Sector report by Ecclesiastical reveals biggest risks facing charities

The specialist insurer has published its second Charity Risk Barometer¹, an in-depth study exploring the immediate and emerging risks facing the charity sector – with COVID-19 an unavoidable narrative thread.

Loss of funding remained the biggest risk facing charities, with the pandemic amplifying financial concerns, while the risk of not surviving was also a major concern with many charities at crisis point.

Among the most stark findings of the report was stress-related burnout among staff. With charities trying to do more with less, as well as the challenges of working remotely through lockdown, keeping staff happy and healthy is seen as a key priority for charities as they continue to navigate the pandemic – with 44% seeing burnout as a significant threat to their operations.

The research found that two thirds of charities have experienced an increase in staff stress levels, and most are offering some form of support. That includes flexible working arrangements (75%), a wellbeing policy (52%) and counselling services (46%).

Seven out of ten (71%) charities cited Covid-19 as a reason for their increased concern for their futures, with a 34% drop in fundraising activity as a result of the pandemic.

Despite the bleak picture, the charity sector has adapted to these challenges. Charities that have been able to adapt to the restrictions imposed and shift how they work, either through embracing new ways of working (83% have moved to digital methods) or adapting their offer (52% using social distancing/PPE to continue working with patrons), are seeing the benefit.

While it wasn’t possible to plan for a once-in-a-lifetime global pandemic, many charities did have business continuity plans in place. Over half (58%) responded saying they had followed an existing plan and 82% of those believed that their plan was effective.

The role of trustees can’t be underestimated in navigating the challenges thrown up by COVID-19, and four out of five of respondents said that their charities’ board had performed well on making decisions such as adapting to change and remote working – but also for their efforts in planning for the future.

Some charities are already looking at how they will look in a post-Covid world, with 19% considering downsizing and 20% who had already begun collaborating with other charities during Covid considering doing so in the longer term, as a way of cutting costs or spreading risk. 

Angus Roy, charity director at Ecclesiastical Insurance, said: “The findings from this research make for sobering reading, but they’re no surprise given the extraordinary year we’ve had.

“Charities have become used to dealing with challenges, but this year has given us a perfect storm of a loss of funding through fundraising activities, a reduction in giving from corporate partners, as well as the general public, and an increase in need has left many charities at crisis point.

“It isn’t all doom and gloom though and what we have seen is charities rising to the challenge, through a mix of innovation, resourcefulness and determination and that gives us hope for the future.

“As one of the leading insurers of charities in the UK, Ecclesiastical’s goal is to be a strategic partner to the charity sector. Our aim is not only to help customers identify and manage their risks but also to work with them to provide solutions for the longer term – something I believe is critical as we emerge from the fog of Covid-19.”

Find out more about The Charity Risk Barometer

¹ The Charity Risk Barometer was developed following conversations with key sector partners, including the Charity Finance Group, Small Charities Coalition, Carers’ Trust and previous winners of Ecclesiastical’s Movement for Good Awards during a virtual roundtable event in the Autumn and a survey of 250 charities through YouGov.