Coronavirus: Emergency funding goes 'nowhere near' helping charities on brink of collapse, MPs warn

'Smaller charities, in particular, are at risk of imminent closure if adequate support is not provided'

MPs urge Rishi Sunak to act urgently to save charities from collpase (EPA)

Emergency funding provided for charities during the coronavirus pandemic goes “nowhere near” addressing organisations’ plunging incomes, a group of MPs have warned.

While welcoming the government’s recent £750 million support package, the Digital, Culture, Media and Sport committee reiterated that some charities in England are on the brink of insolvency – with the sector facing an estimated £4 billion blackhole.

In a new report, the MPs on the committee warn that smaller charities are fighting for survival after their means of generating income “dried up overnight” when the Covid-19 lockdown was implemented.

“Social distancing is making delivering services harder and more costly,” they warned. “Reserves are running out. Smaller charities, in particular, are at risk of imminent closure if adequate support is not provided”.

According to evidence submitted to the MPs, the UK has more than 160,000 registered charities with the majority being smaller organisations with an annual income of less than £100,000.

In a warning to ministers, the report went on: “We are concerned that the support announced to date is not enough, and that a lack of transparency in how these funds are being allocated means deserving charities will lose out.

“We therefore call on the government to increase the support available to charities through a comprehensive stabilisation fund, and to ensure that support is made available to charities that are not directly working on Covid-19 but facing financial hardship.”

“The government must also adapt existing support schemes for businesses to ensure they provide appropriate support for the charity sector. It must take these steps urgently, within a month to prevent charities from folding.”

MPs on the committee also suggested introducing a separate coronavirus Job Retention Scheme for the charity sector, in order to allow furloughed employees to volunteer for their own organisations during the crisis.

Julian Knight, the Tory MP who chairs the committee, said: “The strong message that charities gave us was not that they have some sort of right to survive but that people have a right to the services they provide.

“We warned the chancellor that charities told us they faced a £4bn gap in money coming in, with some smaller charities facing insolvency within weeks without immediate emergency support.”

He added: “The sum of money that’s been made available goes nowhere near replacing the income that many charities have lost.

“We’re urging the government to set up a stabilisation fund to assist organisations to stay afloat so that we avoid increasing hardship among those who depend on charities to help them during this crisis and beyond."