CEO Dan Corry speaking at an event

Up for it, and up to it?

The challenges for charities and funders in the Covid-19 world

By Dan Corry 14 October 2020

The speech was delivered by Dan Corry at the first ever online NPC Ignites conference on 14 October 2020. The video of the speech is available to delegates. Non-delegates can can access the recording by registering. It has not been checked against delivery. 

Our society, our economy, and our nation are enduring the most profound crisis most of us have ever seen. No-one knew what to do when it broke. There is still much about the virus we do not understand. Navigating this uncertainty is proving challenging for our government and overwhelming for all of us.

Yet the sector has responded, and even with the new restrictions announced this week, many have naturally been thinking about how to bounce back. But as my colleague, Seth Reynolds put it, “The best-case scenario may have been Covid then recession; the reality will be Covid and recession”. Now it looks like you can add the real likelihood of a disruptive Brexit into the mix – the oven-ready deal is turning out to be rather half-baked.

But what is now certain is that the crisis will be with us for a long time. There will not be short, distinct phases. The new normal is really the perilous present, a long-lasting crisis in which disaster is never far away. Reacting and rebuilding must happen together.

And the challenge of rebuilding will be massive.

Helping people, places and the planet survive and thrive will be a massive effort. But one thing we can be sure of: the sometimes maligned ‘do-gooders’ who make up civil society will be at the heart of it.

Charities, social enterprises, community organisations and all their funders are crucial to getting us through this crisis and creating a better, greener and fairer world on the other side. Everyone here today needs to be part of the story, you need to be listened to, you need to be at the table.

We need a sector that is up to this and up for this – especially as the crisis drags on. Plus, we need policy makers who understand the centrality of charities and the social sector to a strong society and a strong economy.

NPC Ignites this year is about the future of charity and philanthropy.

I’d like to kick the conference off by talking through some of the biggest challenges and opportunities we face.

Charities have stepped up extraordinarily well, but there were some fundamental weaknesses in our sector which made us vulnerable. The government is thinking more about charities but still does not understand the sector. We have learnt a lot from this crisis, and we must take this opportunity to rethink and rebuild if we are to build back better.

Nobody could have prepared for a crisis like this.

It’s not like charities, social enterprises, and community groups had loads of spare time or cash before Covid, so it’s beyond tough to meet any surge in demand or cope with a cliff-edge in fundraising.

Our sector is variable – to put it mildly.

But it does make my heart leap to see charities fighting so hard to keep going, to keep getting food on people’s tables, sharing company with the lonely, and delivering vital health supplies to vulnerable people shielding from the virus. People have run marathons on their own, in the rain, to raise a few more pounds for their cause. And as many of the blogs we have featured recently show, we’ve seen charities embracing new ways of working, of delivering services and of collaborating that were very new to them.

So, what comes next?

The challenge is a big one and our ambitions must be equally so.

The reality is that Covid is ‘stress-testing’ a system that already had weaknesses, so first, we need to look at where we were pre Covid. So, whilst I think the Charity Commission’s tone could more strongly recognise the sector’s achievements more, we should be mindful of naïve optimism.

Most charities lack financial reserves and have no spare capacity to respond to rising demand amidst falling funding. It’s a real problem and one that is more or less inherent in the model. Forthcoming work from Professor John Mohan and colleagues of Third Sector Research Centre is likely to suggest that even looking at larger charities – those with income of over half a million pounds – a significant number have a month or less in reserves and even more have less than 3 months.

Charities are inevitably influenced by what funders – big and small – will fund. Many do not always think hard about where and how they fund, nor do they understand the power they hold and the damage they can inadvertently cause.

We have a lot of charities who are overstretched. Our State of the Sector survey, carried out just before Covid, found charities doing more of everything and expecting to do even more in the future. Partly this is about trying to meet diverse needs as they arise; partly about funding; partly about not focusing effort on the things that have the biggest impact.

We have also – and let’s be honest about it – a sector that was dragging its heels on digital.  Reasons for this are abundant, but the value of digital is now becoming all too clear.

We have a sector heavily involved in delivering government contracts. Over half of charities surveyed for State of the Sector did so. But rather than being a safe haven of stability, we found the majority were cross subsidising contracts with other, fundraised income. It’s been going on for years, but with the massive squeeze at the moment is it really sustainable?

We have a very uneven spread of charities across the country. Our research last year found there are more in richer places and less in poorer places, which matters a lot when we think about how the sector can address inequalities and indeed Covid.

While the data is incomplete and imperfect, it looks to us from Charity Commission data and the 360 Giving data set that the response from funders since Covid does not so far show the  significant switch in grants towards more deprived areas one might have expected.

