Beware of ‘crying wolf’ during recession, charities warned

Recent surveys have predicted a miserable future for the sector, with a projected steep decline in donations, legacies and government funding, just as demand for services increases. But in a new History & Policy paper, Professor John Mohan of the University of Southampton and Karl Wilding, Head of Research at the National Council for Voluntary Organisations, dismiss this blanket picture of gloom.

In Economic downturns and the voluntary sector: what can we learn from historical evidence? they use the accounts of British voluntary hospitals during the interwar period, and trends in charitable-giving in North America during the Great Depression of 1929-31, to assess the likely impact of the current recession on charities. This research will inform a policy seminar on voluntary action and the economic downturn, taking place at the National Council for Voluntary Organisations on Tuesday 7 April.

History suggests that:

• Charities have been creative in developing new sources of income and the impact of the current recession will depend as much on the internal management, decision-making and resources of individual charities as on the external environment. As was the case of the British hospitals in the interwar years, survival of the fittest will prevail.
• The proportion of individual income given to charity will remain generally constant – as in the USA during the Great Depression – but as unemployment rises, fewer people will be in a position to give anything.
• However, some sources of income, such as major gifts, tend to march in step with the stock market and may recover quickly, so the sector needs to retain the capacity to respond to an upturn in income.
• The biggest charities will not necessarily be best placed to maintain donations; giving may be redirected towards local, community-based organisations, as was the case with local appeals during the 1930s depression in the UK and the self-help initiatives founded during the miners’ strikes of 1984-5.
• Long-term data from the Charity Commission suggests there have been steady increases in the rate of formation of new charitable organisations, even during recessionary periods.
• Requests for state aid are likely to be met with demands for greater accountability, partnership and rationalisation. During the 1930s, voluntary hospitals’ claims of penury were met with scepticism by the Ministry of Health, while state grants were rare and always tied to reform.

Professor Mohan said: “Charities should beware of crying wolf. There will be casualties of this recession, but predictions of widespread gloom are likely to prove exaggerated. History suggests long-term stability in the resources available to voluntary organisations, but inevitably some causes or types of organisations will suffer more than others. It is important that policy responses are flexible and aimed at protecting organisations and sectors which appear likely to be strategically significant.”

Karl Wilding adds: “In the midst of so many surveys about the impact of the recession it can be hard to see the wood for the trees. Previous recessions might provide more insight - and one such insight is that the voluntary sector might be more resilient than some of the more alarmist surveys are suggesting.”