose the tax liability on those trustees rather than the whole charity.

“The Fashion for Relief case should act as a reminder to all trustees that they need to be proactively involved in the overall direction and control of a charity, and to ensure that professional advice and guidance is being obtained and followed.”

New insurance charity to protect climate vulnerable

Humanity Insured, a UK registered charity and US non-profit, has been launched to empower at-risk communities to build climate resilience through effective insurance solutions. Backed by the insurance sector, Humanity Insured’s mission is to leverage private and philanthropic capital at scale to unlock insurance protection for people living on the climate crisis frontline.

Howden, the international insurance intermediary group headquartered in London, convened the insurance industry to establish Humanity Insured which has received seed funding from seven global insurance businesses – either based in or with a strong presence in London - including Howden, Allianz, Hiscox, The Fidelis Partnership, Tokio Marine Kiln and Beazley.

Beyond insurance protection, the charity provides funding for resilience tools and training for insured communities to adapt and manage climate threats to their livelihoods.

Charlie Langdale, chief executive of Humanity Insured, says: “Everyone should know the security that insurance brings as that security is what empowers people to invest in their livelihoods. This is an essential response in an ever-more volatile world that relies on post-event funding. Humanity Insured will not only stop families adopting negative coping strategies after climate shocks, but by being financially prepared, the most unprotected are able to pre-emptively manage the climate risks they face.”

The new charity’s board has approved three grants for communities in East Africa and the Pacific.

Major donation to help young entrepreneurs

The Stelios Philanthropic Foundation has made a £1 million donation to The Prince’s Trust to help young entrepreneurs across the UK to scope out, sustain and grow their businesses. The donation has gone into the creation of the Sir Stelios Philanthropic Foundation Fund for Enterprise which will form part of The Prince’s Trust “Start Up Grants” initiative and will be accessible to young people who are involved with its enterprise programme.

The fund has been created to help young entrepreneurs test their business ideas prior to launch or build on the foundations they have already established.

Sir Stelios says: “Creating and building businesses is something which is very close to my heart, and I look forward to helping the next generation of budding entrepreneurs achieve their business dreams.”

Celebration for environmental partnership

Fund manager Invesco UK and the Wildfowl & Wetlands Trust (WWT) are celebrating one year of working together to support conservation and restoration of UK wetlands, as the partnership is set to continue. Invesco remains the largest donor to the Blue Recovery fund, which WWT launched in 2020, with the aim of creating and restoring 100,000 hectares of wetlands across the UK by 2050. The firm has been supporting a number of key wetland creation projects and research through the fund. 

Invesco UK’s support has contributed towards WWT’s critical mapping work to identify locations in the UK for wetland creation and restoration. Flood management schemes have also been funded. In addition, to date 47 Invesco staff have volunteered at the London wetland centre in Barnes with 30 more attending before the end of 2024. Staff have also volunteered at Invesco’s Henley-on-Thames office to create their own mini wetland.

New hospice shop comes with community space

City Hospice, the only provider of home-based specialist palliative care in Cardiff, has opened its largest charity shop to date.The new store located on Colchester Avenue, Cardiff spans over 3,500 square feet and will not only offer a wide range of high quality pre-loved items such as accessories, books, clothing, furniture and homeware, but will also feature a dedicated community space.

Designed to bring people together, the community space will allow local residents to participate in crafting sessions, upcycling and other creative workshops, and will provide a welcoming environment for individuals to learn new skills, connect with others and support the hospice’s work through engagement.

 Funding for hospices starts with lottery award

Hospice UK has welcomed a £500,000 award, thanks to players of People’s Postcode Lottery, marking the start of a long term funding relationship. The charity, which represents 200 hospices across the UK, says the money raised will help its work as the national champion for hospice care across the country and its mission to promote and protect hospice care for all. 

The news was revealed at St Christopher's Hospice in London by comedian Tom Allen, ambassador of St Christopher’s and the face of a new People’s Postcode Lottery campaign. St Christopher's provides care and support for people across the five London boroughs of Bromley, Croydon, Lambeth, Lewisham and Southwark.  

Domestic abuse charity funded for new homes

Eight safe properties that will allow survivors of domestic abuse to make a fresh start in their own homes have been bought in ambitious plans by Nottingham charity Juno Women’s Aid. The social investment loan of £3,075,000 was given by Social and Sustainable Capital (SASC), which provides finance for "extraordinary" charities and social enterprises. 

