Coronavirus: Spending on frontline services in decline as income continues to fall

Spending on frontline services is in decline as charities battle with an increase in income loss, new research has shown.

In a survey conducted by ACEVO and researches at the Centre for Mental Health, more than half of charities (54%) said spending on frontline services has worsened in the last month.

The organisations surveyed 124 charities for the second consecutive month on financial changes as a result of the coronavirus pandemic.

Charities were quizzed on new business and donation income, cashflow, FTE number of employees, reserves and spending on frontline services.

The overall score for June sat at 42.8 out of a maximum of 100, which is deemed a negative score, showcasing the financial deterioration among the sector.

A score of 50 means no change, and a score of 100 means every area has improved.

The score is, however, higher than April's score of 30.8, suggesting that although challenges are worsening, it's at a slower rate.

New business and donations were worse for 40% of charities responding; 36% reported worse cashflow and 44% reported that reserves had got worse.

Furthermore, in a new development, the number of charities reporting spending on frontline services was lower than the previous month increased sharply from 30% in April to 54% in May.

ACEVO said these findings suggest that charities that have been relying on reserves to maintain frontline services are now having to reduce their activity at a time when they are never more needed.

“In April, the chancellor announced emergency funding for charities to support the relief effort but much of it is yet to reach charities," Kristiana Wrixon, head of policy at ACEVO said.

"This money was always too little, and it is now also too late to stop charities from being forced to scale back frontline services at a time when they are never more needed. The government needs to act urgently to increase funding to charities and civil society groups in order to reduce the risk of further harm being caused to people and communities that have been hardest hit by the pandemic.”