Looming workforce challenges facing the Third Sector

Third Sector Trends in England and Wales 2022: employees, volunteers, diversity and investment in people – new report published today.

Third Sector Trends has been surveying the voluntary, community and social enterprise sector every three years since 2010. In 2022, 6,071 responses were received across England and Wales (an average of ~600 responses in each region). This is the only fully representative longitudinal survey which can produce robust and detailed comparative analysis at a regional and national level in England and Wales. This is the second of five reports from Third Sector Trends England and Wales 2022.

Employee retention and recruitment

There are about 200,000 Third Sector organisations (TSOs), about 40% of them are employers. The sector has a paid workforce of about 1.1 million people.

Over the last two years, 20 per cent of Third Sector employers have found it harder to retain staff and 43 per cent have experienced recruitment problems.

Problems with recruitment are widespread across England and Wales – but it is most intense in North East England (54%), North West England (48%) and in Wales (46%).

Recruitment problems are most severe in the largest organisations: 79 per cent of TSOs with income between £1million and £25million are experiencing recruitment problems compared with just 31 per cent of the smallest employers (with income between £50,000-£100,000).

Difficulties surrounding employee retention compound the challenging staffing situation many organisations face. Again, this is most serious in North East England (25%). Retention problems are most severe in the biggest organisations (53%) but affect organisations of all sizes.

Those organisations which deliver public services under contract for government departments or local authorities are finding retention problems the most challenging (27%), while TSOs which do not deliver contracts are less affected (15%).

One of the participants in the survey told us this afternoon:

We have recently attempted a third round of recruitment for two vacant posts (out of 8 employees). In order to try to attract applicants, we reimagined the roles to allow for trainees as well as experienced staff. We received 25 applications for two posts, with 20 of them applying as trainees. We shortlisted 8 of these. 7 pulled out prior to interview, so we ended up only interviewing one, who was not suitable. So our vacancies continue. These vacancies are related to project grants and the funders are very sympathetic but the projects are unable to go ahead without the staff, which means that there is unmet service need. Very frustrating. We will be trying again in January 2023.”

Reliance on regular volunteers

There are about 4.3 million regular volunteers working in the Third Sector. In workload terms, this is equivalent to 190,000 full-time equivalent employees.

Many organisations are facing challenges in sustaining the energy produced by volunteers. Over a quarter of organisations (26%) have been losing volunteers who joined them during the Coronavirus pandemic.  41 per cent of the biggest organisations (income £1million – £25million) are losing these volunteers compared with 18 per cent of the smallest TSOs (income below £10,000).

The composition of the volunteer workforce has been changing in the last two years.

  • Nearly half of organisations (48%) state that it has been harder to hold on to older volunteers.
  • A fifth of TSOs (20%) say that they now have more volunteers aged under 30.
  • Just over a fifth of organisations (22%) report that their voluntary workforce has become more ethnically diverse.

Sustaining support from trustees is vital for organisations: but 17 per cent of organisations report that the number of trustees has fallen over the last two years. Trustee numbers have fallen most in North East England, East of England, South West England and in Wales (all with net losses of trustees between 3-5%).

Regular volunteers produce about one fifth of the ‘energy’ that the Third Sector injects into its work. And in micro and small organisations, volunteers put in all or most of that energy.

  • 80 per cent of organisations say that they rely mainly on volunteers who can commit time on a very regular basis.
  • Over three quarters of TSOs rely on volunteers who can work unsupervised. Reliance on regular volunteers who can work unsupervised is stronger in organisations based in more affluent areas (83%) than in the poorest areas (64%).
  • 85 per cent of organisations state that they could not keep going without regular volunteers.
  • 65 per cent of regular volunteers are reported to be service users and beneficiaries.

Diversity in sector leadership

In recent years, concerns have been widely expressed about equal access to leadership opportunities in the Third Sector for all members of the community who feel that they have a contribution to make.

Until now, debate has been hampered by a lack of reliable data on diversity and inclusion in Third Sector leadership.

  • In England and Wales, university graduates constitute 70 per cent of chairs of boards and 63 per cent of chief officers.
  • A majority of chairs are men (55%) but there are more women chief officers (62%).
  • 10 per cent of chairs consider themselves to have a disability compared with 8 per cent of chief officers.
  • About 8 per cent of chairs and 10 per cent of chief officers are Black, Asian or from other ethnic minorities.
  • Nearly 60 per cent of chairs are retired.

There are some indications of improvement to diversity in leadership since 2019.