The two and three-bedroom homes, across the city and the county, are currently being refurbished and will soon be occupied by women and their children so they can set down roots in new communities. These are the first to be bought in the charity’s overall plan to secure 28 homes. 

Of the first tranche, four properties fall within the city council boundary and a further four are in south Nottinghamshire. The properties are being renovated, redecorated and fitted with new carpets, kitchens and bathrooms where necessary and the first tenants will be able to move in imminently.

A further two properties will be used for the charity’s Serenity scheme which provides emergency refuge accommodation, while the others will provide tenancies for typically up to two years. Families will have access to bespoke specialist tenancy and domestic abuse support to help overcome the trauma they have experienced.

While giving Juno greater control over the quality and location of its properties, it is estimated the project will support around 110 women and 220 children during the loan term.

Likely protection for charity trustee whistleblowers

The Employment Appeal Tribunal (EAT) has allowed an appeal by Dr Nigel MacLennan against the British Psychological Society (BPS) in a landmark whistleblowing claim that could ensure protections to over 900,000 charity trustees who may need to blow the whistle on corporate governance failures within the charities they oversee.

The EAT found that even though the Employment Tribunal (ET) was entitled to conclude that Dr MacLennan was not working under a contract and was not guaranteed pay, this was only one part of the picture.

The ET still had to consider on a “broad-brush” assessment whether the denial of whistleblower protections to him and other charity trustees amounted to unjustified discrimination in the enjoyment of a fundamental right, namely freedom of expression.

In order to make that assessment, the ET had to consider all relevant factors of which pay was only one. These include the type and duty of the role, the likelihood of the individual becoming aware of wrongdoing, the public interest of the whistleblowing and vulnerability to retaliation for making a protected disclosure.

Many of these factors when applied to Dr MacLennan’s case might be thought to support his claim that there are sufficient similarities between the whistleblowing trustee and the “orthodox” employee that the denial of protection has to be justified.

The EAT also accepted that there is a “strong argument” that the role of a charity trustee is “akin to an occupational status” such that it can be compared to those who already enjoy whistleblowing protection. 

Dr MacLennan’s claim will now be remitted to the same ET for determination.  If he is successful, the case could extend the same protections that workers and employees enjoy under whistleblowing legislation to the many others who play a vital role as insiders in a position to speak out on wrongdoing.  In view of the “considerable public importance” in the issues raised by this appeal, the EAT has suggested the ET might wish to invite the Secretary of State on remission.  

In reaching its decision, the EAT took into account the representations of Protect, the whistleblowing charity, who had been given leave to intervene in the case, noting in the judgment Protect’s emphasis on the fact that “unpaid volunteers, such as charity trustees, can suffer reputational damage, akin to workers, that could have a chilling effect on their willingness to blow the whistle”.

Dr MacLennan comments: “Charity trustees and trustees of other vital public organisations have a duty to report concerns of serious failings in the organisations they oversee and can face legal, personal and professional liabilities if they fail to do so. 

“Yet in disclosing these failures, trustees are not currently provided with any legal protections and can face financial and career ruin, on top of immense mental and emotional distress when they do so.

“This is what happened to me and there is a serious anomaly that needs to be fixed here if trustees are to be effective in undertaking the essential scrutiny of the organisations they are obliged to protect, without fear of life-ruining reprisal.”  

As to the future, Dr MacLennan says: “I am extremely pleased that the Employment Appeal Tribunal has found in my favour and this ruling will make it much harder for the employment tribunal in my case – and other employment tribunals deciding similar cases – to deny whistleblower protection to charity trustees who are forced to speak out against wrongdoing. This result is momentous and could go a long way towards ensuring that high standards of corporate governance are upheld in the charity sector.”

Counsel for Dr MacLennan, Chris Milsom and Emma Darlow Stearn of the chambers Cloisters say: “This is an important judgment. It has also confirmed that workers can rely upon disclosures made before employment has begun and what matters for the purposes of whistleblowing protection is status by the time of detriment rather than at the time of disclosure.

“In view of the helpful guidance provided by the EAT, it may become increasingly difficult to maintain a situation in which trustees obliged to ‘speak out’ in accordance with their statutory duties are nonetheless denied whistleblowing protection when they do so.”