Charities’ ability to invest time and money into changes that would improve their performance are being held up by “constant firefighting” challenges including the cost of living crisis.

The findings have emerged in research by think tank Pro Bono Economics into ways that charities’ role in the wider UK economy can be better recognised.

The cost-of-living crisis and securing charities' future post Covid pandemic are among challenges charity leaders are facing.

Lack of finance and “restrictive” fundraising practices have also emerged as barriers to improvement, the think tank said.

Among charity leaders that took part in the research there is a “common belief that charities lack sufficient absorptive capacity to invest time and money into changes that would improve their performance”, it said.

“Charity leaders often identified a state of ‘constant firefighting’ or a lack of ‘bandwidth’. This was often coupled with a lack of skills and knowledge - with both generally explained by a lack of finance and/or restrictive funding practices.”

"Charity leaders often identified a state of ‘constant firefighting’ or a lack of ‘bandwidth’. This was often coupled with a lack of skills and knowledge - with both generally explained by a lack of finance and/or restrictive funding practices."

It added: “High inflation is eating away at charity reserves and eroding the value of existing donations, grants, and contracts.

“While the subsequent cost of living crisis is hitting disposable incomes and triggering a sharp growth in the number of people in poverty.”

Pro Bono Economics is calling for charities to be a “vital part” of efforts to improve productivity in the UK. This has “slumped” over the last decade, says the think tank, “yet to date, charities have barely featured in the debate”.

The call has been made through the think tank’s Law Family Commission on Civil Society.

Too often discussion around improving productivity has been focused on business “with the charity sector not only overlooked but often explicitly excluded from these efforts”, it said, adding that “there isn’t even an official measurement of charity sector productivity”.

Pro Bono Economics added: “There are also evidence gaps relating to behaviours and attitudes towards productivity growth within charities, in particular how charity leaders perceive their organisation’s performance relative to their peers.

“There is little research into the amount of benchmarking and networking that charities undertake, the effectiveness of infrastructure that supports the flow of knowledge and ideas, and how well the sector’s needs are being served by it.”

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