Written evidence submitted by Lloyds Bank Foundation for England & Wales

 

 

DCMS Committee: Impact of Covid-19 on DCMS sectors
 

Introduction

Lloyds Bank Foundation for England & Wales supports over 650 small and local charities across England and Wales. These charities have shifted their delivery to continue supporting people facing complex social issues alongside developing new services to respond to emerging needs. The support announced by Government is a welcome recognition of the role that small and local charities are playing in helping people but this support must reach those on the frontline quickly and it is imperative that Government recognise that the impact of Covid-19 will be long-standing. The sector will need further support to continue to meet people’s needs.

Summary

 

What has been the immediate impact of Covid-19 on the sector?

 

First and foremost, charities have demonstrated why they are never more needed. Charities, particularly those which are small and local are playing a critical role in supporting those in communities who are most at risk. Already embedded in communities and working with people that other agencies fail to reach, charities are ensuring that people facing complex social issues receive the support they need, whether that is in response to complex mental health problems, surviving the trauma of abuse, living with a learning disability, being an asylum seeker or refugee, being a young parent or care leaver or rebuilding lives on leaving prison. These charities have built on their trusted relationships and local connections to understand how needs are changing in response to Covid-19 and have adapted their services to continue providing support to people whose problems are only amplified by the pandemic.

 

The current Coronavirus outbreak has therefore exacerbated an already difficult situation for many of the families they support and is posing significant new challenges

 

(learning disability charity, South East)

 

Other agencies, both statutory and voluntary, are also referring people into local charities, recognising that they have the expertise to support people in the most effective way. A number of charities have highlighted a rise in acute safeguarding concerns around which they need to support people – charities’ work here is critical. It is not a ‘nice to have’.

 

Yet they are not only maintaining services to those they already reached. They are developing new services in response to new needs. They are supporting more people, whether that is as a result of previous clients who now need more help as a result of the pandemic or clients who are facing new complex social issues for the first time.

 

Charities’ continued work is critical because the issues their clients face have not disappeared, and if anything, have been amplified. Those will mental health challenges are facing further anxiety, depression and isolation. Those facing domestic abuse are locked up with the perpetrator with no reprieve. And those with a learning disability still need support to live independently and understand what is happening.

 

Packs are being created by the team, many of which are trained as Special Education Needs Teachers.  The packs will contain social stories and information to help the Learning-Disabled people how to cope in this situation

 

(learning disability charity in the South East)

 

Similar scenarios are replicated across all areas of our funding. This is not a time for charities to furlough staff or step back because their services are needed more than ever.

 

Ceasing services simply isn’t an option at a time when people need us most.

(mental health charity in Wales)

This is particularly important because the people small and local charities are supporting face increased risks. They are reaching those most vulnerable to infection due to underlying health conditions and also helping those most affected by, for example, domestic abuse, homelessness and mental ill health – but these people have typically been overlooked in recent definitions of ‘vulnerable’ which focus on older people and those with physical illnesses.

 

Charities exist to tackle problems and meet unmet needs. In the current environment, as society faces levels of challenges not seen for generations, there is more need than ever before and charities are not only the first, but only point of call for hundreds of thousands of people across the country. Their work is helping to drive down demand for other public services, particularly the NHS, not only directly supporting clients but in doing so, helping to protect the wider population by ensuring their clients understand what is happening and how to stay safe. By proactively checking-in on clients, small and local charities have a clear understanding of when people need further support and can also put in place measures to support people to help themselves.

 

Small and local charities are recognised for being flexible and able to adapt to changing situations – which is evident in how they are responding by: 

 

1)      Adapting services to continue delivery

 

The charities the Foundation supports have completely revolutionised their operating models in a matter of days or weeks, to enable them to continue delivering services. A high proportion of charities we fund normally operate around a physical space, bringing people together in communities to heal and move forward with their lives. They have completely shifted their delivery mechanisms so that they can continue to support people as effectively as possible.