And we have a sector that is not understood by government.

The policy world gets excited when they think we can produce lorryloads of free volunteers, but that’s usually as far as the love goes.

Yes, they gave a package of support a few months ago – quite substantial in fact. But as our analysis made clear, it was targeted support to meet some of their ‘needs’ and never a general ‘bailout’.

But to neglect the charity sector is a mistake. Our sector really is in trouble – and that matters to all of us.

Our analysis in May, funded by the Gatsby Foundation, revealed the financial plight of major, crucial charities even after cost-cutting measures and general government support.

Sadly, recent announcements show just how right we were.

And we know how tough life is for the many thousands of smaller charities.

The running toll of redundancies we track is frightening, with projections warning there are more to come. We know many charities will go under, even if previous experience shows this will not happen that fast as many try to cling on for as long as they can.

But we have a hard job getting the importance of all this into the heads of policy makers. Take the Treasury, I worked there twice – under Thatcher and under Blair. I know and understand why they tend to think of our sector as a bit unimportant, and also why they often view us as a bit like the private sector; in bad times some will go bust, but that’s the way it goes.

Now of course the job of government is hard. You can’t spend infinite amounts. And it’s difficult to choose who to save and who to let struggle. But this is no excuse as the same applies to the funding that has been given to the private sector to get through Covid. In Treasury jargon, there is bound to be a lot of deadweight and poor targeting.

But in any case, this is the wrong approach.

Governments fail to understand that our sector is not like the private sector. The market forces don’t work in the same way, and we don’t have easy access to capital.  Relationships with people and with communities – and with other organisations (in and out of sector) – are key to the impact we can have. Once broken they cannot easily be rebuilt.

Governments fail to understand just how important we are to the services people receive. The sector is not a substitute for the public sector. But the Covid crisis has revealed just how much charities do all the time, and that if you let them wither, thousands will suffer. Or, the state will attempt to replace them at higher cost and with less effectiveness.

And Whitehall still hardly recognises how irreplaceable what so many charities do for society, for communities, and for families is.

This is about more than asking for money. Charities should be at the heart of government thinking and institutional change is needed to achieve that. We submitted a range of ideas to Danny Kruger’s review on this: there is much that could be easily done but while many of our recommendations found their way into his report, there was not much in this space.

It’s a relief also to see Labour coming out of its ‘charity is a sign of failure’ mentality, as our recent event with shadow charities minister Rachael Maskell shows. I hope a genuine fight between the parties on this agenda will lead to better policy making all round.

Local government is important too – Covid has made this even clearer. Yet the social sector has often been hostile to local government (and vice versa). From both sides, we need to end that. We need properly funded local government that will work arm in arm with charities.

But despite my concerns, I do think we’re now more prevalent in the minds of policy makers, at least at local government and City Region level.

Which gives me a chance to say a few words about the recent report by Danny Kruger.

There is a lot to agree with and applaud. It’s great to have a politician who really understands and cares about the sector. Whether any of it will be enacted is another story.

But – yes you knew there would be a ‘but’ – there is a big flavour of being very pro the small, worthy, un-threatening local charities – the little platoons. Of course, I agree with these being very important and being worthy of support, but it is only one part of what our sector does.

There doesn’t seem to be the same type of enthusiasm for national campaigning. For the disruptive, passionate, and sometimes angry challenging of the policy of the government of the day on behalf of those charities see suffering. The obvious conclusion being that giving voice and space to the unheard at scale is often inconvenient or embarrassing for those in government, so they would rather not encourage it.

Likewise, there was not much on bigger charities, to whom I fear a latent hostility runs through a lot of policy and political discussion – and indeed from some in our own sector. Yet larger charities are crucial too; they have a big voice that smaller ones simply cannot; they have resources to research and lobby; they have the ability to operate in different areas, pooling knowledge across the country; they can deliver services at scale and take risks. Not all about them is good but we should be nervous at how hostile the current climate seems to be.

But amidst all the pain, we have learned many good things through the necessity and urgency this crisis has forced upon us.

Some have risen to the challenge and new forces have arisen. It is organic, confusing, messy.

Much is inevitably anecdotal at this stage but here are some observations:

We have seen a great outpouring of volunteering and mutual aid groups. The desire to do good still runs strongly even in a pandemic.

We’ve heard at our Place Network meetings how in many areas there has been good collaboration between charities, and crucially with local government and health.

We have seen more collaboration between funders, quicker decisions and more core funding – something we have always argued for.

