A report published today warns that charities and social enterprises in deprived parts of the North of England are most at risk from the economic effects of Covid-19.

The report, by Tony Chapman, Sarah Longlands and Jack Hunter (published by IPPR North) analyses the experiences of third sector organisations in the region over the last decade.

The new analysis shows that although the third sector is more resilient than generally thought, one in four charities in the North are based in deprived areas, and it was these organisations which were hit hardest following the 2008 recession and subsequent period of government austerity policies.

Covid-19 has had a disproportionate impact on people already on the sharp end of inequalities. This means that local charities will face difficulties in the coming years due to rising demand for their services but falling income.

Despite the significant challenges posed by the economic effects of Covid-19, today’s report shows that Northern third sector organisations, have a ‘make-do attitude’ are resilient and able to adapt well to change.

Professor Tony Chapman of Durham University observes that:

“Charities and social enterprises are more resilient than generally thought. They tend to be financially prudent and can adapt to circumstance. After the 2008 crash and years of austerity, many showed this flexibility by generating more income from self-generated trading. But now, cashflow is seriously under threat because Covid-19 has limited their scope to run shops and cafes or charge for services.”

The report calls for a new deal for the voluntary and community sector in the North by building support into plans to ‘build back better’ such as the creation of a Northern ‘growth body’ or ‘prosperity board’ which is widely expected to be announced as part of the Devolution and Recovery White Paper in Autumn 2020.

Sarah Longlands, Director of IPPR North argues:

“Third sector organisations provide the foundations for a strong and resilient Northern economy and continue to play a vital role in supporting communities during the current Covid-19 Crisis. “So we simply cannot ‘level up’ from the Covid-19 pandemic unless we ensure these organisations receive the support and the respect that they deserve to help weather this storm.”

The report can be downloaded from IPPR’s website at this address: https://www.ippr.org/research/publications/third-sector-trends-survey-2020

In June 2020, the long-established Third Sector Trends Study  carried out a ‘one question survey’ with former participants of its major study across England and Wales which took place in 2019.  Its purpose was to find out the extent to which charity leaders’ attitudes had changed about their prospects for the future after the shock of the Coronavirus pandemic.

Now that we have these data, it will be possible to see how opinions have changed in future, together with in-depth analysis of the shifting structure and dynamics of the sector when the main survey returns in mid 2022.

Inevitably, following the onset of Covid-19 and in light of its social and economic consequences, confidence has taken a serious knock. From a 10 per cent sample of the original study of 4,000, the results show that:

• In June 2020, 56% of TSO leaders believed that their income would fall in the next two years compared with just 16% in 2019.
• Only 11% of TSO leaders expected that income from private sector sources would fall when asked in 2019, now 62% expect that this will be the case.
• Half of TSO leaders believed in June 2020 that grant income would decrease over the next two years, compared with just 19% in 2019.
• In June 2020, 61% of TSO leaders thought that statutory funding would decrease, compared with 38% in 2019.
• Expectations about support from volunteers has changed: in 2019 only 8% of TSOs thought that support would fall, by June 2020, 18% of TSOs leaders thought this would be the case.

Of course, these are only predictions, because nobody really knows what will happen next. Indeed, written  commentaries from survey participants, often reflect ambivalent feelings.  As one charity leader told us:

“On the one hand we’re exhausted by all that we’ve had to do at pace in the last four months. But at the same time we have to find the energy to grasp some really important new opportunities (and effectively manage them) before they slip away again. Wish we could just hit the pause button and have a bit of time to take stock, but we have to reset our strategy, plan for a different future, build some new relationships and partnerships, all whilst continuing (for a long time to come) to deliver our crisis response work (which is itself exponentially different to our usual day job.). Oh, and dealing with our own personal experiences of the crisis to boot, and support our staff in their own personal experiences too. Just drained!”

