One in five charities are cutting back on the support they can offer because of rising costs, a survey is warning.

One in three believe they will become “overwhelmed” by increasing demand in the autumn, with seven in ten expecting more people to need their support in the coming months.

Mental health charities are offering group sessions instead of one-to-one counselling, and poverty prevention organisations are reserving support to only those with the highest need.

The warning has emerged in the latest VCSE Data and Insights National Observatory release published by think tank Pro Bono Economics and Nottingham Trent University.

Service cutting measures are being taken amid rising demand and “deep-rooted challenges” facing charities, including financial instability and skills gaps, they add.

Their latest data release also shows that just under a third of charities anticipate a “worsening financial situation over Autum” as local authorities continue to struggle with their long-term financial problems and look to cut back on grants and funding.

Researchers point out that the government has recently praised work by charities in their response to this month’s rioting by racists and Islamophobes.

“But the ‘unhealthy status quo’ the charity sector has reached might limit its ambitions to strengthen and increase resilience in communities as they recover,” they add.

Recruitment problems

Recruitment challenges are also impacting two in five charities, with more than half of vacancies in the sector “not defined as hard to fill”.

A lack of spending on training and development on staff is making charity sector work increasing unappealing to job seekers. This has plummeted by a quarter over the last 13 years and charities are “now three times less likely to invest in leadership development than the wider economy”.

“As the pandemic and cost of living crisis have retreated, the charity sector has reached its new normal, said Pro Bono Economics director of research and policy.

“Unfortunately, this new normal is an unhealthy one. Too many organisations in the charity sector are held back by the sector’s poor financial model, on a never-stopping treadmill of demand, without the right people and skills to meet the increasing needs of the people they serve.

“Charities’ unsteady foundations mean cuts to help for people across the country, with services appearing and disappearing despite need because the money and resources can’t be relied upon.

“The new government’s long-term programme of reform could deliver some slowing of demand for charities’ services.

“But investment is needed now in the sector’s capacity to fundraise and adopt technology.

National VCSE Data and Insights Observatory director Daniel King added: “The insight provided by the most recent waves of the Barometer paints a worrying picture of the state of the sector’s health.

“It’s clear that organisations of all sizes are facing challenges on multiple fronts. These combined factors compound the difficulties they face and make their ‘new normal’ very tough indeed.

“They are continuing to do the very best they can under trying conditions and will always step up to play their vital role when they are most needed. For many, the key question is how long can this be sustained?”

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