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Economics

Life after coronavirus: not-for-profit sector

As the world adjusts to the Covid-19 pandemic, Hugh Biddell, head of charities at NatWest, discusses the future of the not-for-profit sector in the context of five pillars identified by the bank’s group principal economist, Stephen Blackman, in his new research project.

The survey points to the huge difference the third sector was making, pre-pandemic, in people’s lives. But Covid-19 has asked much of charities and not-for-profit businesses, forcing them to cancel or delay projects, but also raising their visibility and thus increasing demand on their services, stretching some to breaking point.

The post-pandemic social contract may lead many of us to do more to support this sector. But good intentions need good policy and sustainable support.

Nation & Society

There are more than 168,000 registered charities in the UK, and most are small organisations. But what’s important is not their size but their purpose.

NatWest has a history of supporting the charity and not-for-profit sectors. We were the first bank to have a specialist team looking at charities. They’re important to our communities and to equity and fairness in the UK, so we should be supporting them.

It is tempting to think that government should be doing more to create that equity and fairness because there is a huge burden on charities at the moment. The monthly survey of the voluntary sector by the Centre of People, Work, and Organisational Practice (CPWOP) at Nottingham Business School shows that, at the beginning of 2021, 79% reported that demand for services had stayed the same or risen. We can question the volume of work done by food banks, volunteer carers and homelessness charities at the moment, but charities bring knowledge, experience and focus. By linking philanthropy with complex social issues, they can leverage their trusted status to focus on the needs of those in our communities who do not have a voice or cannot afford to pay for the services they could benefit from. Given the right support, charities can coordinate resources in a positive way, based on evidence of what really works.

But 75% of those surveyed also thought the pandemic would, long term, have a negative impact on their ability to deliver services, so we need to find a way to stitch the third sector into the fabric of our future society.

Work & Play

One of the most powerful ways to do this is for businesses to build in support for volunteering and charities. Employees and stakeholders are demanding that businesses become more responsible, and boards of companies cannot ignore these concerns. Research shows that, following a crisis, people are more likely to examine how they are spending their time at work.

Only 10% of volunteers in the NCVO’s survey had given their time through a scheme run by their employer. Short term, many businesses are under pressure to survive, and there will be no reduction in the need for volunteering of this kind of community commitment.

This requires good infrastructure, which doesn’t happen by chance. An example: we want to tackle problems like loneliness, but an older person prefers a regular volunteer, and our patterns of work may not fit around that. There is a lot businesses can do to fit structures of volunteering into new ways of working. If we look at the need in society, and the motivation volunteers report, businesses will have an incentive to structure work to give staff that satisfaction.

Place & Community

So where should we focus this good work? Four out of five volunteers give their time to local groups. Social enterprises are active in deprived communities, and they are often vulnerable financially because they tend to be smaller than for-profit businesses. How can we bridge that gap?

There’s a case for government support, but also for larger businesses to become more community-focused, to provide services for people who might otherwise be excluded. This is where SMEs have an edge: it’s easier for them to construct something within a local community. Larger businesses can do things at scale, but employees who will be spending more time at home in future may have a greater connection with their local community, not where their employer’s head office is. In a time of less economic activity, there will likely be more demand on the third sector close to where employees live. Wise employers can recognise this.

Economy & Finance

We have all witnessed the fantastic work the NHS is doing, but capacity is constrained, and the government has to focus on the needs of people who are desperately ill.

Longer term, we may still see underinvestment in areas like mental health, where long-term prevention is much cheaper, but it’s hard to shift to resource new ways of helping people under the radar. There will be more responsibility for volunteer organisations to take some of this on.

One way the economy can tip towards a more sustainable, far-sighted structure is ethical investment, and this shift is under way

Hugh Biddell
Head of charities at NatWest

One way the economy can tip towards a more sustainable, far-sighted structure is ethical investment, and this shift is under way. Charities have already been forced to strike a balance between getting the best return on investments to spend on their cause and ensuring they do no harm with their investment portfolio.

There has been a trend in charities divesting from fossil fuels and becoming active in encouraging their managers to vote in shareholder meetings and make their opinions known. Each investment committee must think about what’s important to their cause and what is negative to the charity.

Health & Meaning

Before Covid-19, we were already debating equity and fairness in the UK, linking it to the meaning of what we do in the economy.

It will mean we focus more on charities, non-profits, social enterprises, and businesses that are doing the right thing for their communities and wider stakeholders.

In turn there is a challenge to charities to become more inclusive. Young people volunteer less, and take less satisfaction, from their activity. People from ethnically diverse communities feel the same. One of the biggest challenges is to help people from these communities feel included.

It continues to be controversial that independent schools have charitable status. Governors and school trustees will be asked: what is their charitable purpose? Are they producing children who will take part in our communities effectively? Are they partnering with other schools to help the widest group of children flourish? The challenges of working during lockdowns have highlighted the inequality of education in the UK but also the value of great schools of whatever status focused on education, well-being and understanding of the wide contribution their students can make to our society.

Short term, there will be a tension between people needing to look after themselves or their loved ones, and having empathy for others. But my experience as a volunteer, charity trustee, and at NatWest, has shown me most humans value fairness. Our commitment is stretched in places, but it has the resilience to spring back.

Megatrends: five essentials for the not-for-profit sector
  • The wish to volunteer needs to be built into the next generation of working arrangements.
  • Ethical investment by charities, and campaigns to highlight ethical investment by others, will become more visible.
  • The problems of lockdown education have shown that schools with charitable status can play a fundamental role in building the society we want to see.
  • The pandemic may cause some to decide that charity begins at home, but it has highlighted the benefits of the third sector that may help charities overcome the immediate threat to their viability.
  • Whichever way the values of society evolve, charities and non-profits will remain a source of local and practical knowledge that can be released with proper funding.

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of the NatWest Group Economics Department, as of this date and are subject to change without notice.

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