Rob Williamson, Chief Executive of the Community Foundation which commissions Third Sector Trends said:

“When we launched the 2020 edition of Third Sector Trends in May we knew that the data would need to be updated because of the pandemic. We also knew we had a large and willing community of respondents who we hoped wouldn’t mind filling in another survey. As Professor Chapman notes we can’t say whether the fears of organisations surveyed the organisations will come to pass but the data gives us a benchmark for when we come back in 2022 and find out whether this lack of confidence was misplaced.”

The report is available now from the Community Foundation serving Tyne & Wear and Northumberland at this address: Third Sector Trends Covid-19 Impact Survey Report

Tony Chapman has also written a short blog on the key findings which can be accessed here.

When community business leaders completed their Third Sector Trends survey in 2019, there was a good deal of optimism in the air. That optimism must surely have been dented with the onset of the Covid-19 crisis and, undoubtedly, there will be casualties as the economy falls into severe recession.

We don’t yet know how quickly the economy will recover or whether the economy will remain in the doldrums in the longer term. Ultimately, nobody will know for at least two years – at which point – Third Sector Trends will return to find out.

Ailbhe McNabola, Head of Research and Policy at Power to Change, said: “This report shows that community businesses perform a unique balancing act, marrying enterprise and entrepreneurialism with a goal of making a real difference to places where they are based. These attributes will be important as places begin to recover from the social and economic impacts of the Covid pandemic. Community businesses can play an important role in the places where they work in the months and years ahead.”

As this report shows, it should not be taken as read that the future for all community businesses will be bleak. The pandemic may help to produce changes in the way communities think and act in future. Maybe local people will feel a stronger sense of commitment to community and to the organisations which champion and service it, such as community businesses?

In 2019, Power to Change supported the Third Sector Trends study across the North of England alongside the Community Foundation serving Tyne & Wear and Northumberland and Garfield Weston Foundation. Over three thousand organisations responded (of which over 650 worked as community businesses).

This report for Power to Change shows that community businesses are resilient entities which are financed at least in part through self-generated trading activity. And while community businesses cannot be said to be more committed to their communities than general charities, this report shows that community businesses usually have more capacity to deliver support because they are larger organisations.

When compared with other charities, community businesses also tend to be more ambitious to grow, are keener to engage with local policy makers and invest more energy in attending events and meetings to debate or decide upon policy and action to improve community life.

Resilience is underpinned by the agility and flexibility of community businesses to spread financial risks. Usually, as this research shows, they do this by engaging in more than one form of self-generated trading activity at a time.

For example, amongst organisations which are involved with retailing and hospitality activities, 67% also manage a community building and 43% offer other types of paid-for services.

Trading is crucially important to the financial wellbeing of community businesses, but few can keep going on the surpluses they produce from self-generated trading alone. Even in the best of times, most also rely on a variety of other sources of income such as contracts, grants, fundraising, subscriptions, investments, gifts and so on. Few community businesses choose to keep all their eggs in one basket.

Those community businesses that face an immediate cash-flow crisis due to Covid-19 will be feeling pretty vulnerable just now. And for those who are almost wholly reliant on trading to sustain themselves it may be hard for them to see a viable future.

There is so much uncertainty ahead. Temporary measures such as emergency loans, grants, rent holidays and furloughing are welcome – but these are only stop-gap measures for community businesses. But one thing is abundantly clear from this report – funding bodies must not assume that community businesses can be left to their own devices in the longer term just because they trade.

Community businesses in the North of England 2020: new comparative analysis from the Third Sector Trends Study,  by Tony Chapman, Bristol: Power to Change. The report and full blog can be downloaded here: https://www.powertochange.org.uk/research/prospects-community-businesses-north-england/

Professor Fred Robinson of Policy&Practice, St. Chad’s College, Durham University, looks at the economic outlook for the region – and nation.

Everyone knows that the Covid-19 pandemic has hit the economy hard and that we’re now in a deep recession. The lockdown forced the closure of many businesses, some of which may never reopen.

The Government borrowed heavily and spent money – “whatever it takes” – to keep the show on the road, retain productive capacity and stave off mass unemployment and poverty. But the reckoning will soon come. At the moment it still doesn’t feel too bad – or not as bad as it actually is.

