New research from Rathbones, one of the UK’s leading charity wealth managers, warns that charity services are being squeezed by the combined impact of rising demand, funding pressure and increasing strain on staff across the sector.
The research was commissioned by Rathbones Group and carried out by independent research agency PureProfile, surveying 100 senior charity executives. Published in July, its findings paint a worrying picture of organisations having to make difficult decisions about who they can support, what services they can continue to provide and how they can retain the people delivering those services.
The results highlight how charities are being squeezed from both sides: demand is continuing to grow while many organisations are also facing pressure on income and operating costs. Around 62% of respondents said demand for their services had increased over the past two years, including 9% who said it had increased dramatically.
In response to these pressures, many charities have already had to restrict access to services or reduce the scope of their activities. The most common responses reported were:
- 80% of charities restricted their eligibility criteria.
- 28% introduced or increased waiting lists.
- 16% paused or cancelled programmes.
- 14% reduced the areas they serve.
The pressure is also being felt by employees and volunteers. The survey suggests that rising demand and financial uncertainty are contributing to increased staff turnover and concerns about the sustainability of services:
- 88% of charity executives said they had seen an increase in people leaving the sector.
- 89% expected the number of staff leaving the sector to increase over the next two years.
- 35% said their organisation was relying on volunteers to fill gaps left by professional staff.
- 66% of senior charity executives questioned said they were personally considering leaving their jobs due to the pressure they face.
The research also points to potentially serious long-term consequences if funding does not improve over the next 12 months.
Among the longer-term consequences identified by respondents:
- 15%, said they faced permanent closure.
- 34% said they would significantly reduce or restructure core services.
- 25% said they would consider merging with other organisations.
Next steps
For charity trustees and senior management teams, the findings are a timely reminder of the importance of robust financial planning. While maximising income remains important, the response should not be limited to investment returns or new income streams. Charities should also ensure that budgets and forecasts are regularly updated, reflect current demand for services and include a clear assessment of the assumptions being made.
Forecasts should be stress-tested against realistic downside scenarios, such as further reductions in unrestricted income, delays in grant funding, increases in staff costs, or higher demand for services. Trustees may also wish to consider what actions would be available if a worse-case scenario arose, including where costs could be flexed, which services would need to be prioritised, and what level of free reserves would be required to manage short-term shocks.
Documenting these considerations can support better decision-making and help demonstrate that trustees have considered both the immediate pressures and the organisation’s longer-term resilience. In the current environment, regular review of forecasts, open discussion of key assumptions and early scenario planning are likely to be essential parts of good governance.
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