There is a growing divide between large and small charities’ ability to cope with the cost-of-living crisis as small organisations struggle to recruit volunteers, new research suggests.
The fourth VCSE Sector Barometer, a quarterly survey of more than 500 registered charities conducted by Pro Bono Economics and Nottingham Trent University’s National VCSE Data and Insights Observatory, has found “the tale of two sectors is deepening” as levels of optimism vary between large and small charities.
The proportion of small charities reporting an improvement in their finances had fallen slightly from 26 per cent in November 2022 to 24 per cent in September 2023.
By contrast, the proportion of medium-sized and large charities reporting improved finances increased.
Almost one-third (31 per cent) of medium-sized charities reported improved finances, up from 20 per cent in November 2022, and large charities saying theirs had improved increased from 24 per cent to 29 per cent.
The financial difficulties facing small charities are compounded by challenges around volunteer recruitment, the report said.
More than half (59 per cent) of small charities said volunteer recruitment was their main concern, compared to just 26 per cent of medium-sized and 15 per cent of large charities.
Demand for charity services remains high across the sector, with more than three-quarters (76 per cent) of large charities reporting an increase in demand over the previous three months, the report said.
Almost four in five (78 per cent) medium-sized charities and exactly half of small charities reported increases in demand.
Nearly two in three (64 per cent) small charities said they would be able to meet the needs of their service users, up from 58 per cent in November 2022, which the report said indicated charities were beginning to adapt to the trend of long-term demand.
But almost one-third (30 per cent) of the surveyed charities reported an increase in staff burnout or exhaustion in relation to their work over the past year.
Matt Whittaker, chief executive of PBE, said the latest barometer had demonstrated the toll on organisations’ finances, their capacity and the wellbeing of their workforce.
He said: “While there is some good news, with some early signs of sectoral recovery, the overall position remains extremely challenging. And the pressure is being especially felt among small charities, with widespread concerns of dwindling volunteer numbers and precarious finances.
“With small charities forming the backbone of the UK’s social sector, it is important that policymakers, funders and firms recognise both the challenges at play and the benefits of stepping in to provide support and partnership for this crucial part of the country’s civil society.”
Vic Hancock Fell, a charity consultant and founder of the social enterprise Fair Collective, told Third Sector: “What we’re seeing coming out of research and data like this and the NCVO Almanac, is devastating but sadly not surprising.
“At Fair Collective we’re seeing the real-life effects of this daily, in conversations we have with small charity leaders who are unfortunately bearing the brunt of this crisis and are overworked and under supported.
“What makes me the most angry is seeing the small charity share of the sector’s income remains tiny, at just 3.6 per cent. As a sector we’re facing a sink-or-swim moment for smaller charities who do incredible work in our communities. The way out and up needs to be through major systems change.”