Timely Government intervention masked the impact of the lockdown. Having shut down about a third of the economy, the Government brought in a furlough scheme to pay the wages of nine million people and also introduced measures to support the self-employed and small businesses. But the damage is becoming more apparent.

Unemployment is rising sharply as firms adjust to economic realities and cut jobs. It’s going to be much worse in the autumn when the Chancellor runs down the furlough scheme and the dire economic situation becomes far more evident than it is now. What should we expect over the next few months? There isn’t much optimism around.

The usually sober Bank of England is anticipating the deepest recession in 300 years, with the economy shrinking by 14 per cent in 2020. That would lead to at least a doubling of unemployment, with all the misery that would bring. The Chancellor is warning us to expect a “severe recession, the likes of which we haven’t seen”.

The OECD says the UK economy will contract more than any other developed economy. Of course, we don’t know what the future holds – and the forecasts of economists and politicians are often wrong. It is clear, though, that we are now in a major recession; the question is how and when will we come out of it? There’s an alphabet soup of possibilities.

A few weeks ago, the Bank of England was hopeful that there could be a quick and strong recovery, so this would be a “V-shaped” recession. Now, there’s less talk of such a “bounce back”. The easing of many lockdown restrictions will boost the economy – but that could well be a short-lived rebound, curtailed by rising unemployment and falling wages. Most likely may be a “U-shaped” recession, with months or even several years of little or no growth, then eventual recovery.

Probably worst of all, we might have an “L-shaped” recession, with the economy flat-lining for a long time. Not much better would be a “W-shaped” recession, as the economy is hit by new lockdowns in the wake of outbreaks of Covid-19. Add to all that the Joker in the pack: perhaps a no-deal Brexit.

What’s it to be? Much depends on how the Government responds to the pandemic and to the economic challenges ahead. The Government needs to very carefully scale back the furlough scheme and business support measures, sensitive to the problems of different sectors.

There’s a need to rebuild confidence and avoid flattening the economy by resorting to austerity. There’s a good case for spending public money while interest rates are effectively nil – public investment can get things moving again. Keynesian economics is back in fashion.

What are the prospects for the North-East? This is an unusual recession not just because of its causes and severity, but also its geography. In past recessions the North-East has usually suffered most. This time, the impacts are spread across the country and across many sectors. The North-East will suffer along with the rest of the country, but starting from a position of less favourable economic circumstances than many other areas.

Within our region, some places and some groups may well have a harder time than others. Lower paid workers and the young are particularly vulnerable – they need a strong and quick recovery much more than the professionals in well-paid jobs who’ve been able to work from home. Tourism and the hospitality industries have been particularly hard hit, and tourist destinations in places such as North Yorkshire and Northumberland could struggle to recover.

It’s difficult to be optimistic about the future for High Street retailers or for pubs, cafes and restaurants coping with social distancing measures. Our university cities like Durham and York have been missing the spending power of students – and will take a big hit from reductions in international students next academic year.

There’s talk about the need for a Green Recovery, a fairer tax system and job creation schemes, as part of a programme of progressive social, political and economic reform and revival. Labour says it’s a 1945 moment, a time for radical reconstruction and renewal. A Conservative Government is, however, more concerned to get back to some kind of familiar normality – a hope probably shared by most people.

But the “back to business as usual” recovery is a hard trick to pull off. While the Government’s handling of the pandemic itself has been inept, the response to the economic crisis has, so far, been impressive. The Chancellor now has to get things moving again, somehow rebuilding consumer confidence, and also bringing hope to “left behind” people and places – while coping with the continuing challenges of the pandemic.

It’s a time for imaginative intervention and competent government. Here in the North-East we know what recession is like, how painful and destructive it is. We have to hope that with luck and effective Government action we can avoid a return to the hard times we experienced in the 1980s. A better future is possible.

Fred Robinson is a Professorial Fellow at St Chad’s College, Durham University

First published in the Northern Echo on 4th July 2020. The original article can be found at this address: https://www.thenorthernecho.co.uk/business/18551669.a-time-imaginative-competent-government/

We’ve launched our reports from Third Sector Trends today.  But we wanted to ask one of our questions again to see how people are feeling now following the onset of the Covid-19 crisis.

