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How COVID-19 hit the UK charity sector: Kreston Global’s report

Duncan & Toplis | 2 November 2021

Like many businesses and economies around the globe, there’s no doubt that charities in the UK were among the many sectors hit as a result of COVID-19.

As members of the Kreston Global network of accountants, we’re able to gain valuable insight into the financial challenges and opportunities facing charities across the UK. We’ve worked with our colleagues across the Kreston UK Charity Group to produce the Kreston UK Charity Group COVID-19 survey 2021 which sheds a light on the experiences of charities through this unprecedented period.

Across the group, we’re proud to work with more than 2,000 charities of various sizes. This provides a unique perspective and this recent report highlights the impact of coronavirus on the sector, exploring the outlook for charities and not-for-profits as we move into what looks like a more positive phase in 2022 and beyond.

To provide a clearer understanding of the situation, the survey was conducted from a range of charity organisations; a third of the responses were from charities with an income of less than £100k, a third £100k to £1m, a quarter £1m to £5m with the remainder over £5m. Sectors represented include grant-making charities, education, arts culture and sport, and health, social care and community.

How charities were affected

As expected, findings from the report revealed some charities were significantly impacted, particularly through lost income, while others found more flexibility in the way they raised and spent money, and even saw some increase because the pandemic drew attention to the important roles they play in their communities.

67% of the arts, culture and sports charities reported a reduction in income, as did the private education sector which saw both a reduction in income and an increase in costs as a result of PPE, cleaning and the introduction of remote working technology. 

Fortunately, the income of other organisations remained steady, with 53% of charities seeing an increase in demand during the pandemic, and just 20% reporting a fall. 

More than 95% of respondents consider their charity to have been financially resilient during the pandemic, and almost 80% are happy with their current reserves levels. 

Recovering from the pandemic

Going forward, over 70% expect an increase in demand from beneficiaries, with 30% anticipating a significant increase. 97% however feel they will be able to survive for the next 12 months. 

Unsurprisingly, technology - including the increase in the use of Zoom and other online chat and webinar platforms - has played a huge part in service provision, with 57% providing more services online. 

The key highlights of the survey painted an encouraging financial picture: With the aid of government support schemes, many charities now look forward to a positive future as we move on from the worst of the pandemic.

Our director Tim Godson, who co-authored the report, said:  

“The results from this recent survey paint a really detailed picture of the charity sector post-COVID. It’s clear that many organisations have had to adapt in order to survive or thrive and I’m pleased that so many have been able to embrace change quickly.

“Overall, the report has shown a lot of positivity about the future of the charity sector and it highlights the need for a clear strategy going forward; with the acceptance that processes have evolved and may not be able to be done in the same way as they previously would have. 

“By adapting to life in a post-covid world, many charities have and will continue to stay relevant, grow and flourish for years to come, and we’ll continue to support them in whatever way we can.”

If you would like to speak with a member of our team about recovering from COVID-19 and your charity, or for general advice, please contact our team.

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