We have heard cases of switching to digital at astonishing speed, especially in service delivery, although it’s difficult to know quite how widespread this has been. Yes, there was often no alternative, but the sector got on with it pretty well.

Equally important, we have seen a major shift – at last – towards trying to use data more to analyse where need is (including as a result of Covid), and to understand where funding has already gone. We have seen this increase in demand for data from both funders and charities – who have used a lot of the material that we have put out on our website to understand what is happening.

Another hard lesson is that Covid-19 has held up a great big mirror to the massive social inequalities that beset our nation — be that of class, ethnicity, disability, income, geography or age. The Black Lives Matter movement has turbo charged awareness, but the inequalities were always there.

I hope it leads to a greater focus on these issues. It clearly requires us all to ask what we as individuals, organisations and as a sector can do to tackle these inequalities.

There is much to get on with – for instance, despite the agreement that something needed to be done, good data around BAME-led or focused charities has been hard to come by. There have been some positive signs recently that this, and many of the other data issues we face, will finally be tackled, but much too often in the crisis we were without much of a compass.

So, we’ve learnt a lot, but the question is, how do we keep hold of the good things as we go forward?

How do we avoid the tempting pull of the old ways? And how do we avoid the land mines ahead once we have got through this crisis?

There could be missed opportunities that we will look back on and regret. We must carry forward the good innovations that we have seen.

And there are dangers.

Collaboration is happening more, but largely in the same places as before. That’s partly because it takes time to build the relationships and social infrastructure that enable it. With all the barriers raised by Covid, we will need specific, targeted programmes and funding to help such infrastructure spring up where too little exists already. The levelling up agenda won’t work without this sort of investment as part of it.

Data sharing from charities and funders is still slow and siloed. Our systems are outdated, so we need to expend real resources on the unsexy business of making them all reconcile with each other.

Digital adoption could easily become just a cost saving exercise if post Covid, commissioners and grant makers are not prepared to go back to funding more expensive in-person work where it is more effective. And the problem of digital exclusion still remains and must not be ignored.

There is also a danger that some may see the rise of mutual aid groups and ‘new’ volunteering as an excuse to downplay the importance of the more formally organised charity sector in favour of spontaneous, bottom up movements.

Volunteering has mushroomed which is great news. But unsurprisingly as people came off furlough it has gone down again. ONS data from their Taking Part Web Panel COVID-9 Report shows a steep fall between May and July in the proportion having volunteered in the preceding four weeks. In fact, the ONS also note that “our estimates showed a trend towards decreased participation compared to before the pandemic.”

And great as mutual aid has been, it is certainly not evenly distributed.

Our research has found that London and the South appear to have more mutual aid groups relative to their populations than Scotland, the North and the West Midlands.

35% of mutual aid groups in the UK are in local authorities with no small areas in the bottom 10% of the Index of Multiple Deprivation. As an example, on this data, South Cambridgeshire has ten mutual aid groups, Middlesbrough has one.

So, the spread unsurprisingly shows signs of reflecting existing inequalities.

Just as important, we need to be careful on the scale here – there are hundreds of times more local charities than there are mutual aid organisations in the Mutual Aid UK database.

So, while Mutual Aid groups are very much to be welcomed and should be part of the mix, and more bottom up volunteering will, we hope, continue and not drop down again post crisis as it did after the 2012 Olympics, we need to keep seeing all this as a powerful supplement to the infrastructure that exists, even in deprived places, through established charities and not as a replacement for it.

But perhaps the biggest danger is that we simply go back to where we were before – or even worse as a hollowed-out shell of what we were. We need to build back better. It is when we have a crisis that we can see the possibility of systems shifting – in the way we think and the way we act and behave. We really must not waste this crisis. Now is the time to embed recent shifts.

Some say a focus on survival and doing the best we can for our clients and causes is all we can manage. While we must recognise the reality of this for many charities, we do need to focus on how we can go forward as well.  

So, at NPC we are beginning a new initiative: Rethink, Rebuild.

We know that the coming challenge is huge. And that even most of the good things we’ve seen in the crisis from charities and funders are really just incremental. So, the challenge we must rise to is to go way beyond the past, and respond with creativity and collaboration as well as compassion.

We want to convene and collate diverse insights and expertise to support the charity sector’s resilience and adaptation.

We want to rethink strategy, philanthropy, data and digital, collaboration, and policy.

We want to challenge long-held imbalances, inequalities and systemic dysfunctions in the sector.

You are taking part in Ignites because you understand this too. So, acknowledge the challenges but don’t be daunted by them.

Let’s use this time to rethink, and then rebuild.

Are you up for it? And are you up to it?