Government funding for charities: An important start but more is needed

After weeks of waiting with bated breath, yesterday the chancellor announced a new package of support for charities.

What’s in the package?

A total of £750m in funding was announced. This is new money, separate from the £300m which the National Lottery community fund (NLCF) announced they were bringing forward on 27 March.

But it’s important to note that this money is very much targeted at charities responding to the crisis. Also, as far as we understand, there’s also no money planned for the Department for International Development to give to international charities: this is very much UK-focused.

Of the £750m, £370m is due to go to small and medium-sized charities. In England, this will be channelled through the NLCF and other organisations. It will support locally-focused charities doing most during the outbreak – such as delivering food and medicines and providing financial advice.

Another £360m will be allocated by government departments to charities providing essential services and supporting during the coronavirus crisis. Out of this total figure:

  • up to £200m will support hospices
  • funding is specifically allocated to St John Ambulance to support the NHS and Citizens Advice to allow more staff to provide advice.

The announcement also singled out vulnerable children’s charities delivering local services and victims’ charities, including domestic abuse, to help address rising demand. It’s not clear how much flexibility there will be for other types of need – disability charities are an obvious example – and we’d like more clarity on that.

The government also intends to match public donations to the BBC’s Big Night In charity appeal, with a minimum donation of £20m to the National Emergencies Trust.

The devil will be in the detail

Behind the headline figures, the key issues that now need to be addressed are how the money will be distributed.

Government aims for charities to receive funding in the coming weeks. Departments should be starting to identify priority cases now, but we don’t know what their criteria for prioritisation are and how they’re measuring them. For example, we don’t know what consideration will be given to equality and equity, including the need to fund organisations that represent marginalised communities.

Charities should be able to apply for the NLCF grant pot within a similar timescale – but again, we don’t yet know what the criteria will be. In particular, we don’t know if the focus will be on income loss, increased need or a mix of both.

It’s a start, but it’s not enough

Charities will make good use of these funds: they’re an important start. We’re also acutely aware of the sheer scale of the crisis facing the government just now. Ministers have an extraordinary range of challenges to contend with, and we know they’ve worked hard to deliver this package.

But with charity shops shut and fundraising events cancelled, we’ve estimated charities stand to lose around £4bn in 12 weeks as a result of the crisis – and that’s a conservative estimate. The Institute of Fundraising’s survey of charities, in partnership with NCVO and the Charity Finance Group, found charities expecting to lose nearly half of their fundraised income, even as demands placed upon many of them soar. Cancer Research UK and Macmillan Cancer Support anticipate losing over £200m between them. Charities like the Scouts and Mind expect to lose millions over the next few months.

This won’t be enough to prevent good charities around the country from closing their doors. Even many of the charities which survive will look very different in a few months’ time, with severely reduced capacity to provide support that people rely on.

Why a specific package of support for charities is necessary

When the chancellor announced the first swathe of financial measures, the clarification that charities are also eligible was welcome. However, the benefit for charities is likely to be very limited.

Charities are eligible for the coronavirus job retention scheme – the furloughing scheme, as it’s usually called. The government gives grants to employers to pay 80% of furloughed staff’s wages up to £2,500 a month (plus employer national insurance and the legal minimum for pension contributions). If you’re pausing activities during the coronavirus crisis, that might well help you.

But lots of charities deliver vital services, give much-needed advice and support vulnerable people, and none of that can or should stop in a pandemic. Quite the opposite – the need is growing, not shrinking. Even where a charity can make use of the scheme, it’s probably only an option for some of their staff.

Coronavirus business interruption loans, meanwhile, are only open to charities if over half their income comes from trading rather than grants, investments, fundraising or other sources. That locks out most charities. Business rates relief in England for the retail, hospitality and leisure sectors and for nurseries helps some charities, but only to a limited extent since charity rate relief is 80% anyway.

Help us help others

This isn’t about charity for charity’s sake. It’s about the people and services which rely on them. At a time of crisis, charities want and need to be able to give their all to supporting people who need it most – from housing support to hospices, from mental health support to bereavement counselling and from air ambulances to meals for people who are self-isolating.

But they cannot do this if they have to suspend their work or close altogether. The government doesn’t want that any more than we do. We’d really welcome a commitment to review the level of this support as the crisis continues. And whatever happens next, we’ll continue to push for the support needed so charities can keep serving the public. We’ll make sure to keep members updated, and you can sign up for our emails here.

Finally, a huge thank you to our colleagues in other sector bodies, with whom we’ve worked closely – and above all, to our members and charities as whole. At a time when charities are enormously stretched and worried about their own situation, and even more worried about the people and causes they’re here for, they stepped up to help make the case for our whole sector. We can’t do our jobs at NCVO without that input, and it makes a huge difference. On that note, we’re still looking for case studies of how the crisis is affecting charities’ finances – please do feed in using this form.


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Avatar photo Elizabeth was head of policy and public services at NCVO until 2020.

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