Here’s the link: One Question Survey

It takes less than a minute – unless you want to tell us something more – as many people do:

“I am concerned that there seems to be a lot of micro-grants around to help people and community organisations through Covid-19, but very little for the medium-sized organisations to ensure that their long term service provision remains available.”

“It’s tough at the moment but we have learnt new things and more remote working will continue. It makes us more agile and suits our team. And we must all work in collaboration to help the increasing numbers who need our support.”

“All of our charity members and volunteers are all in the “Third Age” Many are shielding and most are very concerned about resuming normal activities until a vaccine is available. Social distancing would be impossible for 80% of our activities.”

“Reducing lockdown has so many unknowns. The pressure to return to delivering services had to be balanced with the welfare of volunteers. The potential of a second wave of infection increases anxiety levels.”

“The strains on households during the recovery are going to be huge. As we deal with the elderly who have been in lock down they are now very worried about leaving their homes. We need to continue to look after their welfare.”

“Small charities like ours will really struggle to gain grant funding, as the focus of funders has changed to Covid-19 work. Our work is as important and has been for over 25 years, as we go to see our clients in their own home offering long term help and support to have a quality of life.”

“Donations from individual members have increased, but donations from visitors has inevitably decreased. None of the ‘help’ put forward to be applied for by the Lottery or Historic England fits our situation. When you have stood on your own two feet and never had their help, you can’t show a track record to meet their criteria.”

“We support disabled people to run a cafe. Don’t know when we will get back as can’t see how we can socially distance and support at the same time.”

Here’s the link: One Question Survey

And if you want to see our reports from the North East and North West of England or Yorkshire and Humber click this link: Third Sector Trends in the North

Third Sector Trends is a long-term study of the voluntary and community sector which began in 2008 in North East England and Cumbria.

In 2016 surveying began right across the North West region. This has been repeated in 2019 providing a unique resource of evidence which is widely used by policy makers and practitioners.

As such it forms part of a wider study which runs across the North of England. All reports from the study are hosted by Community Foundation serving Tyne & Wear and Northumberland who fund the study in North East England and are responsible for its legacy. All reports can be accessed here.

The full North West England report on the 2019 study can be downloaded here: THIRD SECTOR TRENDS IN NORTH WEST ENGLAND 2020

Third Sector Trends is a long-term study of the voluntary and community sector. It began in Yorkshire and Humber in 2010 with a baseline study of the structure and scale of the sector.

In 2013 surveying began across the region. This has been repeated in 2016 and most recently in 2019.  This provides a unique resource of evidence for Yorkshire and Humber which is widely used by policy makers and practitioners.

As such it forms part of a wider study which runs across the North of England. All reports from the study are hosted by Community Foundation serving Tyne & Wear and Northumberland who fund the study in North East England and are responsible for its legacy.

The full Yorkshire and Humber report on the 2019 study will be published on 18th June 2020 by Community Foundation serving Tyne & Wear and Northumberland alongside all other reports from the research programme, and can be downloaded here: Third Sector Trends in Yorkshire and Humber 2020.

Alternatively you can download the report here: THIRD SECTOR TRENDS YORKSHIRE AND HUMBER 2020

A Tale of Three Sectors

The world was a very different place when the latest Third Sector Trends survey for the North West closed in December 2019. The relative stability of the sector highlighted in previous reports is reflected in the latest report but will that still be the case in a post-coronavirus world in 2020 and beyond?

At this launch Professor Tony Chapman will present the latest findings from Third Sector Trends but will look at the situation of the sector through a contemporary lens. He will argue that it is better to look at the probable social and economic consequences of the Covid-19 pandemic in a more focused way than is currently being featured in the media.

A Tale of Three Sectors will look at the situation of small, medium sized and larger charities and social enterprises – to make an assessment of their future prospects.

This ground-breaking longitudinal study explores the scale, dynamics and needs of the voluntary, community and social enterprise sector in the North West and looks at what the sector can promise to achieve for its beneficiaries.

