28 January 2021

Small and medium NGOs face funding cuts from both The Foreign, Commonwealth & Development Office (FCDO) and donors, despite an increase in demand for humanitarian and development support, Bond’s latest NGO survey has found. 

In the year ahead, 58% of small NGOs and 54% of medium NGOs expect their income to fall, compared to 40% of large NGOs.

When asked about future demand for services, such as healthcare, water and sanitation, food and humanitarian relief, 63% of organisations said they expect demand for their services to increase in 2021-22. The most significant levels of increase in demand are being felt by medium and small organisations, with just under a third of small and medium NGOs expecting the demand for services to increase by more than 20%, compared to 20% of large organisations.

Despite NGOs delivering much-needed support to marginalised communities during the global pandemic which looks set to push an additional 88 million to 115 million people into extreme poverty, funding sources for programming remain under threat. Many NGOs have been unable to access government support and now face funding cuts, forcing them to row back humanitarian and development programming.

Small and medium NGOs are particularly vulnerable to funding cuts and miss funding opportunities as the government continues to move towards awarding contracts rather than grants. 78% of NGO respondents receive government grants - particularly small and medium NGOs, who receive 65% and 87% of government funding through grants, respectively. Worryingly, 39% of all NGOs surveyed receiving government grants, and 41.6% of NGOs receiving government contracts, report that their funding has been seriously or very seriously affected. 

Respondents were asked to rate the financial, or other support, provided by UK government during the pandemic to the UK charity sector on a scale of 1 to 10, where 1 was the lowest rating and 10 the highest rating. The UK government scored 3.6 out of 10 in the survey.

Similarly, respondents were asked to rate the financial or other support provided by FCDO to international NGOs on a similar scale. FCDO scored 2.6 out of 10 and 41% of respondents gave FCDO the lowest score of 1.

Funding from trusts and foundations have also been affected with 22.9 % of UK NGOs reporting that their funding has been seriously or very seriously affected.

Stephanie Draper, CEO of Bond the UK network for organisations working in development said:

“The situation has got progressively worse for small and medium NGOs on the frontline dealing with COVID-19. Providing the basics to marginalised communities – healthcare, water, food, education is now even harder as funding dries up and staff are made redundant. 

Sadly, the third sector, which is a final lifeline to so many people both at home and around the world, has been abandoned by the government leaving many of us questioning what “Global Britain” means. 

We urge the government to protect any funding that directly helps people, particularly grants, and allow organisations to redirect funding to frontline programming rather than asking for it back, so NGOs can continue to deliver lifesaving support during the global pandemic.”

Reassuringly, public support for UK NGOs has remained strong. Only 14.2% of those who receive individual giving reported that their funding has been seriously or very seriously affected. 

The survey also reveals that organisations are being forced to choose between furloughing staff or cutting back on programmes despite the increased need for help by marginalised communities. Administration and finance roles, as well as programme and delivery roles, continue to be those most under threat of redundancy as organisations close programmes or scale them down. 

26% of organisations have already made redundancies, and 34% of organisations said they will be making redundancies in 2021-22. 9% of the organisations surveyed have already made 20% or more staff redundant, and 7% of organisations will be making 20% or more of their staff redundant in 2021-22.

In the year ahead, the burden of redundancies will increase for medium-sized organisations, 46% of which will make staff redundant in 2021-22, compared to 32% of medium organisations that have already made redundancies. Similarly, 29% of small organisations will make staff redundant in 2021-22, compared to 19% of small organisations that have already made redundancies.

Most organisations are unable to use the furlough scheme. Only 21% of smaller organisations currently have staff on furlough, compared with 41% of medium organisations and 40% of large. 21% of large organisations have furloughed 10% or more of their staff.

The financial ramifications of the crisis are forecast to last longer for medium and small organisations. 46% of medium organisations and 40% of small organisations expect it to take 12-24 months to return to their pre-crisis income levels, compared to 27% of large organisations.

ENDS 

Notes to editor 

  1. The survey was conducted between the 11th and 18th of January and was completed by 100 organisations: 48 small organisations (below £2m), 37 medium organisations (between £2m and £20m), 15 large organisations (over £20m).
  2. This survey is the fourth wave of pulse surveys conducted by Bond of its members to find out how COVID-19 is affecting their work. Previous survey findings from May and October can be found here and here
  3. Bond is the UK network for organisations working in international development. Bond unites and supports a diverse network of over 400 civil society organisations from across the UK, and allies to help eradicate global poverty, inequality and injustice. 
  4. For further information please contact Maryam Mohsin on 07555 336029 or [email protected]