 

We established a new 10am to 10pm freephone helpline for young people in the Lancaster and Fylde and Wyre districts as a response to the Corona crisis

 

(mental health charity in the North West)

 

Many small and local charities did not have advanced digital capacity before the crisis. They typically did not have the hardware, software or skills to operate remotely. Small and local charities, embedded in the communities they serve have rapidly sought to support people remotely, typically focussing on providing 1-2-1 support via phone or video and shifting staff to work from home. More than three quarters of the support requests the Foundation has received from grant holders have been for digital technology, and we are working with Computer Recyclers UK to provide repurposed hardware and software for charity staff and volunteers to work remotely. This support is also being extended to enable charities’ clients to access this support where it will enable them to continue to engage in the charities’ services. Yet this still doesn’t overcome the challenge that many grant holders are reporting of clients not having sufficient data to participate in all engagement activities and support, even where they have the devices. Furthermore, those facing greatest disadvantage are typically those who also have lower digital literacy which makes engaging in remote support even more difficult. This is particularly the case for many refugees and asylum seekers and those leaving prison.

 

While the Foundation can provide some support, adapting services inevitably comes at a cost to charities, in terms of buying phones, laptops etc alongside the cost that comes from delivering all services 1-2-1 rather than a combination of individual and group work.

 

“Still providing our advice and support service but via telephone 10-4pm, this is challenging as the support needs are growing and it is particularly challenging liaising with other organisations with reduced services. Everything is much slower and involves more work/time. We are now also providing emergency food parcels each week to the most vulnerable.”

(homelessness charity in Wales)

Furthermore, as referenced above, they do not have the resources to pay for additional data so that clients can access more support online.

 

Charities are also having to shift their ways of working to protect their staff and volunteers’ mental health. Supporting people facing complex social issues places tremendous pressure on staff and volunteers who themselves are now isolated and who often face additional caring responsibilities. For those still delivering face-to-face services, staff and volunteers are often having to do so without PPE.

 

Charities are having to find new ways to support their staff and volunteers, working to ensure they don’t burn out at this critical time – especially as their own staff and volunteers may be less able to support others due to their personal situation. This is particularly the case for small and local charities were volunteers are often former service users and may find themselves at higher risk or in need of additional support.

 

2)      Adapting services to meet new needs

 

The charities we fund provide holistic support, so it is not surprising that many are now providing additional services to meet new needs.

 

Our aim is to replicate our service remotely (as much as possible) and respond to new concerns/issues because of COVID 19.

 

              (mental health charity in Central England)

 

A key area of growth has been in the supply of food and toiletries to those who do not have the resources or ability to get their own. For some charities that previously provided lunch at their centres, they are now delivering food to people’s homes or temporary accommodation. For other charities it is a completely new service that has seen staff and volunteers shopping for clients and delivering food to their doors.  They do this because many of the people charities work with have no other means of support – they often have limited networks or family who could step in. If charities are not able to support people (and support them to stay in their homes) it is highly likely that infection rates among a highly vulnerable group would further increase.

 

Many small and local charities are seeing their role as a local coordinator increase too, linking into other initiatives and organisations to reduce duplication, simplify referral pathways, raise awareness of support and link up offers of help with those organisations that can help. In some instances, small and local charities are the lynchpin for local authority-wide initiatives, working closely with a range of partners to find people accommodation for example.

 

While there has been a tremendous outpouring of support for others at this time, with more people coming forward to help their communities, this is most effective where it is linked into charities that are already connected to the people who need help – and importantly, already know how to help them. For example, a grant holder in the South West is working with Wessex Water to coordinate food for vulnerable people. Wessex Water’s head office catering team is producing 100 meals a day twice a week for people in the local areas.  The charity was already working with other local community organisations so has been able to build on this to make sure that the food reaches those who need it most, with other community groups able to refer people into the charity. Existing relationships and networks have been critical in enabling more people to access this support. Small and local charities are used to mobilising volunteers and connecting people in the community – their networks and understanding have never been as important as now, to connect volunteers with those who need support.

 

“We have identified those most vulnerable and are also working with the Parish Council to support the village who can also use our support line.”

