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Charities in Scotland facing an uncertain future

Runners in the 2018 Edinburgh Marathon - Image credit: PA

Charities in Scotland facing an uncertain future

While coronavirus has motivated an army of volunteers and many charities are having to take on extra work with the increased need in areas such as food and poverty, homelessness, mental health and domestic abuse, across the third sector there are major challenges, particularly in the area of funding.

“We put an estimate of around £50,000 being lost directly off our income,” Nathan Sparling, chief executive of HIV Scotland, tells Holyrood.

“For us, that’s a sixth of our income because we’re a small charity, so when I’ve got six staff, losing a sixth of our income, that puts a lot of pressure on where we’ve got to go.”

It’s a similar story for Cancer Support Scotland. “We had seen a complete wipeout in donations coming forward, various direct debits being cancelled,” says the charity’s chief executive, Rob Murray.

“We had a lot of income pledged for March, April, May, June, July, August in terms of events, the Kilt Walks, the Edinburgh Marathon, Paris Marathon, London Marathon, all these big events.

“We had a lot of corporate income that we were negotiating and all that just disappeared.”

Cancer Support Scotland has lost 40 per cent of its income between March and July and Murray says he’s had “a real question” about whether they will be able to survive.

“The biggest thing – it always is – but the biggest thing just now is funding,” says Anna Fowlie, chief executive of the Scottish Council for Voluntary Organisations (SCVO).

“And that’s because for a lot of organisations, they rely on trading income, so the likes of charity shops obviously, but [also] you know, the bigger ones like Amnesty or the RSPB and wee communities that have cafes, and so there’s all sorts of different trading things that happen and that’s all stopped.

“I mean there’s a few online things, but pretty much that’s all stopped.

“And massive fundraising events like the Kilt Walk or the London Marathon, the Edinburgh Marathon, things like that, all those things have come to an end.

“You can’t have dinners, people can’t go out in the street and all that kind of fundraising has just come to an end.

“And actually, quite a lot of charities have furloughed their fundraisers because they can’t do stuff like that. I think that’s really interesting at a time when you really need to raise funds.”

While some of the reduction in personal giving may be down to people being uncertain about their income, SCVO has noticed that giving has also been diverted from charities to the NHS – which is publicly funded from taxes.

The other issue is with contractual funding, where some charities are funded on payment by results contracts, where they have to carry out certain work or achieve particular targets to release the funds.

In some cases, the agreed results may no longer be possible under lockdown, holding up the funding. Some funders, including the EU and UK Government have been flexible about what funding is now used for, Fowlie says, but others, including the Scottish Government, have not.

She explains: “Some people have obviously realised that that’s no longer appropriate [to require the funding to be used for its original purpose] and have flexed and other parts of the system haven’t flexed, so that’s an issue.

“The European Commission have said you can relax this because we want all our money, everything to be diverted to, or used as much as possible, to address the COVID situation, but in Scotland, the Scottish Government seem to not have accepted that particularly and haven’t flexed as much as other parts of the UK have.”

This is the situation that HIV Scotland has found itself in. Many HIV clinicians are infectious disease consultants, so that has made much of HIV Scotland’s planned work impossible.

“There’s lots of different events or policy work that we were planning on doing that we’ve just had to postpone until next year because there’s no point in even trying to get into some of that,” says Sparling.

“So that’s impacting in terms of our funding. Some funding that we’ve got, we’ve had to negotiate with our funders in terms of postponing those outcomes and outputs of work that we were funded to do.”

Other charities have been able to continue working but have had to switch to delivering services differently – or different services altogether.

With quite a lot of the emergency funding for the third sector directed at frontline response to coronavirus, many organisations that don’t normally work in areas such as emergency food provision are coming forward to say they can, says Fowlie.

“There’s been quite a lot of flex and people really rethinking what they can do to make sure that the people they would normally work with in their communities are safe,” she says.

Other charities who previously offered face to face services are now delivering them digitally.

Safe Families, which supports families in crisis with volunteer befriending, respite and practical help, does not have the same financial issues as the other charities Holyrood spoke to because it has contract funding from local authorities for services it can still deliver, but it had to change rapidly from a purely to face to face service to volunteers offering support over WhatsApp and FaceTime.

“There’s almost no face to face now at all, it’s all virtual support,” says director of family support Andrew Murray.

“There’s been quite a lot of sending activity packs to families and maybe little toys and things. There have been quite a lot of drop offs at the door in terms of emergency food and stuff.”

He adds: “As an organisation we’re just trying to embrace the challenges, so we’re going ahead with online training now and we have developed a way of recruiting volunteers through online training.

