Last month, results from the second wave of Pro Bono Economics and Nottingham Trent University’s VCSE Barometer were published, entitled: ‘Running Hot, Burning Out: The state of the charity sector’. The results were similar to those from the first wave, published in November 2022, revealing a sector facing huge demand under difficult economic circumstances.
The report sheds some light on the challenges facing the sector and includes data from new questions about the sector’s workforce, while suggesting a tentatively growing optimism from the 738 social sector organisations surveyed.
The pervasive issue continues to be the cost–of–living crisis and the challenges it creates for charities, which are now facing an almost impossible balancing act as they try to deliver for their beneficiaries while navigating surging demand. Organisations are trying to do more with fewer resources, as inflation and energy costs chip away at their financial foundations. Many charities are attempting to grow their organisations as a means of countering increased demand, but recruitment brings with it a whole new set of challenges.
The report found that 82% of charity employers have sought to hire additional paid staff in the last three months. However, 71% of these employers reported difficulties, with more than half (54%) stating they have vacancies. The problems with recruitment were largely attributed by respondents to the competitive labour market. Of those struggling to recruit, 55% cited a low number of applicants, and 41% identified competition from other employers as a significant factor in unfilled vacancies.
These issues are part of a vicious cycle identified by the report, which threatens not only recruitment but also retention. As charities struggle to fill vacancies, the current workforce shoulders a heavier workload, making retention more difficult. The research found that 70% of employees reported an increased workload, with 24% citing stress and burnout as a result. The issue of retention has been a problem for charities of all sizes. 24% of all charities that responded reported difficulties in holding on to staff, a number that rises to 36% for larger charities. When coupled with the fact that wage growth in the sector is consistently outstripped by the private sector, these trends mean that many charity employees may be looking elsewhere for work.
The worst of the situation is the rising demand for services, with many charities being forced to either scale back operations or dip into reserves, at a time when beneficiaries are most in need. Most organisations (78%) predicted growing demand for services in the next three months, with 31% predicting it to grow by a lot. This is a particularly troubling prediction when voluntary participation rates are also at an all-time low, as the DCMS estimates that there are 4 million fewer people participating in regular formal volunteering than there were in 2019/20.
The disparity between demand and workforce is spurring charities to take drastic action. Over half (51%) of organisations report they have used reserves in the last three months and 46% of those struggling to recruit stated they have scaled back operations as a result. In the long-term, this poses serious problems not only to the delivery of services, but also to innovation in the sector. When citing the effects of struggles with recruitment, 52% of organisations reported a delay in introducing new services, 29% reported challenges in implementing new work practices and 16% reported difficulties in introducing technological change.
The cost-of-living crisis is ultimately causing stagnation in the sector, the authors argue, in terms of both financial growth and organisational development. As the report states, the surge in pressure on charities impedes organisations’ ability to implement the solutions to the problems they face. This leaves organisations unable to act proactively and exacerbates the situation in the long-term.
Despite the economic turmoil and the undermining of the charity sector’s ability to respond, there is some positive news found in the report. There was a slight decrease in the number of respondents reporting uncertainty since the first wave of the survey, along with an increase in the number of organisations that predicted an improved financial position in the next three months from one in five (20%) in the first wave, to almost a quarter (24%) in the second wave.
As always, the work carried out by charities is vital, especially in times of crisis. The sector continues to show great resilience in the face of adversity, with organisations doing everything possible to counter seemingly endless challenges. While some of these survey results can be bleak, there is a glimmer of positivity to be found. While the increase in optimism is marginal, there is evidence for what the authors call ‘a dampening of pessimism’.