As is so often the way in moments of crisis, the charity sector is on the front line of dealing with the coronavirus pandemic and its impact on everyday life in the UK.
According to Jane Ide, chief executive of the infrastructure umbrella body Navca, the impact could prove fatal for many civil society organisations. She describes the crisis as “potentially existential” and warns there is a real risk of financial collapse, with a “horrendous” impact on communities as a result.
And, she says, the biggest household-name charities are just as likely, if not more, to be at risk as fundraising contracts and providing services becomes more difficult.
“If you are so small that you have nothing to lose, you might in some ways end up being more resilient than others,” she says.
Rita Chadha, chief executive of the Small Charities Coalition, agrees the current situation is precarious for charities, big and small.
“Charities will continue to take chances at the moment because they feel they owe it to their beneficiaries, but they will end up getting themselves into more debt because they don’t know when something is coming over the horizon,” she says.
“Normally they would take a calculated risk, but at the moment there is no way of measuring if they will get something back if they dip into their reserves, which many of the smaller ones don’t have.”
In a moment of crisis, it can be tempting to throw everything you have into meeting the immediate need. But as the crisis continues to unfold, both Ide and Chadha warn, charities must keep an eye on the long term and marshal their resources where possible.
“Whether they are organisations on the front line or not, this is going to be a longer process than people were expecting a couple of weeks ago,” Ide says.
“There is a feeling everything must be done immediately, but charities need to be looking ahead. Whenever you are dealing with an emergency, somewhere in your head you need to be preparing for the recovery stage.”
Chadha says that many small charities have approached her with dilemmas about how to deal with cash-flow issues. For example, charities running community centres hired by other voluntary groups are unsure whether to charge their usual cancellation fees for events that can’t go ahead because of the virus.
“My advice to charities has been to meet any contractual obligations you have for the next two months at least, where possible, and start negotiating now for month three for what you need to pull out of,” she says.
“If all charities stop making payments immediately because they are fearful of what’s going to happen in the long term, that will knock the whole system down.
“Charities need to think about the short term, medium term and long term. We are going to come out of this at some point, so bear in mind what your charity is going to look like then. What is your charity going to need to deliver to stay relevant in its mission?”
She believes services for older people will be “completely shaken up” after the pandemic has abated, and the sector’s relationship with the NHS might need to be reviewed.
Ide says that individual charities will have to decide their own way forward to mitigate the financial impact of the crisis, based on their own circumstances, but adds that there is one key piece of advice she would offer.
“Do a risk assessment,” she says. “A quiet, calm, steady look-through of exactly where you think the problems are going to be and do something about it.”
But ultimately, she says, the government needs to step up and offer its support to the organisations it is relying on to help pull the country through.
“It’s really important it is recognised that the sector is going to need financial support,” she says. “There is no question about it.
“This is not about big or small. It’s about operating models and how they work: if they are on very tight cash flows and haven’t got the money coming in to pay the rent next week, they need immediate help.”