What does the ‘Breaching the Dam’ report tell us about the state of the sector?

As 2022 came to an end, the think tank Pro Bono Economics published a report entitled: ‘Breaching the Dam: The state of the charity sector’, exposing the trends emerging from a survey of 738 social sector organisations. Beyond highlighting the services delivered in 2022, the report reveals the challenges facing the sector in the coming year, alongside some of the steps taken by various organisations.

The report reveals a charity sector facing demand from multiple sides, with 71% of charities reporting an increase in demand for their services over the last three months. The rise in pressure felt across the sector is due to what the authors refer to as a ‘triple tide of demand’, as charities face down the cost-of-living crisis, the lingering effects of the pandemic and a backlog of public services.

The effects of the cost-of-living crisis are the most pronounced in these findings: 93% of poverty relief organisations reported a surge in demand, with the added pressure of beneficiaries requiring support for extended periods of time. As prices rise, demand for these services is expected to continue for the foreseeable future, as 49% of respondents reported they would be unlikely to meet demand this winter.

Organisations across the sector are adopting varying approaches to mitigate the effects of this rising demand, but these measures alone are likely insufficient. Potential solutions vary depending on the size of the organisation implementing them. Smaller charities who are naturally affected more harshly have had to take drastic measures. The report found that 27% of small organisations have reduced their paid workforce to manage the crisis and 40% expect to do the same in the next three months. More alarming still is the 17% of organisations that reported a reduction in the delivery of services, highlighting that the invaluable work these organisations provide is already under threat.

Larger organisations are by no means unaffected either, with many turning to recruitment as a solution. 33% of large charities and community groups reported having increased the size of their workforce in the last three months, with 20% of both large and medium-sized organisations intending to do the same in the near future. However, Almost half (47%) of these organisations reported recruitment difficulties and 54% of those having problems say employees are working longer hours to help fill in the gaps. Equally, 41% have had to reduce operations, demonstrating that even the larger organisations’ services are already in decline.

Overall, the report highlights the deterioration experienced by so many organisations due to rising pressure, while demonstrating the unsustainability of the measures adopted. The report implores the government to scale up support for those on the lowest incomes, as well as encouraging cooperation between the government, funders and regulators to enhance the resilience of the sector, whose safety net is coming apart.

In the short-term, only the government can make the large-scale changes that would relieve some of the pressure. Recently, 95 charitable organisations joined together to call on the government for more targeted support to help manage increasing demand. This support would take the form of a social tariff for the energy market, alleviating pressure when universal energy support ends in April. As for long-term solutions, the charity sector must continue to show the resilience it has in the past by taking practical steps to secure the future. These steps include improving the skills of the sector’s workforce, addressing blind spots in data and enabling long-term investment.

The strengthening of the sector ahead of the difficult times to come will require a combination of external support and internal reorganisation. The trying times the country is facing has proven that the work carried out by charities is vital to national infrastructure and while the outlook may seem bleak, the changes needed are identifiable and the work towards them is already underway.