The report, based on a representative sample of over 3,000 organisations in the North, is the latest of a series of reports that began in 2008. This gives the study a long-term view not available from other research on charities and community organisations regionally or nationally.

The event will be hosted on Zoom and a link will be sent out the day before. To sign up for the event, click this Eventbrite link A tale of three sectors

This event will feature presentations from:

Professor Tony Chapman (St Chad’s College, Durham University) on the findings of the survey.

Jack Hunter (Institute for Public Policy Research) on the consequences of these findings for the North.

Warren Escadale (Voluntary Sector North West) on how these findings could feed into conversations we’re having around recovery for the region.

This event will also include an opportunity to ask questions directly by participants.

The full report will be available on the Community Foundation serving Tyne & Wear and Northumberland Website on 18th June. If you would like to download the report, please click here: Third Sector Trends in North West England.

In an article in The Guardian yesterday it was claimed that 10% of charities could collapse. Yes, times are going to be tough for a lot of charities in the social and economic aftermath of Covid-19. The sector is not collapsing now and will not do so in the future. There will be casualties and that is sad. But we need to get things into proportion argues Tony Chapman in a blog today.

Are one in ten charities facing immanent collapse? I don’t think so.

The fifth iteration of the Third Sector Trends study in North East England is published today and will be launched in a Community Foundation Tyne & Wear and Northumberland webinar. The report, based on a representative sample of over 1,000 organisations, takes a long-term view not available from other research on charities and community organisations regionally or nationally.

The recent findings paint a picture of a sector that, having stayed fairly resilient during and after the financial crisis had, by December 2019, started to see small increases in the number of organisations, employees and volunteers. Comprising 7,200 organisations, 38,250 employees and 154,000 volunteers, the sector is a significant part of the North East ecology.

Already playing an important role in supporting many vulnerable people during the Covid-19 crisis, the latest findings give an insight into how the sector in the region may fare after Covid-19.

Many charities, community groups and social enterprises will suffer financial hardship as the economy reels from the Covid-19 pandemic. But this report shows that organisations with different characteristics will respond to the challenges ahead in a variety of ways. Drawing these distinctions will be useful, it is hoped, to grant making foundations and public sector bodies which support the Third Sector.

Rob Williamson CEO of the Community Foundation said:

“When we commissioned this latest edition of the Community Foundation’s Third Sector Trends Study, we could never have envisaged the extraordinary circumstance we’d be in when it came to sharing the results. Over twelve years, Third Sector Trends has reported on the financial crisis and impact of austerity. The pre-Covid-19 data reveals a sector finally coming out the other side. This raises critical questions about how charities and community organisations will come through the current crisis. But, as Prof Chapman says, the findings give funders, policy-makers and sector organisations an opportunity to pause, reflect and look at the big picture rather than becoming overwhelmed by the here and now.”

The author of Third Sector Trends, Professor Tony Chapman, said:

“Previous Third Sector Trends reports have drawn some criticism for being ‘too optimistic’. Our results often run contrary to assumptions, and don’t mirror the findings of small scale, one-off surveys. But, as a long-term study, now running for 12 years, our data will provide vital comparative evidence to inform thinking in these enormously difficult times. The money side of things is extremely worrying now, but the sector does not run just on financial resource – it is fuelled by the ideas, values and work of the people who work in it. Few of them will be ready to throw in the towel. Many will be more determined than ever. whatever comes next, we know civil society is here to stay.”

The full report, a shorter summary report and an infographic which captures key findings  will be available on the Community Foundation website on May 27th, 2020 at this web address: https://www.communityfoundation.org.uk/knowledge-and-leadership/third-sector-trends-research/

Or you can download the full report here: THIRD SECTOR TRENDS IN NORTH EAST ENGLAND 2020

And a summary report here: SUMMARY REPORT Third Sector Trends 2020 in North East England

The launch presentation slides, from 27th May, are available here: NORTH EAST TST LAUNCH PRESENTATION 27th May