May 23, 2024

UK charities struggle to reach recipients as two thirds are at risk of administration

Almost two in three (62%) NPOs say they will be less able to reach the recipients who benefit from their services, despite a 25% increase in demand for their services, according to new research from Sage Foundation.

Over two thirds (68%) say they are at risk of going into administration, while four in five (80%) cite a continued lack of funding as the sector’s biggest obstacle. This amounts to 72% of NPOs who say they will be less able to deliver their projects or undertake work in 2021.

Almost a third (31%) of non-profits expect their funding to decrease by as much as half from 2020, a year in which financial support was already heavily depleted due to COVID-19.

Funding across multiple channels, including government and public fundraising, has dramatically dropped.  Just 11% received the majority of their funding from public fundraising in 2021, versus 20% of those who received the same in 2019, before the COVID-19 pandemic.

Similarly, just 12% received the majority of their funding from commissioned services, for example government awarded funds or contracts, versus 21% pre-pandemic.

Some NPOs have identified ways in which they could overcome these challenges and could get access to better funding. Over two thirds (67%) say better skills at pitching for funding, including better organisational financial literacy could improve their funding chances in 2021.

NPOs often lack specific skills such as financial management due to resource constraints, with 65,000 job losses in the sector in 2020 compounding this issue.

In response, Sage Foundation today launches a programme to support non-profits to have confidence for the future by building stronger business and financial planning into their organisations. Sage Foundation NPO Success offers eligible non-profits discounts on Sage Business Cloud product subscriptions, free financial management tools, training opportunities and an online support community.

Paul Struthers, Managing Director, Sage, UK and Ireland said: “It would be another sad legacy of this pandemic if two in three UK charities go into administration, particularly when demand for their services is at an all-time high.  Organisational financial literacy is key to supporting NPOs to adapt and build confidence for the future.

“Our NPO Success programme will help non-profit organisations successfully unlock more opportunities by supporting them to save time, reduce costs, eliminate errors, achieve compliance and most importantly be more effective at gaining and managing financial support so they can support their communities.”

Kate Welch OBE DL, Trustee of Acumen Community Buildings and Sage non-profit customer said: “This is the most challenging time I have known as a charity trustee or Chief Executive.

“Having good financial management and forecasting is crucial to our survival as well as our mission to continue to make a difference in our community. We welcome these resources and the help Sage can offer and I know many other charities will be able to make good use of this to help with raising funds and diversifying their income.”