(learning disability charity in the South East)

 

Yet adapting to support people comes at a cost

 

While charities have stepped up quickly – to continue existing support and provide additional support – this has not come easily and does not without a cost. To really understand the impact of Covid-19 on the sector, it is important to recognise the pressures charities were already under before the crisis started. The Foundation’s grant holders have consistently reported rising demand, both in terms of numbers and complexity, alongside increasing difficulties in securing funding. Charities have attributed much of this rise in demand to welfare reform and the reduced availability of other public services whether through closure or rising thresholds to access support. This has been particularly prevalent around mental health, where non-mental health specialists have had to support people with increasingly complex mental health needs as a result of reduced community mental health support.

 

Charities, particularly those that are small and local, were already operating under difficult circumstances and were seeing increased waiting lists for services. They were already under pressure, often through no fault of their own but as a result of broader policy and austerity decisions and public funding environments that favoured scale.

 

Charities are both versatile and precarious. They are used to contracting and growing according to the resources they have available. The key difference in the current scenario is that all charities are seeing intense pressures simultaneously. There is no one else to pick up the pieces if they collapse, so they will continue to look for ways to struggle on in whatever way they can – but as the crisis weakens them, their ability to continue to adapt and meet levels of demand with fewer resources will inevitably diminish unless they can access further support. No amount of planning could have prepared small and local charities for the impact of a global pandemic that has put the country under lockdown, driven surges in demand, and dried up income streams.

 

Loss of income

In addition to the loss of staff and volunteers through sickness, increased personal caring responsibilities and the amplification of other challenges, charities are seeing some of their income streams disappear. 91% of charities have already or are expecting to have their cash flow disrupted[1]. For years charities have been encouraged to diversify their income and move away from grant dependency. Some of the most innovative charities have been highly successful but it is these charities that are experiencing the harshest impacts.

 

The loss of income from the cafe and room lettings has put us in an even more challenging financial situation to cover staff costs.

 

              (unemployment charity in the South West)

 

The sums involved are significant for small and local charities. One homelessness charity is losing £5,000 per week now that it can’t trade – equating to approximately 10% of its annual income. Another, whose annual income is less than £300,000 had budgeted to secure at least £100,0000 from its social enterprise this year, but it now cannot operate. These charities still need to keep their support running while facing huge holes in their funding.

 

Trading income stopped overnight. This may have come through renting out building space, charging for services or running cafes for example. All of these sources of income have ceased under lockdown. Fundraised income has been similarly hit. Spring and summer are typically key times for fundraising events which have had to be cancelled. In one example, a grant holder whose total annual income is approximately £200,000 would typically raise £6,000 - £7,000 per month from challenge events, but this income has dried up – that is almost 40% of their monthly income. While there are a limited number of example of charities benefiting from an outpouring of public support at a difficult time, most of the charities we fund work on traditionally ‘unpopular’ causes and have not benefited from new giving. Furthermore, as supporters face their own economic challenges, there is evidence that individuals are cancelling direct debits which can be a valuable source of unrestricted income.

 

A significant proportion of the Foundation’s grant holders obtain a proportion of their funding through statutory contracts which is now under threat. The shift to contracts over grants that we have seen over many years means that services are often paid on a payment by results basis for services delivered in a prescribed way. As charities adapt delivery and shift their focus to meet new needs, they might not be delivering on the contract terms and, while government has issued guidance saying this should not be case, some charities face uncertainty around whether this contract funding will be honoured. Grant holders are already reporting discrepancies in how statutory funders are responding – some with flexibility, while others are reverting to rigid delivery mechanisms from original contract terms which are now irrelevant but mean the charity will lose out on essential funding for work they are still delivering, but in a different way.

 

Some grant holders are also reporting challenges due to the closure of grants programmes. A number of charities had already invested a lot of resources into applying for the Universal Credit Transitions Fund when it was shut down on day one of lockdown. In other cases, charities were mid-way through applications to independent funders like the National Lottery Community Fund which have closed to new applications. There are real concerns that the pivot to emergency funding (more than 500 funds are reportedly available) will have knock-on effects on the availability of funds for the medium- to long-term and fail to provide the stability that charities need at this time.

