To win the battle against coronavirus, we need an urgent stimulus for charities - RSA

To win the battle against coronavirus, we need an urgent stimulus for charities

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  • Economics and Finance
  • Communities

Without a significant increase in voluntary sector action in the UK, we cannot expect to beat coronavirus. This means giving charities an unprecedented fiscal stimulus, says Asheem Singh.

We will not survive coronavirus without the work of the charity and care sector.

It is as simple as that.

In places where elderly people are isolated, social care workers are helping them survive as they stay at home. Without them, these elderly folk will get infected and likely die.

In places where homeless folks are at risk of transmitting infection to one another, homeless charities are offering shelter and sanitation. Without these charities, the outrage of homelessness in our country becomes a truly deadly sin.

I could go on and on and on, one public health intervention at a time for the large bulk of the 160,000-odd charities in the UK — or the many more across the world.

Right now, at our darkest moment, we need charities at the top of the game, just like we need health workers, doctors and nurses too.

Indeed, it may be that community action and care can significantly reduce demand for health service beds. Family carers in the UK save the NHS £132 billion each year in reduced demand  that’s the cost of a second NHS.

Now, more than ever, charitable action is not some ‘nice to have’, or an ‘add on’ as it is popularly caricatured. It is what will get us through this.

If charities are to support us through this crisis, however, we need to support them. Right now that is not happening; charities are going to the wall. And with each one that goes under, our chances of beating this virus reduce.

The charity reserves problem

The reality is that we are deep into the red zone. Most charities, without urgent support, will not make it through this crisis.

Most have relatively low levels of reserves  fewer than four months  and are incapable of withstanding minor shocks, let alone global pandemics and the disruptions to fundraising caused thereby.

Most charities have fewer than four months of reserves – and this includes many of the biggest charity brands, whose work will be crucial as we go through this crisis. Indeed, many charities in the UK with a turnover of less than a million have nothing resembling a sustainable reserves policy at all.

It is possible we will be forced to self-isolate for longer than that. The sector as a whole has about £20 billion in reserves (minus charitable foundation funding — for example, family foundations). That’s around six to seven months of trading. 

And it’s possible this is overstated — potentially by around 20 percent. This is skewed by a few mega ‘heritage’ charities. The rest are barely scraping by. All of them could close, first in drips, then in droves, as the months go on.

Think about what this means. Many employers will go down yes, and many charity workers will be made redundant — but also all of those support functions provided by charities for elderly folk, young folk, social care services and so on will wither on the vine.

Key pathways to enabling social distancing will be closed off. It would be an act of extreme recklessness to allow this to happen.

Treat charities differently to business

But we need to go further than buttressing reserves. I have heard in some quarters — including from the chancellor — that we should view support for charities through the prism of support for business and generate parallel supports.

This would be not only a generational policy error but is also economically unsound. We are trying to reduce aggregate demand for business at this point in time on public health grounds. We need to do the exact opposite with charitable activity: we need more of it. In other words, we need a fiscal stimulus.

The language of fiscal stimulus is what we must use. We need more health workers, more night shelter operatives, more guide dogs for the blind, more family carers.

We need an unprecedented multiplier of charitable action: investment in back-office functions, in governance, as well as management and care of boots on the ground. Whatever it takes.

A ten billion pound carer and community action fund

Charities will be assisted by the chancellor’s income guarantee scheme, but to deliver a stimulus to charitable action we need a cash injection. There is only one way to deliver: unrestricted cash grants.

And so I say to the chancellor: these organisations need to be given a fiscal stimulus of unprecedented scope and size. Right now we need more charitable activity, not less. And we certainly can’t afford for it to die.

How much? A ten billion pound carer and community action fund would add another three to four month’s worth of reserves to the whole voluntary sector’s coffers (an order of magnitude less than the business package) and would enable vital, trusted, network-rich organisations to stay in the field. We are talking 0.5 percent of GDP, and a historic structural intervention in the voluntary sector, beyond anything conceived by Beverage.

Perhaps foundations could pool together and help government get to the figure. Perhaps money could be moved from other places. But let’s be clear: this needs to be new money, in cash, going directly to charities, using existing mechanisms like community voluntary sector support services, community foundations and other trusted sources. Hard cash, distributed now.

I am going to repeat myself for clarity: without a significant ramping up of voluntary sector action in this country, we will not and cannot beat coronavirus. Doing whatever it takes to win this war means giving charities an unprecedented fiscal stimulus. It’s time for the chancellor to step up — or how can he expect charity workers and carers to do the same? And in that case, how can we possibly be expected to win?

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  • Completely agree with you. Charity, Volunteers and any kind of help to the people who are in need is something we should do to protect our society. 

  • I completely agree with you. It needs to be a large boost, it needs to be unrestricted and it needs to be easy to access, almost automatic and QUICK. The danger is that both government and foundations get tempted to over-engineer the solution with trying to pick “frontline” charities or demanding slow complicated application processes. How about simply granting every charity triple the amount they claimed in Gift Aid last year? Last year Gift Aid paid out £1.4billion to 75,000 charities with the vast majority receiving less than £50,000. A triple extra Gift Aid payment would be quick to pay and easy to administer.