Running costs will remain high, recruitment will be difficult and the political landscape will continue to change, according to a new report looking at 2023.
The Road Ahead 2023, published on Wednesday by the National Council for Voluntary Organisations, outlined five key insights for charities over the next year.
The report said that due to the cost-of-living crisis the sector’s growth had slowed down, forecasting that the cost of running a voluntary organisation would continue to rise this year.
It said that the Office for Budget Responsibility estimated that inflation was set to peak at a 40-year high of 11 per cent in the current quarter, continuing the trend of rising overheads and falling incomes for charities.
Individual giving, which represents 51 per cent of the sector’s income, is likely to see a significant decrease, as research by Enthused showed that 55 per cent of the public said their financial situation made it harder to donate, the report said.
Recruitment will remain challenging, with 56 per cent of charities saying that they had difficulty filling vacancies, compared to 46 per cent of employers across all industries.
The report highlighted the difference in pay rates between the charity and private sectors, with voluntary organisations paying their employees 7 per cent less than businesses.
It also encouraged charities to budget for the upcoming increase to the National Living Wage and to adopt flexible working to accommodate and attract talent.
The report also said that charities would need to be reactive to a changing political scene, due to the upcoming 2025 general election as well as new legal provisions affecting the sector.
These include the worker protection bill, data protection and digital information bill, online safety bill and procurement bill.
The report warned that workplace discrimination remained embedded in the sector, urging charities to build inclusive cultures internally, as well as campaigning for equity in government and on social media channels.