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State of the Sector 2020

Where we stood as the crisis hit

Read the latest State of the Sector research into opinion among charity sector leaders: State of the Sector 2024.

We don't want or need to go back to all the ways we did things in the past. How radical we are will depend upon our appetite for bold change. Click To Tweet

Charities are in crisis. Beyond the immediate funding shortfall, the economic and social changes brought about by Covid-19 will create a raft of new challenges that charity leaders will have to grapple with, from big questions around governance and longer-term funding models, to how to equip themselves to continue delivering services. But the crisis also gives us great opportunities. We don’t want or need to go back to all the ways we did things in the past. How radical we are will depend upon our appetite for bold change.

Our research captures our sector in the final few months of calm before the storm, offering insight into its strengths, weaknesses, challenges and risks. It paints a picture of a broad and complex sector, wrestling with its relationship with government, funding challenges, technological change and its own diversity and representativeness.

We hope that by understanding the trajectory the sector has been on since 2017, funders, philanthropists and policymakers will be more able to understand what happens in the crisis and help charities adapt to the new challenges they face, so they can keep serving the people who need them more than ever.


Our headline findings

1. People, politics and procurement

  • More than half of charities we spoke to held a public sector contract. 59% of these are subsiding their public sector contract(s) with income from other areas such as public fundraising.
  • We found there has been a big increase in small and medium-sized charities saying that they hold a public sector contract since 2017, possibly enabled by inclusion in consortia.
  • There is widespread agreement that public trust in the sector has fallen. Only 5% of charity leaders we spoke to believed that public trust had not dipped in the last few years. Despite this, most felt that falling public trust would not affect their operations. Where they did, they were most concerned about fundraising (by a large margin).
  • While the majority of charity leaders felt the sector was already ‘political enough’, there were still more respondents who felt it should be more political than less political.
  • Two thirds of charities reported changing their operations as a result of austerity. Conversely, most had made no attempts to prepare for Brexit.

Percentage who deliver public sector contracts 2019 vs 2017

2. Data, digital and use of evidence

  • 95% of our respondents this year agreed that the use of data and evidence were important to them achieving their mission.
  • But, comparing our survey of perception with independent benchmarks like the Lloyds digital skills index suggests charities are overconfident when it comes to their ability to use data to evaluate their work.
  • Conversely, charities perceptions of their digital ability have become more negative since 2017 and more negative than the digital index would suggest they should be. Familiarity does not breed confidence when it comes to charities and digital. It may be that the more you know, the more you realise how much there is that you don’t know.

Charities’ confidence that they are making the best use of digital

3. Charities in a changing world

  • We found that charities were doing more of everything we asked about in 2017 and planned to do more in future. This came despite overall funding for the sector remaining relatively static, which suggests that charities were already spread thinly before the crisis.
  • Charities are remarkably positive about their funders in this survey but, of the organisations who receive money from independent funders, only 47% thought that they offered appropriate core funding and only 45% thought their funders collaborated well. A lack of flexible core funding could affect charities’ resilience, and a crisis on this scale demands more collaboration between funders.
  • Fewer charities reported having conversations at board level about strategic issues and responses they could make. In particular we found a significant decline in charities talking at board level about merging with another organisation (25% in 2020 vs 34% in 2017).
  • Charities are very positive about user involvement when asked about it, but when asked to rate the factors most important to their impact few mentioned it.
  • Four in five charities (78%) say that they think their current staff are not fully representative of the population they serve. When asked from which groups they think they needed to recruit more people from in order to be representative of their users, the most common answer given by charities was people of different ethnicities (41%).

Charities’ perceptions of how representative they are of the people they serve

We are grateful to our programme sponsors: Lloyds Bank Foundation England & Wales, PwC, Barrow Cadbury Trust, Odgers Berndtson and the NPC Supporters’ Circle for supporting this work.


Next steps

For the second half of 2020 we will re-orient the programme to research the key challenges the charity sector is likely to be facing over the medium term due to the Covid-19 pandemic, produce solutions, and advocate for change and support.

To be involved in supporting this project, contact our policy manager Tom Collinge.


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