 

Even for those charities which have reserves, they cannot rely on them as the impact will continue far longer than their reserves can last them. Reserves are held to allow for the orderly wind-down of services when charities have to close rather than to prop up the charity on an ongoing basis. Charities have typically been encouraged not to have too many months of reserves as a way of demonstrating they are spending as much of their money as possible on the people who need support. More than half of the charities the Foundation funds had fewer than 3 months of reserves at the point of grant application.

 

The reduction in available resources should not be viewed in isolation, because it is happening at a time of increased costs for many small and local charities. Existing liabilities such as rent continue to draw down on their funds despite buildings lying empty, while new costs increase to enable charities to adapt to remote delivery. These financial pressures will inevitably further mount as the country heads into an anticipated recession. Even where short-term measures are offered to help charities, the long-term implications of these mean that they may not offer the support that is needed.

 

While these are overarching trends, the charity sector is inevitably diverse and there are also differences in impacts between sectors. For example, the rises in demand for domestic abuse charities have been widely reported but many services are bracing themselves for further spikes in demand when lockdown restrictions are eased and people have more opportunities to reach out for help. Mental health charities have seen similar surges, with lockdown leading to increased isolation and anxiety even for those who did not previously face mental health challenges. In some sectors, such as those working with refugees and asylum seekers, charities face particular challenges in delivering support remotely as clients often do not have access to digital technology. Charities in the criminal justice sector are trying to adapt delivery when there is no access to prisons and those that are released face increased challenges when other services are closed. Within each sector charities are facing new issues and are seeking to work within new environments so they can meet needs as effectively as possible.

 

How effectively has the support provided by DCMS, other Government departments and arms-length bodies addressed the sector’s needs?

 

The Foundation welcomes the £750m announced to support charities, and the recognition of the importance of small and local charities. It is too early to truly understand the impact of the funding at this stage but there are already some important factors to consider:

 

1)       Much of the impact of this funding will depend who is able to access it and how quickly they can access it. It is imperative that the distribution of funding aligns with the following principles:

    1. Openness in terms of communications and decision-making processes
    2. Clarity that the funding can support charities responding to Covid-19 and continuing to deliver frontline services
    3. Consistency between government departments and coordination with other funders
    4. Simplicity in terms of applications and decision making
    5. Proportionate and flexible processes with funding agreements that work for different sized organisations – particularly in terms of up-front grant payments
    6. Reflecting an equality and human rights approach to ensure funding reaches those most at risk. 

 

This funding needs to be distributed speedily and transparently. While the Foundation understands that little notice was given to DCMS in advance of the announcement to be able to plan funding distribution, three weeks on from the announcement, there remains little clarity around the parameters for who is eligible to receive it. The Foundation understands that government departments were required to submit rapid bids to DCMS yet without any clear communication. The lack of communication means that some sectors and charities will inevitably miss out in what looks to be a deeply flawed and opaque process. In addition to the detrimental impact this will have on what the money is ultimately used for, it has also damaged the relationship between the sector and government as charities continue to wait to even hear a timescale for when the process will be announced or the money paid out. No information has been shared on either the funding via government departments or even the National Lottery Community Fund due to delays within government itself. Given the time-critical nature of the work charities are undertaking, government’s slow and unclear response is particularly concerning.

 

2)       The £750m announced does not provide the level of support that is needed to enable charities to continue delivering services.

As NCVO have indicated, the charity sector is set to lose approximately £4bn over a 12-week period – although we know the impacts will be felt over a much longer timescale. While the funding from Government is a welcome start, much more is needed to ensure that people can access the support they need by enabling charities to continue to deliver services and continue to grow their services to meet new and growing needs at a time when their income continues to be hit. Government should, over the coming months, commit to review the support provided to the sector with a view to stepping in to ensure people can access important services.

