‘Shifting Out of Reverse’ report shows signs of improvement in state of the sector

The latest wave of results from the VCSE Barometer study are out, providing an updated insight on the issues faced by the sector during the cost-of-living crisis. The latest edition is the third in the series and includes data from new questions about the sector’s workforce. Despite the at times bleak economic landscape, there is cause for growing positivity amongst the 738 social sector organisations surveyed.  

Difficult economic conditions continue, but easing slightly 

The UK economy is growing very slowly and while conditions remain strained for everyone in the sector, the news of inflation returning to single digits (8.7%) and energy prices falling for the first time since October 2020 is a reason to believe in long-term improvement. Demand remains very high for social sector services, but for the first time since the launch of the VCSE Barometer last Autumn, over half of respondents expect to meet demand over the next three months. Charities of all sizes are anticipating some financial improvement in the coming months, with the number of those expecting their finances to improve almost doubling (from 17% to 32%) since the first survey results in November.  

Ongoing issues with recruitment 

This is in part due to the easing of recruitment difficulties and the expansion of charities’ paid workforces helping to close the gap between supply and demand. Recruitment remains an issue, especially for larger charities, with 40% citing recruitment as a concern compared to just 5% of small charities. However, almost a half (48%) of large charities and a third of small (34%) and medium (35%) charities expect that the size of their paid workforce will grow during the next quarter. While the economic improvements are slow and incremental, these results demonstrate that the sector has a slightly better long-term outlook. This positivity is most evident with the larger organisations surveyed, but across charities of all sizes there were fewer respondents that reported a deterioration in their finances than in November 2022.  

Cost-of-living pressures are impacting volunteering 

With energy prices falling and recruitment concerns waning, there is undoubtedly some cause for celebration. However, the results surrounding the paid workforce tell only half of the story and volunteering remains a key issue in the overall state of the sector. The latest data shows a decline in the number of volunteers, with (63%) of small charities reporting a lack of volunteers of as a major problem.  

Wider economic conditions and a lack of organisational capacity are putting pressure on volunteer support, with 34% of charities citing the cost-of-living crisis as a key issue for volunteer retention and 27% reporting a lack of capacity as the main obstacle for recruitment. One respondent of the survey reported that the cost-of-living crisis has ‘limited volunteers’ free time, with some having to work two jobs to earn a living’. Equally, a rising number of charities believe that their volunteers’ wellbeing has deteriorated over the last 12 months. While this can be attributed to wider economic and social pressures, evidence from NCVO’s ‘Time Well Spent’survey suggests that more and more volunteers feel that charities have unreasonable expectations of them. The impact of this decline in volunteer recruitment and retention is clear, with 40% of organisations surveyed reporting that they have been at times unable to meet their beneficiaries’ needs due to a lack of volunteers. Volunteering is foundational to the sector and if these trends go unaddressed, they pose a significant threat to the feasibility of charities’ objectives.  

We’re not out of the woods yet, but there is some cause for optimism  

Overall, there are some incremental signs of improvement in the operating environment for charities, with inflation and energy prices easing somewhat. However, the pressures around volunteers and their impact in terms of meeting demand are still very much prevalent. The problems posed by this decline and wider economic uncertainty means that the sector has by no means recovered from the disruption of the last few years, but there seem to be some green shoots of growing confidence in the results of this latest survey, which is definitely positive and will be instrumental in navigating the challenges to come.