Charities: we've got five years left, at best

Cuts combined with escalating demand for services are threatening our existence, say nearly one in 10 charities.

Anna Bawden

Nearly one charity in 10 thinks it will not exist in five years. That is the stark finding of a survey of more than 1,000 charity professionals in the Guardian's voluntary sector network. Yet more than 85% expect demand for their services to increase and 35% predict a dramatic rise in demand.

The findings show that, although three-quarters of third sector organisations are confident their charity is strong enough to be still operating in 2018, 8.5% do not believe they will survive and 18% were unsure about their future. "There seems to be a shift to asking third sector organisations to meet needs that were previously met by government agencies, but with fewer resources," said one respondent.

Voluntary organisations are increasingly alarmed by the government's attitude to charities and believe it isn't doing enough to support them. The survey was conducted in May and June 2013, and 1,256 members of the voluntary sector network took part. Asked: "How much confidence do you have in the government's approach to the third sector?" nearly half (47.3%) said they had "no confidence".


Taking up the slack

"Charities are being expected to take up the slack of government cuts to services, without the financial support to do so," said one respondent. "The government tends to see the third sector as a way to offload statutory services, but with no attached funding," said another.

The survey results echo research by charity thinktank New Philanthropy Capital (NPC) last year, which found that 90% of charities faced a riskier future, with more than half reporting that they were using or planned to use their reserves to keep going. This has "serious implications for the sustainability of the sector," says Dan Corry, chief executive of NPC. "All this is set against a significant rise in demand for their services, so it is easy to see that we're heading for trouble.

"The delivery of public services is clearly an opportunity for the voluntary sector, but there are still question marks over whether the government has got charities on board. It is worrying, therefore, that almost half have no confidence in the government's policies."

A combination of welfare reform and the £2.1bn cut in council budgets from 2015, announced in the spending review means that demand for charity services will continue to rise at precisely the same time as public sector funding is drying up. "The trend over the past 20 years has been for governments to support the third sector bodies to take over services otherwise supplied by local authorities. In the past three years, the demand and pressure for this has increased, while the support, both financially and otherwise, has lessened," one respondent pointed out.

Calculations by the National Council for Voluntary Organisations (NCVO) before the spending review indicate that, if cuts are passed on proportionately, third sector funding will be £1.7bn lower by the 2017-18 financial year than it was in 2010. But if councils choose to make charities bear a disproportionate degree of the savings, charity income will be £2.1bn lower.

Sir Stuart Etherington, chief executive of NCVO, says: "The combination of increasing demand, rising costs and income levels that are often static or falling means that many charities are under unprecedented pressure at the moment. I think this government still, rightly, sees the voluntary sector as an important part of the answer to many of our current challenges. But it's important that it keeps its side of the bargain and listens to the expertise of charities. The voluntary sector excels at innovation – we can help find new and cost-efficient ways to respond to problems, and we can be part of the economic recovery through supporting people to develop their skills and confidence."

The Cabinet Office denies that the government is not doing enough to support charities, pointing out that £107m was made available through the Transition fund between 2010 and 2012. It also cites the funding that "social ventures", such as mutuals and social enterprises, can access through the Incubator fund and the Investment Contract and Readiness fund. "We know that, for many reasons, this is a very challenging time for charities," a Cabinet Office spokeswoman says. "However, the British public continue to show their support, with giving that is stable and volunteering on the rise. Government support has come in the form of new incentives for giving, improvement of gift aid and the development of the social investment market. At the same time we are opening up new opportunities such as the Transforming Rehabilitation programme for charities, mutuals and social enterprises to help us deliver better public services."

But some participants in the survey worry that, for smaller charities, funding pressures will be exacerbated by the vagaries of the contract tendering process, with the result that they will lose out when bidding for contracts. One said: "I am seriously concerned about the future of small- to medium-sized and local organisations that are in real danger of losing out to bigger providers in the competitive tendering system, or else being subsumed into partnerships with larger organisations."

Another respondent felt even more strongly that the voluntary sector was operating at an unfair disadvantage. "The government's new approach is doing a fabulous job of facilitating the squeezing out of charities by corporate organisations that are better at tendering, despite their lack of understanding of the sector."

The survey revealed that a number of participants had negative experiences of working with the private sector. "I find the majority of companies only want to help on their own terms and are unwilling to listen to us and take on board what our actual needs are," said one respondent. "They often assume that their skills and experience are superior, even if they have no prior experience of working with the client group. They appear to believe all charity workers are incompetent amateurs and that by deigning to grace us with their 'precious' time they can solve all our problems."

But most had more positive views of partnerships. "Working with companies can be a way of raising awareness of social responsibility issues and even supporting companies to introduce responsible practices," said one. "It's vital that charities partner with companies. It helps to expand your reach as a charity and can be an important revenue stream," agreed another.

Given the third sector's precarious finances, charities make less use of social media for fundraising than might be expected. Asked: "How important do you believe Facebook is as a fundraising tool?" many were surprisingly cautious. It would appear that a number of charities see donating via social media as primarily useful for "personal fundraising" for marathons, sponsored cycle rides and the like. Although social media is lauded as a "massive networking tool", as one respondent summarised: "Likes do not translate into giving."

Instead, organisations use Facebook mainly to raise awareness and for single-issue campaigns. As one said: "Our Facebook page is aimed at providing information to our service users, so we wouldn't necessarily see the page as a fundraising tool, but Facebook itself certainly lends itself to getting the word out about your cause, especially if people are able to donate directly, using the JustGiving app for example." (http://www.guardian.co.uk/society/2013/jul/24/charities-voluntary-sector-five-years-existence?CMP=twt_gu)

• Additional reporting by Jordan Rowe