 

Many of the other existing government initiatives to support organisations are less significant for small and local charities. The Foundation supports the amendments to schemes put forward by Charity Finance Group, NCVO and Charity Tax Group, as summarised below:

 

 

 

 

 

Government has also announced specific support for some sectors. For example £2m has been announced for domestic abuse, focused on helpline provision. This funding is welcomed, particularly given the spike in domestic abuse that we are seeing. However, helplines and online support can only go so far to support people. They typically refer people on to frontline services who do not have the funding to meet such increases in needs.

 

The Foundation welcomes the £5m allocated to support mental health charities, and that this is being distributed by Mind which is well placed to understand how local charities are supporting people but we are already hearing that the process is very detailed so it is difficult for already stretched services to apply. Devolving funding in this way enables those with expertise in specific areas to distribute the funding but it has to be done in as simple a way as possible, especially at this time. It must be recognised that distributing funds in itself requires resource.

 

More broadly, policy decisions that impact upon the sectors charities work in have a significant impact on charities and the clients they support. Some of these announcements have been positive, introducing policies that the sector has been pushing for, such as:

 

However, there are many other policy areas that would further support the work of the sector and better meet the needs of the people they support. There is also a clear need to extend the good provisions that have been introduced beyond the immediate Covid-19 response so that the needs of those facing complex social issues continue to be met.

 

What will the likely long-term impacts of Covid-19 be on the sector, and what support is needed to deal with those?

 

While it is impossible to predict the exact nature of the long term impacts of Covid-19 on the sector, there are already indications that the sector will continue to need support to ensure people can access the help they need.

 

 

There are likely to be particular spikes in demand when lockdown ends. Those who have been locked up with a perpetrator of abuse may have more opportunities to access local services. While those who are homeless and currently living in hotels risk being forced back onto the streets unless charities can work with local authorities to find suitable alternative accommodation, for example. As the anticipated recession hits, charities will see even greater demands for support as people face rising debts and growing poverty. With more people experiencing redundancy, there will be more people needing to access benefits for the first time and needing help to navigate support options alongside coping with more mental health issues. Increased pressure to respond to needs is a not a short-term issue for those charities supporting people facing complex social issues.

 

 

 

Staff have been resourceful with limited and in some cases out dated portable technology, but with the Covid-19 crisis continuing for an indefinite period we now need to ensure we have sufficient portable computing equipment to see us through the crisis and not only allow our staff to work from home, but to continue to provide services in a digital format for as long as is needed.

 

(mental health charity in Wales)

 

Charities are also anticipating increases in costs as support / flexibility offered during the crisis is cut back.

 

“[Our landlords] have offered 50% rent holiday but still owe at the end ie must pay before March 2021. They have also told us that we will have our rent put up at some point too – but no idea when or how much.

 

              (sexual abuse charity in central England)

 

The charities that the Foundation supports typically have 3-6 months reserves so are in a stronger position than many during this crisis. It is for this reason that they are less likely to close immediately. However, as they deal with rising costs and reduced income over a prolonged period of time, there is concern that we will see an increased number of charities go to the wall in 12-18 months – they can only struggle along for so long. This could be compounded by multiple grant cycles coming to an end simultaneously as all the short-term emergency response funding of up to a year comes to an end. Charities are already raising concerns with the Foundation about the implications on medium- and long-term funding of funders pivoting to provide emergency support. Charities could face a cliff-edge in funding further down the line. It is critical that plans are in place to help charities to become more sustainable.

 

Key factors to help charities respond include:

 

 

 

 

 

 

 

What lessons can be learnt from how DCMS, arms-length bodies and the sector have dealt with Covid-19?

 

DCMS, and OCS in particular have engaged with the sector in making the case for sector support, but there appear to have been particular challenges around helping other departments (primarily the Treasury) to understand charities and the need to support them. As the immediate crisis subsides, there is a need to strengthen relationships with Treasury and to help the sector to understand what data needs to be generated to ensure Treasury feel they have the evidence to react more quickly in the future.

