NGOs lay off, furlough staff as financial crisis bites

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LONDON — A majority of development NGOs in the U.K. have already taken measures to reduce staffing costs, amid financial turmoil related to the COVID-19 pandemic, according to a survey.

“This scenario could result in mass redundancies in the U.K., which could bring about the slow decline of the organization.”

— Charlie Gamble, CEO, Tackle Africa

Development programming is also under significant threat. NGO leaders called for more government support and flexibility to avoid bankruptcy and ensure their work continues.

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Many fundraising activities — such as events, bake sales, and races — have been called off because of social distancing measures in the U.K., and donations are already dropping as the economic crisis begins to bite.

The poll, conducted by Bond, the network for U.K. development NGOs, surveyed 93 organizations of different sizes.

It revealed that 56 of those surveyed — or about 60% — have already frozen recruitment, furloughed or laid off employees, or asked staff to voluntarily take unpaid leave. A further 25% said such moves were likely, while just 15% said they had not reduced staffing costs.

There was no information available on the size of the organizations most affected.

NGOs are facing particular pressure on their core operational costs amid the economic fallout from the pandemic, which has seen much fundraising dry up for the foreseeable future and some funds putting a hold on new work not related to the outbreak.

Just 48% of NGOs surveyed said they could still operate in three months’ time without additional funding, and just 37% said they could run for over six months.

Charlie Gamble, CEO at Tackle Africa, a sexual health education charity, said the entirety of its programming had been halted because of lockdown measures in various African nations. That has resulted in a recruitment freeze, and some staff members have been furloughed while others have been put on voluntary unpaid leave. All of its U.K. workers have taken a 10% to 15% pay cut, according to Gamble.

The charity had assessed the risk of losing one fundraising event “but never a scenario where we couldn’t run any events,” Gamble said.

“This scenario could result in mass redundancies in the U.K., which could bring about the slow decline of the organization,” he added.

NGOs have also complained that the rescue packages provided to businesses by the U.K. government do not always apply to the charitable sector. Meanwhile, the government funding they do receive is restricted to programming and does not cover the core operational costs currently needed to keep NGOs running.

Martin Drewry, CEO at Health Poverty Action, which employs nearly 500 staffers worldwide, said that if restricted government funds usually reserved for programming were temporarily allowed to be used for operational costs, NGOs would see a huge benefit.

“A temporary unrestricting of existing funding … would save a lion’s share of the challenges,” Drewry said. The move would “help us cover our core costs, so we'd stay alive and wouldn't go bankrupt. We only need about 2% of our turnover to do that,” he said.

“Just allowing us the flexibility to cover those costs would be incredibly valuable and safeguard ... the rest of the programs the donors are funding,” he added.

Such a move would be of minimal cost to the Department for International Development, Drewry said, but would also be strongly contrary to the bureaucracy in which it operates.

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About the author

  • William Worley

    William Worley is the U.K. Correspondent for Devex, covering DFID and British aid. Previously, he reported on international affairs, policy, and development. He also worked as a reporter for the U.K. national press, including the Times, Guardian, Independent, and i Paper. His reportage has included work on the Rohingya refugee crisis in Bangladesh, drought in Madagascar, the "migrant caravan" in Mexico, and Colombia’s peace process. He can be reached at william.worley@devex.com.