Researching the recession: so what do we know?

In the midst a somewhat busy period at NCVO Towers I was asked the other day to present an overview of what we know about the recession and its impact on the sector. (This was for the recession summit between the sector and OTS.) Trying to assess the impact of recession is difficult for three fundamental reasons: first, its really the sort of exercise that can only be done at distance, by which time it’s too late to do anything about the findings; second, despite the efforts of many, systematic data sets on the sector are few and far between. There is a related problem of whether we are capturing the impact on below the radar organisations; and thirdly, the sector is constructed constituent parts with some very different drivers, bringing into question whether there is any sort of common experience.

Bearing in mind such concerns, it’s worth reflecting on what we know, particularly as 18 months ago the sector was collectively very worried about its short-term future. So what has happened? Or more to the point, what has not happened?

1. We haven’t seen mass closures or failures. I don’t think that there is much evidence of even relatively small numbers of failures. Some people were getting excited at one point because the Charity Commission removed 14,000 (Link: details are halfway down the page) or so charities from the register, but this is mostly a result of their drive for a more accurate register. However, I have seen reports from the regional networks that smaller organisations fear they may close. It’s also worth noting that we haven’t seen the sector reconfigured by a wave of mergers.
2. Charitable giving has declined, but not as much as we feared. There are two really big income streams for the sector: giving/fundraising, and government funding (an increasing proportion of which is contracts). Charitable giving has dipped: our estimate is 10%. This is more than giving fell in the US. Beth Breeze’s research on major philanthropists suggests the number of big gifts held up, but their value fell by 13%.
3. Government funding has held up. Maybe two months before the end of the financial year is a stupid time to make this point, and there is undoubted pain to come, but all the evidence I can see suggests that there has not been a mad rush to ditch funding commitments. I’ll qualify this by saying some local and regional reports are suggesting small, community based organisations don’t subscribe at all to this view. I’d suggest here that such organisations really are seeing cuts or experiencing poor funding practice with statutory funders, but that this has nothing to do with the recession and is in fact a long-term problem.
4. Volunteer enquiries have shot through the roof. The big national surveys aren’t translating this into a big increase in volunteers, which might highlight the other problem that has surfaced – the sector’s ability to deal with a big influx of new volunteers, probably with different motivations and therefore expectations. Volunteering England’s report is the last word here.
5. Confidence is still low. There are at least 3 quarterly confidence surveys of the sector going on, and they are all reporting that a majority of organisations think things are going to stay the same or get worse. I’m surprised anybody is optimistic: research by Gareth Morgan and Beth Breeze highlighted that the number of negative recession news stories in the sector press heavily outweighed the positive.
6. But maybe, just maybe, we got our act together and got through it? This isn’t evidence, its hypothesis, but here goes: despite many chronic problems, the sector was in better shape than when it entered the last recession of the early 1990s; the staff, management and governance of organisations are more effective than we sometimes give them credit for; the support and advice of funders and infrastructure bodies helped; and at the macro level, fiscal and monetary policy averted the deeper recession that some expected. These are interesting research questions worthy of investigation so that the sector is better prepared for the next recession.

So, I am suggesting that at best the indicators of malaise are mixed, that most howls of pain are emerging from local studies that focus on community based organisations, and that the biggest change has been demand for services, whether advice or volunteer placement. It doesn’t need a crystal ball to suggest that on the statutory funding side things could be about to get much worse: and maybe the real story of where we are at the moment is ‘no change’. In short, everybody is holding their breath, waiting for the next administration to wield what Christopher Hood calls ‘the Geddes axe’ in March 2011. I’ll write about this research in my next blog.