  • The percentage of women chairs has increased from 43 to 46 per cent.
  • Chairs with disabilities have increased from 9 to 12 per cent.
  • Black, Asian and other minority ethnic chairs have risen from 6 to 8 per cent.
  • The proportion of graduate chairs has also increased from 64 to 70 per cent – suggesting that leadership opportunities for non-graduates at board level have worsened.

There has also been change in the population of chief officers of organisations.

  • The percentage of graduate chief officers has fallen slightly from 70 to 66 per cent.
  • The percentage of women chief officers has fallen from 65 to 62 per cent.
  • The percentage of chief officers with disabilities has risen from 7 to 10 per cent.
  • The proportion of Black, Asian and other ethnic minority group chief officers has risen only very slightly from 8 to 9 per cent.

Regional variations in the proportion of Black, Asian and other ethnic minority chief officers tend to reflect local demographics. However, London stands out from other all areas where 26 per cent of organisations have Black, Asian and other ethnic minority chief officers compared with an average of just 8 per cent across England and Wales.

Investing in people

The energy that Third Sector organisations can employ to achieve their social objectives is dependent upon the enthusiasm, skill and commitment of volunteers and employees.

Attracting and retaining people to work in organisations may be affected by the quality of the working environment and organisational commitment to training and personal development opportunities.

Overall provision of support for staff and volunteers is quite limited.

  • Only 45 per cent of organisations have a dedicated training budget.
  • 29 per cent of organisations provide digital training.
  • Fewer than 60 per cent of organisations offer flexible working and
  • Just 53 per cent of organisations make provision to support personal development.

But underlying factors help to explain why overall investment in people appears to be quite low. Organisational size makes a big difference. Only 16 per cent of micro organisations (income below £10,000) hold a training budget compared with 91 per cent of the biggest (income £5million – £25million).

The extent of investment in training and personal development is strongest in organisations based in the least affluent areas – where organisations tend to be larger and are more likely to be involved in public service delivery for local authorities or national government departments or delivering major grant-funded social programmes.

During the pandemic, there was much news coverage about organisations embracing digital technologies to shift services online.

But investment in digital training is limited. Fewer than 46 per cent of medium-sized organisations (income £50,000 – £250,000) provide digital training and even amongst the biggest organisations (income £1million – £25million), only 72 per cent do so.

Reacting to the news Rob Williamson, Chief Executive of the Community Foundation said:

“We have seen issues of recruitment across many sectors in the UK, the NHS perhaps being the highest profile, but it is clear it is hitting the charitable sector hard too and our communities will suffer. The last three years have seen the sector step up to support the most vulnerable in our communities, first during covid and now the cost-of-living crisis, but they are burnt out and many are leaving. With increased costs and reduced funding, organisations aren’t always able to pay high enough wages to attract staff. We and many other funders are looking at how we can support them to raise wages and cover costs. Our cost-of-living fund is supporting organisations over the winter to do that – but more needs to be done” 

The report’s author, Professor Tony Chapman, St Chad’s College, Durham University said:

“This is an especially difficult time for many Third Sector organisations with rising inflation, high energy costs and rising demand for services. About 40 per cent of Voluntary and community organisations and social enterprises are employers. Many of them are now facing serious problems associated with staff recruitment and retention. The report’s findings indicate that tackling the issue of traditionally low pay in the Third Sector is becoming an urgent priority.”

Sylvia Copley Chief Executive at ShARP (Shiney Advice and Resource Project) said:

“Here at ShARP we kept going right through Covid – that was hard but our funders were really helpful, and we were able to adapt delivery by moving to remote working so were able to provide telephone advice to people who needed it throughout national and local lockdowns. As we emerged from Covid we then saw this cost-of-living crisis coming and despite planning for increased costs there is now the possibility of a gap in our finances emerging, particularly for core running costs. As a Living Wage Employer we reviewed salaries about 18 months ago and moved pay for all staff above that level. But we now know that the cost of living crisis is going to hit us all impacting on the value of our salaries as things like travel costs and day to day living costs rise significantly. Our advisers will experience financial pressure along with everyone else, and whilst we can help with things like providing extra hours in the short term that is not sustainable in the longer term… we are having to reshape and expand services to meet  ever increasing need in our communities whilst at the same time we are facing rising costs for utilities and other core costs, have fewer volunteers to support us, and have a tired, depleted workforce many of whom have not had a proper break in two years”. 

The report can be downloaded here:

All other reports from Third Sector Trends can be found here: Community Foundation: Third Sector Trends.