Future of diverse social sector at risk, survey reveals

The continuation of the critical contribution charities and not-for-profits make to the economy and social fabric of our country is at risk due to the impacts of COVID-19, with organisations across the sector facing declining revenues and a consequent inability to provide their usual services. Impacts on mental health and well-being are also emerging among staff and volunteers.

These are among the key findings from the RESET 2020 National Impact+Need Research Study released, which generally validates modelling developed at the start of the pandemic. However, this survey provides real insights into the extent of the impact of COVID-19 on the social sector, from large charities to small grassroots organisations.

The research was undertaken by The Xfactor Collective, with the support of Equity Trustees Sector Capacity Building Fund. The survey, conducted in April and early May, sought to understand the impacts of COVID-19 on the social purpose sector, particularly change-makers and others whose primary purpose is to provide vital services to their communities of interest. It establishes a baseline against which future impacts can be measured, and importantly, highlights areas where the sector needs support now, if it is to continue to undertake its critical work.

Financial impacts are significant

The sudden on-set of COVID-19 has exposed the vulnerability of the sector as a whole. The survey found that nearly two thirds (64%) of respondents have lost revenue since March 2020, which is especially concerning for those whose revenues are less than $250,000 a year – about half of the respondents to this study.

Organisations with decreased revenues are especially vulnerable to the economic shock brought on by the pandemic, as income decline is not offset by a fall in operating costs. Organisations are working really hard to retain staff, meet ongoing operating costs like insurance, rent and other outgoings, as well as keep services going.

But 45% of respondents reported operating reserves of six months or less. Worryingly, 18% reported the impact to their revenue is so severe that they are either struggling to deliver their usual services, or need immediate financial support to continue.

This is particularly concerning when more than a third of organisations (35%) reported an increase in demand for their programs and services. Only 18% of responding organisations have experienced no change to demand. Small organisations (those with revenues of <$250,000) are more likely to have seen a decrease in demand (45%). Conversely, those with turnover of $5-$50 million are experiencing a significant increase in demand for their services.

Workforce numbers relatively stable

Positively, at least for now, the paid workforce in the social purpose sector does not appear to have been as affected as those in the business sector. While just over a quarter (28%) of respondents had either stood staff down or reduced their hours of work, around three in 10 reported no impact to their workforce – so far.

While a few (5%) are employing more staff, 22% report their staff are working more hours to manage the additional demand.

Decline in volunteers significantly affecting delivery of services

However, the effect on volunteering is severe. In stark contrast to the paid workforce, 70% of organisations have had to let volunteers go or reduce the number of hours they contribute. Of those, seven in 10 have lost or reduced the hours of more than six volunteers. Only 15% have experienced no impact to their volunteer capacity so far.

Volunteers are the life-blood of most social purpose organisations, especially smaller ones who already face significant revenue loss. They run the opportunity shops, community halls, market stalls and fundraising events, but lockdown restrictions and social distancing prevent these activities from operating. This not only affects revenue; it also impacts service delivery – which will have significant long-term consequences for society.

Regardless of capacity, the impact of COVID-19 on the morale and motivation of employees and volunteers is acute. Over half (52%) report that the uncertainty of the COVID-19 situation is impacting their staff. A further 28% are concerned about the mental health and wellbeing of their staff and volunteers.

So, what needs to be done?

It is no surprise that when the sector was asked what strategic and operational support would be most valuable to them right now, funding, in all its forms, is at the top of the list. Also highly valued is advocacy to government and public relations support to help charities keep a focus on the issues and needs relevant to their purpose. Assistance to move systems and processes online, to develop programs that can be delivered virtually and to manage staff and volunteers working from home would also be valuable. With most funding being directed at a specific or discrete projects, there is often little available for investment or capacity building. With reports suggesting that the sector is slow to adopt digital technologies, the current situation may force them to make investments to improve efficiencies and expand their services.

Julia Keady, Founder/CEO, The Xfactor Collective said this study has confirmed many of the issues predicted and also matches up with the experience and insights shared by those participating in the RESET 2020 support and advice program, which has been running over the last couple of months to help provide practical advice and support to leaders struggling with how to respond to some of these impacts.

“The research and registration data paints a strong story about the sector’s backbone – the tens of thousands of small organisations who are normally juggling budgets, boards and beneficiaries in tight environments, let alone a financial downturn, let alone a pandemic,” she said.

We will continue to monitor the evolving impacts through further research, Julia said, and in the meantime will continue to actively support the sector, especially the wellbeing and mental health of the organisation leaders who are navigating such extraordinary change and challenge.

“With the COVID virus clearly being here for some time, we believe it’s critical to stay on top of the evolving needs of the sector. That’s why the RESET 2020 survey will be run again in September, and a full data set will be made available and free to the sector on the SEER Data Platform,” she said.

Jodi Kennedy, General Manager, Trusts and Philanthropy, Equity Trustees said that this research has provided a baseline that will inform future sector support.

“Our commitment to this study reflects our aim to empower and strengthen social sector organisations, so they can continue to provide the key services and support they do to our society. This research helps us better understand exactly where the additional support is needed, and we are committed to continuing to ensure they have access to very practical advice and support they need to reset for a sustainable future,” Jodi said.

The Full Report is available for free to all sector organisation and can be downloaded in the Xfactorcollective website.

Pearl Dy

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Pearl Dy is a community manager and journalist. She is passionate about business and development particularly involving not-for-profits, charity and social entrepreneurship.

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