“We’ve slightly tweaked the process. It’s not ideal but we don’t know how long this is going to go on for”.

Cancer Support Scotland has also had to change the way it works. Within two weeks it was set up to deliver its counselling sessions by phone and online.

“From a service point of view, we had to completely transform the charity, which was tough,” says Rob Murray.

And at the same time that the charity is struggling financially, demand for its services has “dramatically increased”, meaning it needs more counsellors.

The situation has taken its toll emotionally on staff as well as on people affected by cancer, with “phone calls every hour of people just breaking down into tears worrying about what this meant for them, their cancer treatments being cancelled.”

“For us it’s actually been quite a challenging and emotional ride in terms of a) the impact on our finances, but b) because we’re dealing with a really vulnerable group, it’s had a profound impact on the wellbeing of our staff as well as on those affected by cancer,” says Murray.

This move to delivering services digitally has added more pressure to charities’ budgets, with the additional costs of digitalisation of staff and services on top of the fixed costs for buildings.

Additional Scottish Government funding has been made available for charities in Scotland, including the £34m Wellbeing Fund and the Food Fund, which are providing grants for charities that are supporting people particularly affected by coronavirus.

There is also the £20m Supporting Communities Fund for organisations supporting local responses to the pandemic and the £20m Third Sector Resilience Fund, which is helping charities who expect to have cash flow issues in the months ahead.

There is also the National Emergencies Trust Community Response, Recovery and Resilience Fund, which is being delivered by Foundation Scotland.

Over 800 organisations have been given grants by the Wellbeing Fund, which is being administered by SCVO in partnership with the Corra Foundation, STV Appeal and Inspiring Scotland, with another 600 awarded funding last week and the fund opening again for another round on 7 May.

But even though the approval process has been made as light touch and as quick as possible, some of the charities that were offered funding had already had to close before they got the money.

Fowlie says: “It’s as quick as that. That’s only been two weeks, they have not had to wait very long.

“I don’t know what the number is on that, but… it shows you how dramatic the fall in funding was, and it shows you how precarious funding already is in the sector that it’s just like a Jenga thing – you can’t remove one brick or the whole lot falls over.”

Of even more concern is the medium to long term outlook, with the emergency funding perhaps only providing a temporary reprieve before charities find themselves in the same situation again.

For Cancer Support Scotland, Rob Murray says: “At present, come July it would be a case of revisiting things.

“If the government furloughing scheme doesn’t continue, I don’t know what that holds for the staff that are on furlough.

“For the staff that we have working just now, we would need to reassess where we are, but we’re working around the clock to make sure that we’re getting funding from a whole range of sources, and I think a lot of places are sympathetic, but it’s just about how quickly we can we can get money.”

Sparling says: “We’ve not furloughed any staff at the moment, mainly because most of our funding has come from public sources so we can’t furlough them because we’re using the money that’s been given to us.

“But the other impact on funding is it’s not just in the short-term period, because actually, I think we’ve got a good range of funders who are stepping up to the plate to make sure that organisations like ours that have a direct role in supporting some of the most vulnerable people do continue to get some funding.

“So, our pharmaceutical funders have been great at stepping up to the plate and donating some more money, but they’re donating money for us to work on projects, not to cover the shortfall that we’ve got, so we’re having to do more work with less money.

“But my concern is what happens next year. So, at the moment we would normally be starting to go through discussions with the Scottish Government about the next three years of funding, which then would go out to tender in October and we get a decision by December. But those discussions aren’t even starting to happen yet.

“And… it is just that uncertainty. Nobody quite knows what’s happening, how long this is going to last, what the focus of money is going to need to be on and, you know, spending a lot of money right now to help charities, is that going to impact on what happens next year, so are we just delaying lots of charities going under during this because it looks like a good time to support charities that are working on the frontline?”

“I think that the problem is that there’s not enough money,” says Fowlie.

“And it’s a hell of a lot of money. We’ve been lucky in Scotland compared to other parts of the UK, particularly England where they’ve been quite slow to [act] and proportionately offered less money, but it’s not going to be anything like the amount of money [that is needed] and what we’re increasingly concerned about is that you can’t rely on Scottish Government funding, but the normal sources of funding have pretty much dried up, as I said, from fundraising-type activities.

Nobody knows where the money is going to come from, she says.

“Nobody thinks the Scottish Government has got a bottomless pit… You know, to be realistic, there can’t be a bottomless pit, but this won’t be enough. This won’t be enough.

“Organisations are going to go under and organisations that weren’t eligible for the resilience fund when it first opened up because they had their own reserves or had enough cash flow to be okay in the meantime, in six months, that’s not going to be the case.

“Even big organisations in the third sector don’t have big reserves at all.”

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