Small charities are at risk of extinction

Small charities and the communities they support are becoming increasingly marginalised, new research shows


In recent months charities have filled plenty of column inches, yet far from the media storms thousands of small and medium-sized charities have continued working to tackle disadvantage while facing very real threats to their future.

Last Wednesday Lloyds Bank Foundation brought together researchers, thinkers and charities to launch two new publications, which tell the story of small and medium-sized charities, looking at what figures from the last few years show and exploring what the future might hold.

As a major independent funder of charities with income between £25,000 and £1m, we’ve seen first-hand the challenges they’re facing at a time when funding is increasingly tight and yet demand for their services continues to rise. We commissioned two research projects to help us to understand the risks organisations are facing.

Navigating Change, produced by NCVO, uses the unique historical Almanac dataset to show how small and medium-sized charities (those with a turnover of £25k – £1m) have navigated the aftermath of the 2008 financial crisis. The findings do not make comfortable reading. Small charities are more vulnerable to volatile changes in income, as they are more likely to be reliant on a single source of funding.

The research sets out in stark terms how major changes to the dynamics of this remaining government funding – a seemingly irreversible shift from grants to even bigger contracts and commissioned services – have failed to create a level playing field, leaving small and medium-sized charities and those they work with ever more marginalised.

Funding from local and central government fell by up to 44 per cent for small and medium-sized organisations. It is only the very largest who have been able to manage, seemingly at the expense of smaller providers.

So if small charities are bearing the brunt of cuts, why don’t we just work to help them grow, merge, combine and ultimately get bigger? From our experience of the charities we work alongside day in and day out, we believe something is lost when great small and local charities close. Too Small To Fail, an evidence review from IPPR North, looks at this case for why small charities matter.

The research found that small and medium-sized charities can play a role that larger charities – and the public and private sectors – cannot. The review shows how the charities that are rooted in their community have the understanding and credibility to reach the most disadvantaged.

They can act as a local anchor, engaging local volunteers, building the community’s social capital and offering broad or holistic support. As these kinds of charities are reduced or withdrawn, deprived and BME communities will be hit hardest. Given the level of ongoing squeeze on public expenditure, particularly at local level, this will get worse for some time to come.

The evidence is not unequivocal: there are 40,000 small and medium-sized charities, and we cannot claim that small is always beautiful. But where there are effective small charities offering the best route to tackling disadvantage, it is all the more important to ensure they are nurtured and supported.

If we are to help the good small and local not just survive but thrive then we have to focus on turning the tide which is moving towards fewer, larger contracts that smaller charities can’t access, and make sure the little money that’s left does indeed reach them. This will ensure that we give small and medium-sized charities the stability that an organisation needs to thrive, not just survive.

As well as diving into the data with the help of NCVO’s and IPPR North’s reports, we’ve backed the newly launched Grants for Good campaign which will call for local authorities and central government to offer grants instead of contracts to charities.

If we do not make and win this case for small and medium-sized charities, there is a real danger that we will not know what we have lost until the small charity is all but extinct. We must act now to protect their crucial work.

Alex Van Vliet is Research and Data analyst at Lloyds Bank Foundation for England and Wales. Follow them on Twitter

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