A new report from Ecclesiastical Insurance has delved into the risks faced by the charities sector – and has identified an opportunity for insurance brokers to support non-profit organisations during this financially difficult period.
According to Ecclesiastical’s “Charity Risk Barometer,” the COVID-19 pandemic proved to be an “unavoidable narrative thread” for the charity sector, heightening existing concerns. To gain more insight into the issue, the specialist insurer surveyed charities to determine the top risks they face in the months to come.
The top five risks identified over the next 12 months by the survey were:
- Loss of funding – 55%
- Employee burnout – 44%
- Political instability – 43%
- Meeting the needs of service users due to COVID restrictions - 42%
- Brexit - 35%
Ecclesiastical also noted that the impact of COVID-19 on charities has been so strong that surviving the next six months was of a higher priority to them than planning for the next five years. About a fifth of the charities surveyed indicated that they think they may not be around in 12 months.
Other key findings of the report include:
- The increased demand for charity services during the pandemic has led to an increase in risk of burn out for employees.
- COVID-19 forced charities to adapt, embracing remote working and other tech innovations in order to continue to provide services.
- 90% of charities strongly agree or tend to agree that they have moved to a different way of working in response to COVID-19.
- 29% of charities had worked remotely either entirely or partially before the pandemic, but 66% have moved to remote working since.
- Charities that have had a link to COVID-19 or its consequences became flush with emergency funding – at least at the pandemic’s outset. Meanwhile, others had to take their services and fundraising online to adapt. Charities that rely on large national or local grants were awarded well in advance, and were largely unaffected.
- 48% of charities expect their funding reserves to run out within a year.
- 34% of charities have done less fundraising since March 2020.
- Fifty eight per cent (58%) of charities had a business continuity plan in place when the pandemic struck; 21% set one up afterwards.
- 82% of those who had a business continuity plan prior to COVID-19 agree that it was effective.
“Charities have become used to dealing with challenges, but this year has given us a perfect storm - 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,” said Ecclesiastical Insurance charity director Angus Roy.
Roy added that brokers “have an important role to play” in supporting their charity clients to better understand and manage their risks.