Assessing financial vulnerability and risk in the UK's charities during and beyond the COVID-19 crisis

This research will provide an analysis of the variegated impacts on charities of the very severe financial constraints they will experience due to the immediate and longer-term economic effects of the COVID-19 crisis.

Project overview

We know that the lockdown will have immediate effects on the fundraising and trading activities of charities. We also anticipate that the economic recession will both increase social needs for the services of charities while simultaneously undermining household incomes, and therefore levels of donations. We want to know which organisations are likely to be most vulnerable to these events.

There is an urgent need for evidence on this. A DCMS Select Committee report (published 6.5.20) highlights limitations of the existing (somewhat anecdotal) evidence base, and notes the ongoing requirement for robust evidence to inform efforts to stabilise the charity sector.

Building on our extensive prior research on the finances, distribution and exposure to risk of charities we will assess the distribution of financial vulnerability across the population of charities, showing how it varies according to organizational characteristics.

Following international literature on this topic, we will construct indicators of financial vulnerability (disruption to finances; excess of expenditure over income; shortages of reserves; fluctuations of particular income sources) and relate these to organisational and community characteristics.

Using these analyses we will produce indicators and guidance which will inform decisions by stakeholders as to which organisations require support. Working closely with long-time collaborators the National Council for Voluntary Organisations, we will generate accessible presentations and graphical materials which can be used by stakeholders to inform responses to the crisis. We will run events – most likely on-line – which will provide a basis for discussion and reflection on the findings.

The project will run from 2020 - 2021.

Project team

David Clifford

David Clifford is Associate Professor in Demography within Economic, Social and Political Sciences at the University of Southampton. David has research interests at the interface of demography and social policy. His research on the voluntary sector describes patterns in the prevalence, funding, and growth of voluntary organisations.

David Clifford

Alasdair Rutherford 

Alasdair Rutherford is Professor of Social Statistics at the University of Stirling. His research focus is the analysis of administrative and survey data in the fields of health, social care and the third sector. He has also been involved in a number of initiatives to build data analysis skills amongst third sector practitioners.

Alasdair Rutherford

John Mohan

John Mohan is Professor of Social Policy and Director of the  Third Sector Research Centre  (TSRC) at the University of Birmingham. He has worked on academic studies of voluntary action and voluntary organisations for over 25 years and in recent times has overseen the development of TSRC’s quantitative contributions to the evidence base on the voluntary sector in the UK.

Professor John Mohan

 

The National Council for Voluntary Organisations are collaborating with the project team; we have worked with their research team for many years on the evidence base for the third sector, including on the construction of quantitative datasets about voluntary organisations.

Briefing papers

Briefing paper 1: Assessing the financial reserves of charities on the eve of Covid-19

In November 2020 we presented the first briefing paper on our Covid-19 project.  The paper, by David Clifford and John Mohan, is on the pattern of charity financial reserves, focussing on those charities that had reserves equivalent to less than three months’ expenditures. 

John Mohan presenting the paper

Following the presentation we invited responses from Brian Carr (CEO, Birmingham Voluntary Services Council) and Richard Hebditch (Director of External Affairs at the Association of Charitable Foundations.

Responses and discussion following the presentation

Publications

Backus P and Clifford D (2013) Are Big Charities Becoming More Dominant?: Cross-Sectional and Longitudinal Perspectives. Journal of the Royal Statistical Society Series A (Statistics in Society) 176(3): 761-776.

Clifford D (2012) Voluntary Sector Organisations Working at the Neighbourhood Level in England: Patterns by Local Area Deprivation. Environment and Planning-Part A 44(5): 1148-1164.

Clifford D (2016) International Charitable Connections: The Growth in Number, and the Countries of Operation, of English and Welsh Charities Working Overseas. Journal of Social Policy 45(03): 453-486.

Clifford D (2017) Charitable Organisations, the Great Recession and the Age of Austerity: Longitudinal Evidence for England and Wales. Journal of Social Policy 46(1): 1-30.

Clifford D (2018) Neighborhood Context and Enduring Differences in the Density of Charitable Organizations: Reinforcing Dynamics of Foundation and Dissolution. American Journal of Sociology . 123(6), 1-66.

Clifford D and Mohan J (2016) The Sources of Income of English and Welsh Charities: An Organisation-Level Perspective. Voluntas: International Journal of Voluntary and Nonprofit Organizations 27(1): 487-508.

Clifford D, Geyne-Rahme F and Mohan J (2013) Variations between Organisations and Localities in Government Funding of Third-Sector Activity: Evidence from the National Survey of Third-Sector Organisations in England. Urban Studies 50(5): 959-976.

Kendall, J, Mohan, J, Brookes, N and Yoon, Y (2018) The English voluntary sector: How volunteering and policy climate perceptions matter, Journal of Social Policy, 47(4), 759-782.

Lindsey, R., Mohan, J., Metcalfe, E. and Bulloch, S. (2018) Continuity and change in voluntary action: patterns, trends and understandings, Policy Press.

McDonnell D & Rutherford A. C. (2018) Promoting charity accountability: Understanding disclosure of serious incidents  Accounting Forum

McDonnell D & Rutherford A. C. (2018) The Determinants of Charity Misconduct  Nonprofit and Voluntary Sector Quarterly 47(1) pp. 107-125

McDonnell, D, Mohan, J and Norman, P. (2020) Charity density and social need: a longitudinal perspective. Nonprofit and Voluntary Sector Quarterly

McKay S, Moro D, Teasdale S and Clifford D (2015) The Marketisation of Charities in England and Wales. Voluntas: International Journal of Voluntary and Nonprofit Organizations 26(1): 336-354.

Mohan, J and Bennett, M (2019) Does the distribution of voluntary organisations influence the likelihood of volunteering? Evidence from the UK, Environment and Planning A , 51(4), 950-980

Mohan, J and Breeze, B. (2016) The logic of charity: great expectations in hard timesPalgrave Macmillan.

Mohan, J, Yoon, Y, Kendall, J, and Brookes, N (2018) The financial position of English voluntary organisations: relationships between subjective perceptions and financial realities, Voluntary Sector Review, 9(3), 233-253.

Pennerstorfer, A & Rutherford, A. C. (2019) Measuring growth of the non-profit sector: The choice of indicator matters  Nonprofit & Voluntary Sector Quarterly 48(2) 

Rutherford A. C., McDonnell D & Hogg, E. (2020) Incentivizing Regulatory Participation: Effectiveness of a Fundraising Levy  Public Administration Review

Rutherford, A. C. (2015) Rising Wages in the Expanding UK Nonprofit Sector from 1997 to 2007  Nonprofit & Voluntary Sector Quarterly, 44(1) pp. 123-145

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