 

There have been criticisms of the delays in distributing the funding announced by Treasury. As referenced above, the lack of clarity or communication about how and when government will release funding means the sector is still in the dark about who will even be eligible for support, let alone when this funding will be available. At times of crisis, clear and regular communications are even more important than ever, yet this has been lacking from DCMS. Even where an existing distribution mechanism exists through the National Lottery Community Fund, delays within Government mean that there have not even been announcements about the money National Lottery will distribute. Charities are eager to understand if they will be eligible for funding and how much they may be able to secure but are being left without any clarity.

 

Key lessons for Government more broadly can be seen in the positive impact that shifts in policy have led to. For example, some charities are seeing a drop in demand for their services because changes announced in response to Covid-19 mean that people aren’t being pushed into destitution.

 

Since the restrictions came into force we have seen a significant reduction in people contacting us for help. Speaking to other advice organisations across the country this seems to be a trend within the advice sector. We believe this drop in demand is linked to legislation which has been brought in to protect vulnerable people, including the postponement of eviction action.

 

(homelessness charity in Wales)

 

There is a clear need to learn from the benefits these policy changes have had, and to enable them to continue where it means people are not left behind and instead have the resources they need to thrive. Without the continuation of these changes, charities will inevitably face further increases in demand when restrictions are lifted.

 

We do anticipate however that demand will exponentially increase once restrictions begin to lift and people are once again forced to face the reality of their difficult situations. We are currently thinking about what we need to put in place to respond to this demand but we expect large numbers of people seeking support with debt and housing issues.
 

(homelessness charity in Wales)

 

How might the sector evolve after Covid-19, and how can DCMS support such innovation to deal with future challenges?

 

Firstly, it is important that government continues to monitor the impact of Covid-19 on charities, and to work with charities to ensure people can access the support they need. Many of the topics highlighted throughout this submission point towards factors which might shape how the charity sector evolves after Covid-19.

 

Many charities have seen their income expand and contract multiple times. It is likely that a significant number of charities will contract rather than disappear altogether. This suggests that we must look at how, with time, we help charities to grow again with the resources required to meet people’s needs. It also means we need to consider how people in need will access support if indeed charities do contract. There is an urgent need to look at how public services and the welfare state can best support people so that fewer people are pushed into crisis and are in need of charities’ support.

 

A key learning point for the future is that being ‘innovative’ does not necessarily make your organisation stronger in times of crisis. Some of the most innovative organisations have been those which diversified their income only to find themselves most at risk when the crisis hit. This demonstrates that, while charities can continue to strive to make the best use of resources and innovate, this will never negate the fact that national crises will lead to charities needing Government support, just as with any other sectors across business. It is particularly important because Government needs charities to be able to meet needs because they can reach people which other agencies cannot, while also playing a vital role in stemming demand for other public services.

 

The crisis has thrown a spotlight on charity reserves. Even for those with reserves, a healthy reserves policy has been to hold funds for 3-6 months of activity. We now know that this is not sufficient when a major crisis hits. Charities need to be able to build up greater reserves which requires funders, whether statutory or independent, to provide sufficient funding to allow for this. Too often, funders have failed to even allow for full cost recovery when paying for services.

 

Ultimately, since the onset of the crisis charities have demonstrated why they are needed more than ever. Reaching people facing some of the greatest risks yet who fall through the gaps of statutory services, charities are providing vital support whether through continuation of existing services or in rapidly developing new approaches to meet emerging needs. Put simply, with more and more people needing support, government cannot tackle this crisis effectively without charities. People cannot access the support they need without charities. Volunteer efforts cannot be well coordinated without charities. Communities will not be brought together without charities acting as local connectors. And public services could not meet demand without charities stemming the flow. It is essential that Government works closely with the sector and supports the sector to ensure charities, particularly those that are small and local, can continue to support people that need help and pave the way for stronger communities as the country rebuilds.

 

 

 

 


[1] Survey by Institute of Fundraising, Charity Finance Group and NCVO https://www.institute-of-fundraising.org.uk/news/coronavirus-impact-survey-results-charities-cannot-meet-the/

[2] Community Wealth Fund: https://localtrust.org.uk/policy/community-wealth-fund-alliance/