Economic downturn

The country is now in a period of economic downturn. This may have implications for homeless people and the charities that support them. There are also sources of support and opportunities.

Context

Following a long period of growth, the UK has been in recession (two quarters of falling economic growth) since July 2008. Many businesses have been affected and because of borrowing, there are likely to be cuts in public spending. Economic trends in the public and voluntary sectors traditionally lag behind the private sector.

Rises in unemployment and increased arrears and repossession are having an impact on homelessness and poverty.

NCVO’s Third Sector Foresight outlines the implications. Increases in poverty and unemployment are likely to lead to an increased demand for homelessness and related services, such as housing and debt and employment advice.

At the same time charitable giving may be affected and corporate giving is likely to fall. Charity income will be affected by the falling value of assets and low interest rates. Trusts and Foundations may maintain or reduce grant making due to falling investment income. Funding from government is likely to fall.

Homeless Link’s Credit Crunch Survey  found that by July 2008, two thirds of homelessness organisations were reporting an increase in demand for their services. A majority were also facing a current squeeze in their income. Looking to the future, around three quarters were concerned about anticipated restrictions in income from savings and investments, funding from statutory bodies and charities and personal donations. A majority of homelessness organisations reported they have already taken steps to deal with the impact of the recession.

During March and April 2009, Homeless Link worked with Voluntary Organisations Network North East (VONNE) to undertake a survey to identify the impact of the recession on the region’s third sector. Half of all respondents reported that the recession is having a negative impact on staff. There were mixed responses about the impact on housing and homelessness organisations. 68% of homelessness organisations identified that their beneficiaries have been impacted negatively or very negatively by the recession.

Solutions

The impact of the economic downturn is not entirely negative; there is some evidence that there are opportunities. Organisations are deploying a number of techniques that include cost-cutting measures, reviewing their strategic processes and taking advantage of reduced prices in the private rented market.

The VONNE survey found that in housing and homelessness there appeared to be an increase in partnership and collaborative working. Some organisations are finding that the recession is creating opportunities. This includes the initiation of service review or cost-saving exercises. There are also development opportunities through access to cheaper property or land. In some areas the private rented sector has become more affordable leading for increased move on options for clients.

Unemployment or reduced hours could create a pool of volunteers and the voluntary sector may attract skilled people who are reconsidering their careers in the private sector. The National Talent Bank is an exciting new initiative being developed in partnership between BITC, Timebank and the Prime Minister's Council on Social Action. This initiative hopes to take advantage of employees with time to give, more demand for opportunities and more need in the community.

Further Information

Third sector umbrella organisations have worked to bring together resources to assist their member organisations navigate the recession.

NCVO has launched a section on its website to help charities, with information on resources, advice and latest news.

NAVCA (National Association for Voluntary and Community Action) published recession resources, including studies on the effect of the recession on third sector organisations, key resources and links to other organisations recession pages.

ACEVO (Association of Chief Executives of Voluntary Organisations) has launched a website to help charities affected by the recession.

The Charity Finance Director’s Group (CFDG) has set up a page called Recession Watch on its website, listing resources, articles, sources of government help and links. It also runs a number of helplines for members.

The Charities Aid Foundation (CAF) has set up a confidential Financial Crisis Helpline for charity leaders worried about their organisation's financial viability. The freephone number is 0800 980 2000.

Business Action in the Community has made available information for businesses on corporate responsibility in a recession.

Inside Housing published an article on corporate giving and the homeless sector.

The National Housing Federation has produced a briefing provides on the current situation and offers housing associations both short term and long term advice.