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. 

The RESET 2020 National Impact+Need Research Study was undertaken by The Xfactor Collective, with the support of Equity Trustees Sector Capacity Building Fund, to provide additional insight into the impact of COVID-19 on the social sector, from large charities to small grassroots organisations. 

Conducted over April and May 2020, the extensive sector study highlighted that:

• 45% of respondents are carrying operating reserves of six months or less
• 70% have either stood down or reduced volunteers’ hours
• 52% report that the uncertainty of the COVID19 situation is impacting their staff.

This sits alongside 56% of organisations being unable to deliver their services in their usual manner, 47% reporting a decrease in demand for services and 35% reporting an increase, coupled with 64% reporting a loss of revenue since March 2020.

A total of 380 completed responses were received, representing 23 communities of interest ranging from housing to health, environment and rural communities. Participating organisations employed a total of 38,000 employees, with more than 170,000 volunteers. Some 68% of respondents employed 10 or fewer employees, with two-thirds of respondents reported revenues of less than $250,000.

Key takeaways

Financial impacts have been significant: With 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 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 on their revenue is so severe that they are either struggling to deliver their usual services or need immediate financial support to continue. Small organisations (those with revenues of <$250,000) are more likely to have seen a decrease in demand (45%). Conversely, those with a turnover of $5-$50 million are experiencing a significant increase in demand for their services.

Workforce numbers remain relatively stable: A positive for the paid workforce within the social purpose sector shows not 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 on 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.

The decline in volunteering has significantly affected the delivery of services: The decline in volunteers significantly affecting the delivery of services. 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 on 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. 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’s 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 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. 

The Full Report is available for free to all sector organisations, and can be downloaded here. To register for alerts and updates, add your name here.