Community businesses on the Covid frontline warn of cash squeeze

Unveiling its new survey, sector body Locality urged the government to offer more support

Community organisations, including co-ops, are warning of a significant, prolonged squeeze on their finances throughout the winter as demand for their services continue to increase under the impact of Covid-19

According to a new member survey by Locality, the national membership network for community organisations, 41% expect to lose at least a quarter of their income between July 2020 and January 2021.

For organisations where trading is more than 50% of their income, 59% expect their losses to be at least a quarter. And the new year looks just as uncertain, with losses predicated at the same levels between January to December 2021.  

The survey also showed that despite financial pressures, 44% of community organisations saw increased demand for their services during the first three months of the Covid-19 crisis, and that for these organisations, demand increased by over a third. Throughout the coronavirus crisis, community organisations, their staff and volunteers, have been mobilising to support their communities through the hardest of times to keep their services going.

In its new report The Power of our Network, Locality’s findings from their member survey show the vital role of community organisations during the pandemic. It says these locally rooted organisations have remained agile and resilient thanks to their local networks, local leadership and their dedication and accountability to the community.

But the report warns that local restrictions and social distancing measures will continue to impact community organisations’ ability to generate income, says the report, while increasing pressures on local authority finances will impact the number of grants and contracts available.

Locality has urged central government to use new funding opportunities, like the Levelling up Fund announced in the chancellor’s Spending Review and the UK Shared Prosperity Fund, to invest in the social infrastructure that enables places to thrive and to put communities in charge of how investment can best support local renewal and recovery.

Tony Armstrong, CEO of Locality, said: “During this extraordinary year, we have experienced the power of community like never before. Community organisations have been incredible, mobilising local responses and taking the lead in keeping people connected and delivering support to those most in need.

“The social and economic impact of lockdowns is hitting our communities hard. Community organisations will be doing all they can to help their neighbourhoods weather these storms – but they themselves are straining under increased demand, decreased income and ongoing uncertainty.

“We’re calling on the government to invest in local places and the social infrastructure that sustains them. The Levelling Up and UK Shared Prosperity Funds should put communities in charge. If we trust local places and the organisations that serve them, we can have a genuinely people-powered recovery which benefits every area.”

The latest monthly barometer survey from NCVO, Nottingham Trent and Sheffield Hallam Universities found that one in seven voluntary organisations are anticipating closure within the next year.

Locality’s membership network comprises over 1,200 community organisations with a combined income of £315m, as well as land and buildings worth £555m. Together, these organisations employ over 6,400 people and work with over 17,500 volunteers.

These organisations are needed now more than ever as they continue to provide the essential services local people rely on, warns Locality. The survey says they deliver on average 13 different services or activities to their communities. Common services include tackling social isolation, unemployment, and mental health.

“Whil the challenges facing our communities are getting ever more difficult into the winter, the survey shows the commitment and resilience of community organisations to weather the storm and to continue delivering vital services to their neighbourhoods,” said Locality.

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